“This needs to exist for regulators to approve of use of Bitcoin in the U.S.,” says Waters. “We don’t want to be the sheriff of the Bitcoin community. We just want to create an ecosystem of clean addresses.”

In the short term, they talk about a limited database that keeps track only of registered identities and their activities with participating companies, but it’s obvious that their ambitions are grander and that a longer term prospect is to take advantage of the transparency of the Bitcoin system to keep track of which Bitcoin is tainted by associations with black markets. Waters says that the development of that aspect will depend on “community feedback.”