Bitcoin Forum

I just read this Timothy Lavin Bloomberg story and wondered if it's been discussed yet. I can't seem to find anything on it. If it has please direct me to the thread. The comments at the bottom are as interesting as the article. He raises some interesting points considering all the recent action from government agencies lately (like Mike Caldwell's recent letter forcing him to close up shop). Will governments simply regulate Bitcoin to death like so many good ideas of the past? Will business competition cease to make Bitcoin a worthwhile alternative? Is this just another naysayer that is missing the "point" of Bitcoin? Is the "point" to provide an outlet for crime or does Bitcoin have a place alongside other payment systems and is simply waiting to claim its market share?

http://www.bloomberg.com/news/2013-08-08/did-the-sec-just-validate-bitcoin-no-.html

thats from the Aug 8, 2013.

also:

in my opinion not a special article.

yes, its a high risk investement if you see it like this. you probably lose all money. you should sell when you dont believe in it.

Yeah, I know how old it is but things have happened like attempting to put Casascius Coins out of production with threats. The government knows how expensive it is to be in a financial services business. So the info might be even more relevant today.

Their are plenty of high risk investments. Most aren't teetering on being illegal.

I think gasoline will be first.

Regarding Mike and the Casascius coins, Mike just chose not to get the licensing. (Which is proving great for those who already have his coins as the price has of course shot up. But bad for newcomers).
Titan has the licensing and they have also raised prices A LOT. Go figure. I do think Mike will get the licensing, at least in some states as he was doing just too well imo.

SEC stopping BTC? LOL, please, this isn't just about America, much less regulations...

Then let's just build bunkers and store food because everything may become illegal. Making alcohol illegal didn't stop people from drinking it, chill.

Of course, that's the point of the article. Did you read it?

SEC isn't attempt to stop Bitcoin. Again, that's what they are talking about. Bitcoin isn't about America. It's about India, the UK, China, the EU and everywhere else. What's happening in India and China right now?

I was frustrated when I first learned of the letter sent to Mike Caldwell of Casascius Coins.  

Upon reflection, FINTRAC was just doing its job.  Casascius Coins is a money transmitter.  I know the argument: people just sent him 1 BTC plus a fee for packaging it into a nice physical coin, and Mike sent them back their own bitcoins--harmless.  But it's only harmless because we all trust Mike.  Potentially, a less scrupulous person in the same business could keep a log of all the private keys.  Two years down the road, he drops the A-bomb and steals all the unspent coins.  I wanted to make it very clear that I do not necessarily agree with the MSB laws but they are designed so people that are trusted with other people's money can be more easily held accountable if something goes wrong.  

Think about it like this: say Mike "open-sources" his Casacscius Coins so that anyone can easily make them.  You wouldn't trust buying one from someone you met at a bitcoin meetup, would you!  The current coins have value because we know that Mike is honest.  

Using similar logic, I expect eventually all non-open source services/products that could potentially steal a users funds will be regulated in a way similar to MSBs.  Even something like the Trezor (if purchased as a complete device, not as hardware to which you load open-source firmware) I could see regulated in the USA because it's possible that the Trezor has hidden code that eventually steals peoples coins.  

Those are good points. Maybe I shouldn't have used Mike as an example. Does anyone know what happened to Bitinstant? Governments don't need to make anything illegal to make it unusable or unprofitable.

Bloomberg and BusinessInsider are sources of FUD.

Most likely they are so invested in the big business/big government marriage that they are merely mouth pieces for those groups.

FinCEN's problem with Casascius has nothing to do with stealing buyer funds. They see his business as a laundering service in that users send him bitcoins and he sends bitcoins back in a new, unconnected address.  In other words, this action has nothing to do with "protecting" buyers and everything to do with tracking money.

As for "regulating everything to death," you could make the same argument to say that they're trying to kill the dollar. Every action FinCEN has taken against Bitcoin-related businesses could and would be taken against someone doing the same thing with dollars.

China forbid money transmitters from dealing in Bitcoin because Bitcoin was so efficient in skirting currency exchange controls. It was a reflection of Bitcoin's utility, not its weakness. China can't shut down Bitcoin, and I expect that if it is not brought into the fold somehow in China there will be a thriving black market in Bitcoin given the huge pressure that existing currency controls have built up - even if it means transmitting private keys by mail rather than working through the blockchain.

FTFY

Good point. All they are doing is their job which can make it difficult for any business to survive. Can Bitcoin then remain a viable alternative for the main stream financial services user or will it always remain fringe because of the costs involved?

SEC has little to zero jurisdiction outside the facist USA .... you need to alter your title to "Why Bitcoin is Doomed in USA" ... sub-title "And Other Like-Minded Backward Repressive States"

The current clamping down on an Internet communications protocol will be looked back upon in the future as an equivalent historical transgression equal in insanity to the Spanish Inquisition driven by the Catholic Church or the colonial slavery era.

Bitcoin can only be a "large scale" alternative to the extent that is fits in with the existing regulations and legislation in the jurisdiction in which it is used.

For the record FinCEN's mission is to safeguard the financial system from illicit use and combat money laundering and promote national security through the collection, analysis, and dissemination of financial intelligence and strategic use of financial authorities.

The State regulations are concerned with safety and soundness and consumer protection.

Also, legitimate Bitcoin business should be concerned with the Consumer Financial Protection Bureau (CFPB) which was created by the Dodd Frank act and includes a whole host of consumer protection items that will affect the buying and selling of bitcoin.

Also the IRS has not weighed in yet on taxing Bitcoin.  Looking for guidance coming before April 15, 2014.

That's actually not my title. It's the title of the story on Bloomberg. Unfortunately, the "America and the Other Like-Minded Backward Repressive States" control most of the worlds land mass. Besides we shouldn't ignore the people of repressive countries. They're the ones that need Bitcoin the most.

Agreed, it's insane.

That's right and that's my concern. The battery of, to date, unused regulations is extensive. No doubt Bloomberg simply parrots what they believe their readership wants to hear but they made me think to current events and future disaster. Preparedness comes from not hiding your head in the sand and saying everything will be just fine because we have the rest of the world. Develop regulation resistive businesses now instead of when it's too late.

Exactly.

Instead of posting rants on bitcointalk.org we have to engage the regulators.  Are you familiar with Millybitcoin/Atlantic Bitcoin?  He recently challenged the March 18th 2013 FinCEN guidence that says ALL miners are "moneytransmitters" (a legal term) and won.

http://www.slashgear.com/bitcoin-miners-do-not-have-to-register-as-money-transfer-services-ruling-28310218/

I also know of another bitcoin business who challenged this guidance and won but the information is not public yet.

Also, have you read the transcripts or watched the recent Federal Senate Hearings?

http://www.hsgac.senate.gov/hearings/beyond-silk-road-potential-risks-threats-and-promises-of-virtual-currencies
http://www.banking.senate.gov/public/index.cfm?FuseAction=Hearings.Hearing&Hearing_ID=955322cc-d648-4a00-a41f-c23be8ff4cad

Law Enforcement and Regulators clearly state that bitcoin is NOT illegal it is only the illegal use that they are concerned about.

I had not read it but gave it a read and am still not clear on it! These titles are just getting a bit old and I once again was only partly pulled in.

Regarding India and China, first India, I think they are trying to get a grasp on what BTC is. They seem a bit against it.
China on the other hand, and shockingly so, seem to just want to separate it from their money system and categorize it as a commodity. I'm still shocked by it.
It will take time to play out and I think the run continues once things get clear in China (then later, much later, India). Of course, it can get ugly in either case, but at least with regards to China, I'm not so worried.

Your perspective on India and China?

Perfect example! Fighting the system when it's wrong and working within it where possible can make Bitcoin a strong contender against the multitude of new financial instruments currently popping up. I knew Bitcoin was something special and a strong contender when I witnessed Amazon Coin, MintChip and a multitude of others spring into existence. Copying is the highest form of flattery.

It's been disappointing to watch good people like Mike Caldwell and Charlie Shrem succumb to attacks from those who wield government regulation against them like the Sword of Damocles. I've met Charlie in person in San Francisco. I think I'm a pretty good judge of character and he strikes me as someone that's just excited by Bitcoin and wants nothing but success for it. The users of Bitcoin are making good people with energy and determination fall under government control faster than it can survive: http://betabeat.com/2013/08/class-action-suit-filed-against-bitinstant-for-misrepresenting-the-speed-of-its-services/

That is their stated mission ... as with everything to do with govt. the actual mission is much deeper and more subtle and has been determined by lobbyists and cunning lawyers writing in loopholes and hooks to get the "framework" that state-sanctioned cartels and cronies can operate with impunity under.

I see you are still on the deluded trip that the regulations are there for your benefit. Newsflash, they are not or the financial/monetary system would not be in such a parlous state and bitcoin would not be needed or demanded ... i.e. you wouldn't be here incessantly spouting the establishment line.

I understand. I kept the shock title from the story because that seems to be what draws attention to a thread.

I see China and India as predictable outcomes. I was more shocked to see Bitcoiners put their faith in a country that regulates how many children it's citizens can have. India has a thriving black market (even cows are traded as food) and Bitcoin can work its way into that fabric quite nicely. I think Bitcoin will be big in China and in India eventually but it will develop as a black market with likely great success. Futuristic governments would recognize that and openly accept its inevitability but those two are not well known for forward thinking.

Charlie is a great guy and one of the best and earliest proponents of Bitcoin.  Unfortunately his company may not have been operating within the the limits of the law.  Word on the street was his legal counsel suggested he shut the site down. (Bitinstant was one of the 22  Companies that received the Subpoena from the Ben Lawsky, New York State's Commissioner of Financial Institutions).  Every time I run in to Charlie he says the site will be back up "in two weeks."  And that has been going on since it went down.

Bitinstant was also somehow involved with a company called TCash/Trust Cash that received a civil asset forfeiture complaint as an  unlicenced money transmitter" in voilation of 18 USC 1960.
http://www.justice.gov/usao/nj/Press/files/pdffiles/2013/TCash%20Complaint.pdf

Again, in countries where there are laws and regulation you have to be aware of who you are transacting with or you run the risk of implicating yourself regardless of your knowledge of your counterparties illicit or illegal activities.

You also have to look at a companies like Coinbase and/or Campbx.  Two US bitcoin companies that "seem" to be operating with in the law as their companies are still operational.   They must be doing something right.

Jeez. I wonder if we will ever get past this phase of utter stupidity and lack of intellectual competence in journalism with respect to BTC.

Ya there's tons of articles for and against BTC. Reality is nobody is certain about what's going to happen to its value, but those whose position on BTC gets validated in the future will say they knew all along.

+++++1

Every bitcoiner should just understand NOT to believe anything you read in the mass media (you should also take EVERYTHING you read posted by the Libertarian KOOKS here on bitcointalk.org with a grain of salt.)

Almost every single bitcoin new story includes factual errors that expose that fact that many of the experts they interview and the "journalists" themselves just don't understand the protocol.

What is Coinbase and/or CampBX doing that BitInstant didn't?  You are implying those entities have state licensure as money transmitters are you?  If they did it would be pretty easy to verify yourself as that information is public record.

For example CA:  http://www.dbo.ca.gov/Licensees/money_transmitters/money_transmitters_directory.asp

The reality is that at the state level most of the regulation is simply a giant unknown at this point.   No two states have the same requirements, no two states even share the same definition of money, money transmitter, or even transmission.  Many states explicitly use the word "currency of the united states", some doesn't even include "foreign currency".   Some states limit their oversight to negotiable instruments (such as checks).   Does Bitcoin meet the regulatory definition of all states?  Maybe, doubtful but there has been no definitive statement by all state regulators ... yet.  However that cuts both ways, to my knowledge no state has said "exchanging Bitcoin isn't covered by statuatory definitions" either.

Bitcoin isn't just cutting edge technology, it is cutting edge in the legal space as well.  It probably will take decades, and countless court cases to resolve it all.   Most big (and no Bitcoin company is even close to "big" I am talking multi billion dollar company) simply get licensed everywhere it is possible to be licensed because despite the up front cost (eight figures easy) it is "cheaper" than the unknown.   Better to be licensed and not need to be then be not licensed and need to.  That simply isn't an option for ANY startup.

To my knowledge no Bitcoin related company US or foreign has a money transmitter license in all states that issue licenses to money transmitters.  I don't believe any Bitcoin startup even has a money transmitter license in a single state.  Someone correct me if I am wrong with cites from one or more state money transmitter registries.  Generally when seeking a license you are implicitly saying "yes I believe our activity is regulated and engaging in this activity without a license is criminal".  By definition that would imply you need to stop business to even attempt to seek the license.  Generally regulators don't issue licenses who are defacto breaking the law at the time they are seeking the license.  :)

They do appear to be doing something right but how long will that last. Every new regulation enforced brings a new cost of doing business. My worry is that the cost of entry will eventually become too high. My favorite thing about Bitcoin is it's ability to enable unencumbered worldwide transfer of value. In my mind, this puts it in a league by itself with no competition. Pegging Bitcoin's value to fiat currency is drawing the bullseye on it in every country. Is there no reasonable method of barter that can happen quickly where Bitcoins can be bartered outside of a fiat system? Selling used or new items directly through an eBay type system works but isn't good enough. We need someone to sell a pound of bread flour for btc and have the flour mill pay it's workers in btc.

DeathAndTaxes

You bring up a HUGE issue.  There is no Regulator at the Federal Level for "money transmitters" the "Money Service Business" category that FinCEN put the bitcoin industry in with the March 18th Guidance.

This is some thing the National Money Transmitter Assocaition is trying to address with upcoming "Industry Symposium for Legislative Action - (ISLA)" February 18, 2014 9:00 AM to 5:00 PM EST in Washington DC.


Carnegie Endowment for International Peace  
1779 Massachusetts Avenue NW
Washington, DC 20036-2103
  
This will be an all-day forum, hosted by the NMTA, that seeks to bring together everyone in the payments services industries to discuss what a National Payments Services Act might look like. Here is why we believe such an Act would be beneficial:
To make the regulation of payments services providers more economical, efficient and effective for both the government and private sectors.

To better protect the United States from financial crime and the funding of terrorism.

To better protect the rights of consumers and ensure a fair, transparent marketplace for payments services.

To provide a national insurance fund for the protection of money transmission consumers.

To provide regulators and law enforcement with a centralized, national database of all those companies licensed to do money transmission in the United States and their agents.

To provide regulators and law enforcement with timely, actionable information.

To establish minimum regulatory standards for all payments services providers serving the US public and to promote greater regulatory consistency across the states.

To allow better communication and coordinated action among the federal government and the various States, in the regulation of payments services providers.

To ensure regulation is consistent, continuous and appropriate across all types of money transmitting industries and all money transmitting business, no matter of what size.

To monitor the orderly banking of payments services providers and provide reasonable access to the banking system for licensed money transmitting companies that are essential to our economy.

To allow non-US providers of payments services with no physical location in the US, to serve the US market and to ensure they meet regulatory standards that are consistent and centrally-administered.

To promote competition and remove unnecessary barriers to interstate trade.

To encourage the healthy development and growth of money transmitting companies and support public confidence in those companies.
To encourage and promote technological innovation in financial services.

To ensure that any US consumer no matter where located, can patronize any licensed US provider of payments services, no matter where that company is located.

To provide a framework within which the payments services industries can regulate themselves to the greatest extent possible.

To ensure that US financial marketplaces remain competitive on the world stage.

To better provide for coordinated action among the US government and foreign governments in the prudential and anti-money laundering regulation of the various payments services industries.

This meeting is for the payment services industries, their trade associations, independent reviewers and legal advisers. This includes not only money transmitters of all kinds, but also money order issuers, check cashers, foreign exchange dealers, web-based transmitters, prepaid access providers, mobile money transfer operators, third party payment services providers and virtual currency dealers.  
 
Attendees are encouraged to address the group, and your written materials will be posted. If you are interested in attending ISLA, please click here to register. Registration is free, lunch is on your own.
 
Help us hammer out a regulatory framework that will let all US consumers use any licensed provider, and enable the normalized banking of these vital industries.
 
Regards,
 
- David Landsman

https://events.r20.constantcontact.com/register/eventReg?oeidk=a07e8ofjkaq22e8c4db&oseq=&c=&ch=

I agree to a certain extent.  I generally oppose new regulation but the current situation is just a nightmare of asinine proportions.  They are less than 100 companies in the world which have licenses in all fifty states.  There is some legal opinion that is is easier and cheaper today, to form a new bank (or buy an existing bank or credit union) and thus bypass the entire issue because banks and credit unions are not MSBs and their national charter makes them outside the regulatory scope of most state regulations.  When it is easier to form a bank then issue a prepaid card for example you know something is wrong.

Still this has been a problem for twenty years now.  Decades before Bitcoin was even born there have been attempts to create a single national license because the current system is broken but all attempts to date have been futile.  The states certainly don't want to give up that power and control.   The existing players who have already gone through that nightmare don't want it to go away.  PayPal LOVES the excessive, asinine regulation.  It all but guarantees there will never be a PayPal direct competitor because the burden on any startup is simply too high and without a startup the risk is too much to dump the tens of millions to jump right to the next stage of the game.   The current MSB/MT regulation is a massive economic boom for the GreenDots, PayPals, and Western Unions of the world.  They will move massive sums of money in lobbying to kill any attempt that opens the flood gates for competitors.

Maybe this time will be different, it certainly is needed.

There was an attempt to create a "Uniform Money Services Act"

http://www.uniformlaws.org/ActSummary.aspx?title=Money%20Services%20Act

But it is enacted in only five (5) states!! (Edit: and 2 territories).

http://www.uniformlaws.org/Act.aspx?title=Money%20Services%20Act

If I'm reading this right, you are predicting the inevitable failure of Bitcoin as a mainstream financial tool. Start-ups can't afford the cost of entry and power-brokers with deep pockets will crush new legislation, yes?

Death and Taxes

I hear you and certainly share your frustration.  But I really do think there is something very different about the peer to peer nature of individuals transacting with individuals that will make it VERY difficult to regulate it out of existence.  

QuestionAuthority, Absolute NOT.


Again i point to the Millybitcoin ruling and the other resent (non-public) ruling that show that individuals can make a difference and individuals united to achieve the same goal can have a HUGE impact regardless of the opposition.

Ok, what was the outcome of this symposium? http://nmta.us/site/page.php?570

Anyone look at the idea of purchasing a bank seriously.  We thought finding a federal charter was interesting but have not pursued the practicality yet.  I also like what Milne did at Dwolla through their association with Veridian Credit Union.... you know of other examples that takes care of the register-in-every-state nightmare?  CA registration alone takes months and even for those out of state they want to personally visit.....

Bob.
If you are serious about a federally charted bank PM me.

What would Bitcoin become in your newly purchased banking system? A replacement system for ACH/EFT? A separate service offered. Banks, more than ever, need to be profitable. Remember, 465 failed banks from 2008 to 2012.

QuestionAuthority,

Because "Money Transmitters" and therefore bitcoin businesses, have no Federal Regulator, FenCEN and the Department of Treasury has made BANKS the de facto regulator of "money transmitters."  FinCEN has also labeled "money transmitters" "HIGH RISK" so instead of banking money transmitters banks are just closing their accounts and thus putting bitcoin companies out of business.  See tradehill.com

A federally chartered bank that would assume the "risks" associated with virtual currency business would be a game changer.

Silicon Valley Bank (SVB) is banking coinbase.com and they are now a front runner in the new economy where the traditional backs may end up like classified advertising in newpapers after the advent of craigslist.com, potentially non-existent.

The result is: The exchange rate many folded after that article was published   8)

The first country that give bitcoin green light will receive huge amount of wealth inflow from all over the world in a couple of years. And that country will become the financial center of bitcoin economy

My understanding is that banks need not register with the states.  Dwolla tried the registration route and as I understand it abandoned the effort when association with another was easier, cheaper, etc.  They focus on thier core business while the bank addresses compliance.

Now if I were to guess Milne is after market share at this point, so profit is a longer term proposition and I can't say the association with the bank fits the model, but the idea is pretty solid and money is willing to follow.....

And yes, BCB, I have chatted with Silicon Valley Bank and they are very aware of their position here......

I believe this is true. Think of the poker world. The small islands around the world received a huge influx of money. Isle of Man, Antigua, several Indians reservations in Canada, etc. If a country embraces a much larger entity than online poker, I think it could be very beneficial, especially if it's a smaller country.

Yes, I understand why it would be beneficial for Bitcoin to have the support of a nationwide bank. Hell, I used to work for one of the authors of H.R. 3841 Interstate Banking and Branching Efficiency Act. Banks need to run as profitable businesses and comply with major truckloads of legislation that far outweighs just money transmitter licensure. The public derives some of its trust in banking establishments from the visibility of "brick and mortar" branches. Online only banks like USAA are increasing in popularity but they are themselves a fringe business type that also failed in mass during the 2008 recession. Using a difficult to successfully operate business as the saving grace for Bitcoin seems like a fools errand.

You say all this and you cannot smell the deep stench of CARTEL?!!!

The money business in the USA is a racket from top to bottom, Federal Reserve is the racketeer in chief ...  how else do you think was the whole sector able to extort hundreds of billions from the taxpayer in 2008 and get away with it?

Crawling to the racketeers asking for permission to run you own shop inside their protection network and expecting it to end well is the height of naivete, or just plain insane.

It's a racket, refuse to see that, deny the reality and you get what you deserve.

Classic regulatory capture. This does suggest why Bitcoin businesses should try and fight the regulators and exempt themselves whenever possible.

The whole notion that placing a transaction on the blockchain is somehow the equivalent of transmitting sovereign currencies from one place or time to another on behalf of another party seems rather a stretch legally.

Exactly.

And that is exactly what must be challenged.

can we all quit worrying about government..  writing on a piece of paper in a law book cannot make bitcoin self destruct. people talking in government conference rooms/offices cannot make bitcoin self distruct.

so the government cannot make a law or argue in parliament / washington /etc to make bitcoin useless or broken.

the last time the government went about and made something so common and accessible to average joe illegal, it caused 'issues', but never completely eradicated it.

want some proof.. the prohibition era meant to have wiped out the alcohol industry. yet there were many underground bars, moonshine distillery's and special members only clubs that still got people drunk every night of the year.

infact without government acceptance, the workers and customers had a great time, the alcohol was cheaper and no red tape or paperwork to obide by, no licences, no declarations of tax.

if governments ban bitcoins, then no one would make tax declarations, due to having to question how they received their FIAT income. thus it would drive bitcoins underground, withot paying tax and making it easier for people to do cash for coin transactions totally free from the rules

http://www.bitcoinclassifieds.net/ad/5233_Bobs_Red_Mill_bread_mix_220oz_bags/

Wow a news article from August 8, of 2013 last year. I think you need to find something more up-to-date to entertain everyone. It's clear that in October/November of last year the price of bitcoin going up by more than 40% puts an end to the August 8th speculation story!

Yes, I agree, the racket needs to be challenged ... but for that to happen you will need to put a strongman in the Whitehouse, one with a single passport and a brain.

That's a start.

https://bitcointalk.org/index.php?topic=394890.msg4259124#msg4259124

Bitcoin price will stabilize and adoption will grow to the same degree that we see businesses accepting bitcoin as payment.

Bitcoin as a payment protocol currently holds more value for merchants then for users, as the merchants are the one who are hit with the high charges (which they then pass on to the consumer)

Merchants also need to understand that if they use a company like bitpay.com they assume NO currency volatility risk.  That is the biggest fear and the biggest misunderstanding right now.  

EDIT: I have no association with bitpay.com

Thank you for all your intelligent and knowledgable posts today, BCB. 

You just mentioned BitPay.  May I ask how much (if any) legal/regulatory risk you see with their present business model?

It is my understanding that bitpay is a "third party payment processor" which is EXEMPT from "money transmitter licensing"

Essentially Bitpay has a contract with their clients, the merchant and when a consumer sends bitcoin to bitpay and bitcoin converts that to cash and sends it to the merchant, the consumer is "legally" sending "other value that substitutes for currency" directly to the merchant. There for bitpay is not a "money transmitter."

EDIT: Bitpay does perform extensive Know Your Customer(KYC) vetting on it's merchants to prevent being caught up in any fraudulent or illicit activity.  This is a MUST for any legitimate virtual currency business.  See e-gold ltd.

I was just going to ask that. Are they in compliance and if so what actions did they take to become fully compliant?

Well the US isn't the entire world, the rest of the world doesn't really care how dysfunctional the US regulatory structure is.  So I see two potential outcomes (and I should state this is my personal opinon doesn't reflect the views or intentions of my employer).  One potential outcome is that startups abandon the US market.  They operate when regulation while not non-existent is at least not an impossible burden.  The ones which are successful gain the resources to handle the large fixed overhead that MT licenses creates.

The other scenario is startups in the US comply with federal requirements, and are able to grow faster than the response from states; in essence grow to survive.

It certainly is an obstacle to growth, and innovation but progress already routes around the damaged parts of the system.  Bitcoin will survive, however the US may simple lose its status as the "tech capital" when it comes to Bitcoin related enterprises. I am not saying that is a forgone conclusion but the regulatory risk and uncertainty doesn't help.

But is it not possible for a drug dealer to sell drugs for btc then buy a couple of lamborghinis at a dealership for btc and sell them for dollars. In that scenario isn't BitPay enabling money laundering?

A drug dealer would not be able to open an account with bitpay. (If that is what you are asking???)

That's a good question.  I'm certainly no legal expert, but my take is that it is no different than that same drug-dealer buying his Lamborghini in cash.  In Canada (where I'm from) a drug-dealer could do this, but the car-dealership would need to report the transaction to FINTRAC (our version FinCEN).  So regardless of whether the drug dealer purchases the car in cash or in bitcoin, the dealership knows who the buyer is and reports the transaction.  BitPay is just facilitating the transaction between buyer and seller; they are outside the scope of any reporting requirements.  

Here is what we will see in 2014.  Companies like circle.com with $9M invested, Coinbase.com with $25M invested and any of the other companies that receive significant investment moving quickly to spend a lot of that money to become licensed in all the US State.

I believe, but I'm don't know, that coinx.com has application in 30 or 40 states (since march 18th 2013) and have only received licenses in about 14 or 15 states so far.

And another issue with NO federal regulator is the there is ABSOLUTELY no list of all the money transmitters in every state that requires licensing so there is really no way to tell.

What you are discussing is called "Trade Based Money Laundering" and it is a bit problem.  Auto dealer are required to file currency transaction report (CTR's) with FinCEN for the reason.

EDIT: http://www.ice.gov/cornerstone/money-laundering.htm

Hint: Don't believe everything that politicians say in public.

That concept "the rest of the world will save us" really doesn't seem to be working anymore. I think it's not working because most of the worlds governments/regulatory systems are as dysfunctional as the US system. I agree with your main point, Bitcoin will survive. Tech creations have a trendy, geeky, cool timeline. Bitcoin is very fashionable and edgy right now. Businesses that survive will need to base their business model of survival on real merits that are timeless because Bitcoin won't be cool and new forever. The US only has a partial hold on being the "tech capital" right now. The regulatory framework is killing more than just Bitcoin.

How does BitPay convert their Bitcoins to cash? Surly they must use an exchange and then need to do record keeping on the businesses they deal with. So, they must have some AML/KYC reporting requirement, no?

That is possible but they are going to stop all business and wait 6-9 months?   For a license they may or may not need?
By definition apply for a license (a defacto admission that unlicensed activity is unlawful) while engaging in unlicensed activity is not smart.   I can't see any state granting a license to an entity which is operating without a license while seeking said license.  The time required to obtain a license is an obstacle.


Not sure what you mean by this.  There is no unified list but pretty much all states make licensure a public record and most (all? I want to say all but there may be one or two exceptions) make these records available online.  If xyz claims to be a licensed money transmitter, license #12345679 it is pretty hard to verify if there is no way to verify.

Examples:
CA money transmitters: http://www.dbo.ca.gov/Licensees/money_transmitters/money_transmitters_directory.asp
VA money transmitters: http://www.scc.virginia.gov/bfi/reg_inst/trans.pdf
NY money transmitters: http://www.dfs.ny.gov/about/whowesupervise/simoneyt.htm

Pretty much just google "[name of state] money transmitter" and you can find a list within a link or two.

DeathAndTaxes, I've checked EVERY state. State licensing is NOT public information in every state.

Regarding operating with out a license: that may be exactly what Coinbase.com is doing.  They don't seem to have a state money transmitter license, yet they have not been shut down.  They would not receive a $25M investment unless the investors are pretty certain what they are doing it legal. 

It's all a mystery to me.

Talk about "Libertarian kooks"! This is anarchy! How will the roads be built if Coinbase doesn't blast tens of millions of dollars into the government's black hole!?

This guy is a little nutty but if you have an hour he has some interesting point.

WRITTEN STATEMENT OF
AARON J. GREENSPAN
CHIEF EXECUTIVE OFFICER, THINK COMPUTER CORPORATION
BEFORE THE
U.S. SENATE COMMITTEE ON HOMELAND SECURITY AND GOVERNMENT AFFAIRS
NOVEMBER 18, 2013

http://www.aarongreenspan.com/writing/20131118.hsgacstatement.pdf

And speaking of coinbase

This is very interesting...

http://youtu.be/jkMhOchu9G8#t=1h30m12s


That is Fred Ehrsam, Co-Founder at Coinbase speaking...

Yes exactly...China and India have already both come down hard on BTC.  Those are the two most populous countries on the earth and something like 2.8 billion people.  So next is #3 to come down hard on it and that is the USA. 

And no it won't "kill" bitcoin as we all know you can't really kill the protocol but it will kill the chance for many more hundreds of millions of people to use it to make their lives better.  And it will also hurt the value/price of BTC of course.

Bread mix at $12 a loaf. Right.

That's the problem with pricing in Bitcoin.  Everything has to be way overpriced in case of a big price change.

Also, it's a dead offer. "Buy this before midnight tonight", 27 days ago.

ftfy

China and India have exchange controls. The US doesn't. If you want to do a wire transfer of a few thousand, or a few million if you've got it, out of the US, the US doesn't care. It gets reported to FinCen, but they won't stop you. Nobody reports any problems wire transferring money to Mt. Gox. (The fact that all of Mt. Gox's "banking troubles" are on the outbound side is a strong indication that they're crooked or broke.)

Bitcoin's problems come mostly from the slimeballs associated with Bitcoin businesses. Over half of the Bitcoin exchanges have gone bust, most of the "online wallet" businesses went bust, and they usually kept the customers' money. Anonymous remote irrevocable money transfer is the con man's dream.

Far too often I see the 'government' referred to as this 'thing that wants to stop people from conducting private legal activities'.  Please remember the 'government' are people, elected representatives of the people (at least in democratic countries, sorry to all those that don't get a say in who they would prefer to represent them).  If the people choose to allow Bitcoin, the 'government/elected representatives' will do exactly what they are paid to do, as employees of the state, if they don't they get fired/not re-elected.  Bitcoin will continue to be a success, as it already is (by the people, for the people).

Were you the one that voted for the 21 kiloton atomic bomb that was dropped on Nagasaki? I'm against genocide for the greater good so I voted against it. Oh, I voted against Vietnam too, twice.

Don't assume governments will do what the citizens want and don't assume that you are in the voting majority.

Or that the majority is the most evil (deserving capital punishment/life without parole) segment of the electorate, because the worst possible evil always seems to "win" where it counts, regardless of "party".

Its doomed because there is going to be to many asic on the bitcoin network (Hence the difficulty going sky high) hence people turning off the miners, hence no transactions processed,asics have basically killed bitcoin

I don't have an asic but that doesn't mean I can agree with what you said. We need asic's for bitcoin to make the network stronger, to protect it against the theorized attacks which I am sure you have read countless times. The only thing that might suck for you is the fact you can't mine with gpu's anymore. Yeah, I hated that too. I still mine alt coins (as much as I hate it) to get my BTC fix and with these impending "scrypt asics" that may one day actually appear, I feel the same thing could happen, though the Litecoin network will sure benefit in the same way as bitcoin has.

Imagine a bitcoin world without asics, I really could not see the price of the coin being what it is now!

Bitcoin's value is backed by all the infrastructure investments in mining operations, you can copy the source code, but you can never copy the hardware infrastructure

Since the essential of bitcoin is a consensus that people around the world using one currency with fixed limited money supply, any addition of other cryptocurrencies will just inflate the money supply and make that experiment more and more close to fiat money, which is not interesting. Majority of people will come back to bitcoin when they finally realize this

Litecoin could work as a backup in case the bitcoin failed, but since bitcoin is not unchangeable, when an extinction level event occur, miners around the world will agree to switch to a new protocol, so it is almost immortal

It don't think the SEC cares much about bitcoin.  It has too many other things to worry about unless someone tries to sell bitcoin stocks or bitcoin securities without proper registration.   There are other branches of govt that might be more interested.  Again it is US only and they have't stopped online gaming.

I disagree with you and I think you actually contradicted yourself.
We will never ever see Bitcoin changing from SHA256 to scrypt.
ASICs are the real value behind Bitcoin right?

+1

Most US Law enforcement and Regulatory Agencies are already on the record as saying they are only concerned with virtual currency to the extent is is used for illegal or fraudulent activities.

This includes
The Fed
US Secret Service
Department of Justice (FBI, DEA, ATF)
Department of Treasury
Security and Exchange Commission

Just FYI, before you say they haven't stopped online gaming ...

Do check out Blizzard closing the Daiblo III auction house..... the rationale per Blizzard is its impact on game play, which I am sure it has, but they could have integrated the auction into their gaming  environment in another way but chose not to.... I highly suspect that choosing to just shut it down has quite a bit to do with what is happening in virtual currencies generally....

It's not all about bitcoin out there.  Rather, we're the bad boy on the block, and the block is otherwise quite occupied - gamers and VR envronments (Second Life) were there well before virtual currency took hold.   We need a little image control/brand development, I think......

I peeked up during the holiday and saw the recent 'offering' on this forum for a new 'bitcoin' investment: growing marijuana.  I thought, as the discussion went on about shares for sale and no business plan but what a cool idea...  Just another PR opportunity for FinCEN if they want to bash bitcoin, or the SEC if they feel interested in tempering any positive traction bitcoin might get.

We seem to have a knack of bringing it on ourselves.  We should have outted Silk Road way before they did......

.... except in most cases the laws are so vague and subjective that they can declare lots of things "illegal" in one of there "guideline interpretations" and entrpreneurs are out of business if they wish it to be so (or face an insurmountable legal challenge) e.g. Mike Caldwell of Casascius coins https://www.casascius.com/ (https://www.casascius.com/)

You're in la-la land of how the govt. really operates, it must be fun living in such a denial bubble?

I certainly would like to know why the US Taxpayer is funding these witchhunts for people who are building alternatives to an obviously broken, biased and corrupt system?

in the name of our own personal safety?  who are they kidding?

the thing with China is that there is an 'inner circle' of wealth elites there who seek to avoid taxation and the like, then there's the rest of China(the peasants).

so China has to appear to be tax compliant, when really the people running the show want to evade taxes, thus it appears they have a schizophrenic stance on this.

China even has two official currencies.

A drug dealer WOULD be able to open an account with Confidence Chains.  They could even loan out money with it.

BUT, the crime is dealing drugs, not using untraceable money.

Alexander Hamilton believed the American electorate was a "great beast". He said it best:

Hamilton advocated for central banking, he somehow got the title of 'founding father' of America although he was never a president, but was the treasurer.

I do agree with that quoted statement.  Capitalism is the solution to the tyranny of democracy.  I want to put Capitalism back in office.  That's what http://altchain.org is about.

It's pretty clear from the article that the very people who manipulated our system into giving them trillions of dollars are now terrified at the prospects of what Peer To Peer Finance can actually do.  The OP article reads like a scary bedtime story.

It is kind of scary. The real problem with saving people is making sure they know they need to be saved. America is described as a great melting pot that accepts anyone into the fold. Really it's a salad where a multitude of different peoples that hate each other are tossed together and that is reflected in the way they vote and choose leaders.

guns and explosives black market already exists

but why isn't the NSAs hidden code on every machine regulated??!?

Let everyone make their own predictions they are either big liars or no nothing. Did they predicted the crisis in 2007? Simply answer is No then how come we believe in their prediction today. Let them say whatever they want while we should hold bitcoins and wait patiently for it to rise. 

Switch to a scrypt-based protocol will require re-investment of the hardware infrastructure, which is very unlikely. What I meant for new protocol is to solve some existing limitations, for example, scalability is a concern in not-so-far future

Really, you voted against dropping an Atomic Bomb on Nagasaki? I do not see how that is possible given The Manhattan Project was 'Top Secret' until after the war.  Perhaps you are confusing fantasy with reality?

You've got it wrong: the rest of the world will save themselves, and Bitcoin is going to help them do it.

The dysfunction of other world governments is an advantage here. Outside the G7 governments aren't nearly as capable of maintaining the illusion of benevolence (http://www.goodreads.com/quotes/12280-the-illusion-of-freedom-will-continue-as-long-as-it-s).

People in Latin America, Asia, and Africa are very comfortable operating in the informal economy and there's no particular stigma toward doing it. In fact, most of the world's population operates in the informal economy as a matter of survival. Outside certain pampered population in Europe and North America, you won't find people declaring that Bitcoin has to shed its black market enabling properties in order to reach mainstream adoption - those will be its primary selling points for the other six billion people in the world.

I agree almost completely with this.  So many people think Bitcoin will become the main currency in the major countries around the world.  I think it has little or no chance of that.  While the starting influx of money and growth in Bitcoin will come from developed countries, I think its the developing world that will embrace it.  The US, Europe, developed Asia will use Bitcoin to the extent that each individual economy (and government) embraces it, but I think down the road (5+ years), you'll see countries in Africa, Middle East, and Latin America using it as a greater % of currency that any developed nation.

That's the point. Once leadership is in power they can do a lot of damage before leaving office. A famous American writer, Mark Twain is known for quoting Judge Gideon J Tucker who said, "No man's life, liberty, or property are safe while the legislature is in session." This speaks to the continuous flood of harmful legislation that streams from the ruling bodies.

It's easy for bad laws to be passed and very difficult for them to be repealed. It does not matter if an elected body can be removed during the next election because the acts they perform while in office remain. It's not possible to "unbomb" Nagasaki or "unmurder" the Vietnamese people. When you vote for someone you're voting for every action they take while in office.

That still agrees with what I said. I don't see the need to rely on the rest of the world to save Bitcoin in the nations that clearly Bitcoin is coming under attack. You do realize that 36% of the worlds population, almost 3 billion people, live in China, the USA and India, right? It's nice that Bitcoin can conquer the black market in the Republic of Trinidad and Tobago or Uzbekistan but that will not save almost half of the worlds population. Without the big three it's going to be difficult to replace Western Union as a value transfer system.

You're also missing the concept that Bitcoin is a financial tool for transferring wealth between people. We need to exist in those places where Bitcoin can easily be purchased and used. Of course, Bitcoin needs to be used by the poor people of Africa using cell phones. They have a great need for it. Just don't expect them to be capable of large purchases of Bitcoins when the price is outside their reach. Satoshi's will seem like millions to them.

http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2013/06/CS%20wealth%204.jpg

Bitcoin is never doomed!!!!

Was going to say that, but then I remembered, the worst possible evil is always made to "win" where it matters. The only way to win is to not play the rigged game.

That's very true. There's no one to vote for in my country that will win any election because of the rigged game.