Bitcoin Forum

New York wants to regulate Bitcoin

http://www.youtube.com/watch?v=cnvK6lm8T8Y

Of course it does. This is NYC, home of financial over-regulation. Don't expect the lawmakers there to be "kind" on bitcoin.

I Watched both days of the hearings in New York (You can watch them here: http://www.totalwebcasting.com/view/?id=nysdfs  ).  I wasn't too concerned with the hearings.  To me I walked away with the imrpession that yes bitcoin will be regulated but not over regulated to the point that it hurts innovation or the growth of bitcoin.

I would agree that if you do want bitcoin to go mainstream and be a day to day means of tranactions or something everyone ueses, then yes there needs to be a certain level of rules and safeguards in place.  Regulation itself isn't a problem, it's over regulation that would be problematic.

I guess we will have to wait and see.... currently I'm optimistic though.

They're going to have a lot of difficulty regulating it.

Why because a regulator, on TV said so?  

A regulator's idea of not over regulating and the entire rest of the world's idea of not over regulating are two different things.  

I'm no expert on obtaining a money transmitter license but sure that sounds pretty harsh... with that said, as bitcoin becomes more mainstream and more people use it. The days of a regular joe with little finincal backign being able to start up an exchange are long gone.  You want to be something like an exchange that handles hundreds of millions in transactions then youll need quite a lot of finincal and business bakcing to do so  (see coinbase or circle for example).

Is it perfect...of course not.

Neither coinbase nor circle have a money transmitter license in any state.  I am not saying they need to (that is for their legal counsel to decide) just pointing out they don't have one.

Did it occur to you that regulation often is used by big entities (think banks, PayPal, WU) are a very cost effective mechanism of killing innovation?  The same entities which donate heavily to the campaigns of public officials, who then appoint the regulators who write the regulation and make sure to not "over-regulate". With the right "donations" the Chases, Western Unions, and VISAs of the world could put the barrier so high that it takes licensure off the table for entities with less than a billion dollar market cap.  That would make the only legal players in the US Bitcoin space ... the exact same players in the US financial space.   Regulation hard at work protecting ... the bottom line of old money enterprises.

Will that happen?  Who knows however I wouldn't be so naive to think NY is looking to pass "smart regulation" just because a suit said so on TV.  Look at the rest of the licenses in NY to get an idea of their track record on smart regulation (liquor license?, taxi medallion?, etc).   Also what would he say "most likely we are clumsily going to set the bar so high as too kill off innovation in NY and the United States and drive the revenue, jobs, and innovation overseas"?

I will leave you with words from the horses mouth

I laugh at government attempts to regulate Bitcoin. What are they going to do? I can't see a way for it to work unless they forced the devs of the wallet client to their will, but then you could just go through another wallet. Flawed thinking.

http://www.villagevoice.com/2013-09-18/news/benjamin-lawsky-new-york-state-department-of-financial-services/

They can order your mom to kick you out of her basement. Thats enough to kill bitcoin........ if all bitcoiners have the same thinking as you do.

I wish I could laugh, but the US government could kill bitcoin practically stone dead if it wanted to. What would happen to bitcoin price if online retailers in US suddenly couldn't take it? Where would all the transaction fees that miners will need to survive in the future come from? Narcotic sales? We all saw how that ended :(

Bitcoin needs regulation, just sensible regulation. Whether that happens or not I don't know. It certainly won't happen in Russia or China. US and Europe and rest of Asia have good chance.

I only finished watching the hearings yesterday and they turned out much better than I thought.

Lawsky was much more level headed than some of the public comments he's made. I think there's a good possibility he acts much like the rest of us when we dug into the technology for the first time. Amazed. He mentioned once during the testimony about how his head was exploding. That is not a comment made by someone not impressed b by something.

People in his position run the risk of appearing like a fool or a tool for the rest of history by going up against something like Bitcoin. The analogy of those against the Internet itself decades ago is not lost on him I'm sure.

Considering they already have a proof of Bitcoins being used for illegal activities (Silk Road), they will regulate the shit out of Bitcoins.

Exchanger will probably (just like brokers and banks), be obligated to keep records, report big transactions and "suspicious" activity. From that point on things are going to get worse for Bitcoin user in terms of privacy if compared to cash.

When cash is on hands, you can spend it anywhere you want for anything you want without a trace. When BTC is "on hands" and since user's BTC address will be known to regulating authority, they will know exactly where user spends bitcoins and they do not need a warrant for that, it is all in the public ledger.

Remember, one may not be able to fully regulate the crypto, but they sure as hell can put the foot down on those who use them.


In the end, 'human factor' is decidedly weak in the internet community. Just look at snowden or charlie and other cryto-jesus wannabes.

Might want to consider reality very carefully before thinking you can try to off somebody while sipping soy latte and typing on a laptop in starbucks.

Fincen had their chance to put the foot down on miners and users today.

Nope. They're safe. Game over.

its impossible to regulate a decentralised worldwide network
let them try

It's possible for them to frustrate it though. If they see and understand the opportunity, then that is substaintially different to them seeing some random risk from something new they don't understand.

Key to wider adoption, will be that it's simple access. If you can walk to your local corner store and give money in exchange for the confirmation that transfers BTC to you, then that's a big difference from what we have now with exchanges that are rather a gamble to use.

If regulation is simply a requirement for KYC as people move in and out of fiat, then that's as expected. If regulation is instead made in error to pander to the concerns of ye olde banks losing market share, then that could be a real problem relative to what Bitcoin can offer the wider economy. The NY Hearings panel seem to have made key points and the questions asked were sensible, so I hope other regulators worldwide are becoming wise to what Bitcoin is beyond just currency|commodity.

The atms are going to play a huge role in this.

Now getting a hold of some coin is trivial. Liquidity is going to improve substantially.

Everyone wants to regulate bitcoin.  Beyond the anti money laundering know your customer stuff that exchanges already have to do, I don't see what other options there is, other than making it a crime to use them.

The promise of ZipZap CashCoin in the UK looks even simpler than ATMs.

Obviously, people need to be able to both buy AND spend bitcoin easily, for this to go mainstream. Also, perhaps worth noting the price of BTC won't be unaffected by merchants initially opting for immediate exchanging BTC to fiat; only later when merchants hold some coin and if investors look to BTC for longer term return, will we see a true stable value found.

Snapcard promises to buy you anything being sold on the Internet. Gyft card is right in there as well.

Snapcard just bought a new Mercedes for someone. The only way it gets better is when brick and mortar starts mass acceptanc.  It's coming.

Price seems pretty stable to me at 950. Until the next ramp if course.  :D

Yes, I was thinking if Amazon allowed payments, then flux; but I expect that would happen parralleled by easy options to everyone to buy coin.

If they don't offer any kind of difference on the price why mainstream people will trade fiat for BTC pay the commission and buy the item they want. I still thinking its needed any economic attractive to the mainstream people. 

Did the hearings imply a 2-way bitcoin ATM will be able to come to NYC in the near future? If so, this is huge.

Bottom line is New York can't regulate bitcoin. Sooner they realize that the better.

it will be possible to sell items cheaper for btc since there is no credit card  transaction processing  fees and zero risk of fraud or chargebacks from btc customers

they could shave off a few % for btc users if they were so inclined

This is correct, it's still not practicle for most people to shop with bitcoin, it's actually more expensive for the consumer. Typically people who buy things with bitcoin are spending profits they earned from the exchange rate going up or that they earned from minning.

Bitcoin already has big positives for things like merchants and things like international remmitence. consumers using it at a store though, not so much. Unless you've made profits off of bitcoin.

Will be interesting to see what if anything can be done to make it so consumers would want to buy bitcoins to spend them. Or maybe there's simply enough people who will buy bitcoin and hold them and then spend profits that thats still enough to create a decent sized amount of consumers using bitcoin. who knows.

After reading your posts and reading up on some more things and re-watching parts of the hearing. I've changed my mind somewhat.  I'm still optomistic but certainly not as much as I was a few hours ago.  Thanks for making some great points and explaining it in ways everyone can understand.

You not wrong but it's worth noting that current options are rather pushing consumers away to any alternative that would offer what Bitcoin can.

All the little irritants help Bitcoin:Dealing with Banks is a hassle; Bank fees; Asking their permission to spend your money; Transaction and transmission cost; security of digital wallet v cash on person; potential discounts from businesses anxious to find any way to save money in a crisis; novelty; risk of Government Bail-ins; anxiety about saving; investment relative to 'high-interest' bank accounts giving 0.5%; etc; etc.

Marc Andresen's piece recently detailed the four constituencies; all the pressure is towards Bitcoin; and given what Bitcoin is beyond a store of currency, the prospects of it being used for verified transactions of alsorts, brings with it a very bright future.. so long as Governments aren't afraid of change and innovation which might help with fixing their economic crises.

I dont know about other countries but when I use my debit card or credit card... it just works. No extra fee's no extra steps needed. When I use cash...same thing.


I don't disagree that people are getting more and more weary of banks, and various fees here and there are pissing people off.  But when it comes to your typical day to day transaction, there simply are no fee' on the consumer side.  Except in cases of using plastic on various micotransactions.

The problem is that fiat is not decentralized and is artificially inflated. With Bitcoin (and other altcoin currencies) you can use it for financial transactions and your money does not become diluted by a central authority.

This will be the main driver of consumer adoption as transactions become more streamlined.

I'm sure almighty  Fincen is the best they have.

Right. Being confident is one thing, being delusional and stupid is another. Has the internet ushered in an era of electronic supremacy?

Human factor always drives history. The only ones who are short sighted here, nevermind lacking any real backbone, are the ones squealing 'lol crypto is the leading wave of history' and generally playing crypto jesus.

Regulation will be a fact of life if Bitcoin is to get places in the world as it is. That's just how it is and how it'll be for a long time to come.

It seems to be a faintly unfashionable opinion, but I think money launderers, thieves, drug dealers and hitpeople deserve to be nailed to the wall.

If it's driven underground then it'll always be out there but no one aside from the most committed is going to touch it. Money tends to make normal people conservative in the extreme.

Any national legislator is going to have a careful balancing act as they'll know another country can open its doors and send innovation that way. What I've heard so far is relatively sensible from US authorities. They could easily render it effectively stone dead but seem to be more open minded than I was expecting.

not really ,even if america made btc illegal doesnt mean russia and other competing nations would agree

they might be able to stop americans from using it but it still wouldnt kill bitcoin use in the rest of the world

and america would move on to some other form of payment

Sure. It's a bit like water, it would flow between whatever cracks exist. It would be a shadow of what it could be though.

Perhaps a handful of smaller countries will buck the trend and it would rise until it couldn't be ignored elsewhere. Lesotho or Vanuatu might become Bitcoin hubs just to annoy the global elites.

I expect that economies under stress right now, can't afford to lose out on the opportunities that Bitcoin will likely provide. There's a good chance it'll inject a wave of new businesses - regardless of the fact that many new businesses fail, it'll also likely encourage a reasonable number of people with saving to start spending some of that. Even if it's only that it gives online businesses a % saving on banking fees, that fits well with doing well by real business and encourages banks to innovate. I don't think Government need to fear about banks losing out a small fraction of business to Bitcoin, and the potentially innovations that will do the economy real good are worth exploring, especially for financial centres like Sinapore; UK; New York.

I listened to some of the hearings, and I admit that Lawsky sounded more agreeable than I expected. However, it seems clear that his idea of "reasonable" regulation and the average Bitcoiner's idea are far different.

I think many of these regulators picture themselves as Jack Bauer. They think if they don't enforce these onerous regulations, New York will be nuked tomorrow. In other words, they are sincere, but deluded. So they are more than willing to shut down innovation completely because they think they just saved the city from destruction. Of course, the likelihood that their work actually does any good is debatable, but that is the mindset the Bitcoin community has to confront as regulators set their sights on it.

It's quite likely they are looking out to cover any risk they might be held accountable for. If Bitcoin is not to be regulated, then with that comes a requirement that those using it acknowledge that they are not granted the same support from regulators and Government as they might be used to. In a society which accepts that crime is fought by delegating authority to and from Government, then it's to be expected that some regulation will occur - KYC at the point of exchange with fiat, at least is to be expected. It would be unrealistic to expect a sudden discontinuity in the balance of what the public and Government takes responsibility for.

if you'd listen to Richard Zabel and Cyrus Vance, you'd think Bitcoin has none of the problems some think it has:

1.  easy to move large amts of BTC with the click of a button.
2.  it is totally anonymous.
3.  ability to transact round the world with the click of a button.
4.  tx are irreversible which make it ideal as a value transfer mechanism.
5.  an ideal tax haven for those seeking to avoid taxes.
6.  Bitcoin HAS intrinsic value which makes it a store of value.
7.  an ip address does not equate to a person or individual.

edit:

one more thing Zabel says in the Q&A:

Bitcoin is trying to function as cash.  And in many instances has many more capabilities than cash.

NY is a fascist place. They introduced a regulation to ban large sodas last year, so you can't be surprised if they want to regulate BTC as well.
Just forget it. Go to Delaware to register a company, and go to New Jersey to shop.

public statements like this one?
 


come on there're tons of documentations out there they/he could have read before the hearings, the representatives of New York Department of Financial Services  have shown an extreme lack of knowledge on the matter they are supposing to regulate.


It would have taken 30min to read something like the Brito and Castillo paper ("BITCOIN A primer for Policymakers") before the hearings. I didn't  expect they read the Satoshi paper, though is quite accessible, but at least something easier to let them grasp the basics was mandatory imho.

Some good points in this article about regulation and the long-term future of bitcoins.

http://www.forbes.com/sites/timothylee/2013/04/03/four-reason-you-shouldnt-buy-bitcoins/

NYS wants to tax it and like everything overregulate it.
It's the main reason why we are losing business's are leaving and people are leaving this state in droves.
I have lived in NYS and various parts of it my entire life.  The greed and politics of the NY City groups is just sickening.