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One week ago the PBOC issued a notice about regulating Bitcoin exchanges. I don't think that the PBOC changed its mind within some days, so probably only those Bitcoin exchanges that do not register with the authorities will be closed down / cut off from payment services. Strengthening regulation of Bitcoin websites
According to the Telecommunications Act and the Regulation on Internet Information Service, websites that provide Bitcoin services like registration, trading etc should register with the telecommunications regulation authorities.
The telecommunications regulation authorities, following the determinations and punishment opinions of the relevant management authorities, should close down illegal Bitcoin sites according to law. |
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“PBOC, in no uncertain terms, directed third-party payment companies not to do business with bitcoin exchanges in China,” they explained. At the moment, these claims are still rumours, as neither the PBOC nor any payment company has issued a statement to confirm what was discussed and what the outcome was. However, our source revealed they got their information from various channels, including those people who were at the meeting. They went on to say that if and when this happens, people will still be able to withdraw their money from Chinese exchanges, they just won’t be able to deposit new funds. “There’s no need to panic and do a run on the bank. People will still be able to sell their bitcoins for local currency and then withdraw that currency,” they concluded. http://www.coindesk.com/china-bans-payment-companies-working-bitcoin-exchanges-sources-claim/ |
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First the good news. The People's Bank of China's recent statement made clear that a) trading (possessing, buying, selling) Bitcoin is legal the general public have the freedom to participate in Bitcoin trading as a commodity trading on the internet on the condition they carry their own risk. b) that Bitcoin exchanges should follow telecommunicatons and internet regulations and AML/KYC rules (regulation implies that it is legal) Bitcoin websites that act as the main trading platform, should follow the Telecommunications Act and the Regulation on Internet Information Service, and register according to law. Also, because Bitcoin has a higher risk of money laundering and being used by criminals, the Notice requires the relevant organizations to follow the requirements of the Anti-Money Laundering Act and fully comply with the legally required anti-money laundering procedures like KYC and suspicious transaction reporting, to prevent Bitocin related money laundering risks. This is a completly different approach to US regulators. While FinCEN defines Bitcoin as virtual currency the People's Bank of China defines Bitcoin as virtual commodity that "does not have equal legal status with currency, and it cannot and should not be circulated as currency on the market."Although it is called currency, it is not issued by a monetary authority, it does not have the status of legal tender and obliged payment status of currency, it is not currency in the true sense. Bitcoin is a specified virtual commodity, it does not have equal legal status with currency, and it cannot and should not be circulated as currency on the market. Contrary to FinCEN, that strictly limits the general public's use of Bitcoin to the purchase of goods or services, China may limit the use of Bitcoin as medium of exchange. Bitcoin can still be used as a commodity like gold. |
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Bitcoins sind ja auch noch keine Währung, sondern die limitierten, unfälschbaren digitalen Coupons in einem globalen dezentralen Werttransfersystem und damit zunächst einfach nur ein Tauschmittel.
Sobald sich dieses System weltweit auf breiter Ebene durchgesetzt und sein Marktpotential ausgeschöpft hat, wird sich auch der Kurswert stabilisieren, und das Tauschmittel wird nach dem Regressionstheorem des Ludwig von Mises zu einer echten Währung werden.
Bitcoin muss vermutlich beides werden, um erfolgreich zu sein: Eine Anlageklasse wie Gold. Und ein Zahlungsmittel. Die Wahrscheinlichkeit, dass Bitcoin scheitert, ist allerdings noch immer um einiges größer als ein Erfolg als Währung. Das bedeutet aber keineswegs, dass man nicht in Bitcoin investieren sollte. Peter Thiel rechnet mit 80 Prozent Wahscheinlichkeit mit einem Scheitern und investiert trotzdem. 20% Erfolgschancen bedeuten, dass der Kurs zumindest das Potential haben muss, 5 mal höher zu sein als zum Kaufzeitpunkt, um zumindest ein ausgeglichenes Glücksspiel zu sein. Bei Bitcoin kann man - für den Fall Erfolgsfall - sogar mit einer 1000-fachen Steigerung des Werts ausgehen. Im Erfolgsfall kann man mit einer ähnlichen Marktkapialisierung wie Gold rechnen. 1 BTC wäre demnach ca. $1.000.000 wert. (von Raoul Pal, The Global Macro Investor berechnet) http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2013/11/Bitcoin.pdfEtabliert sich Bitcoin als Anlageklasse, wird es höchst wahrscheinlich auch als Zahlunsgmittel erfolgreich sein. Kann sich Bitcoin als Zahlungsmittel durchsetzen, wird es sich auch als Anlageklasse behaupten. Scheitert Bitcoin als Anlageklasse (nach einem massiven Crash), wird Bitcoin auch als Zahlungsmittel seine Glaubwürdigkeit verlieren und aufgrund der geringen Menge an Bitcoins mit geringem Wert höchstens noch für Mikrotransaktionen nützlich sein. Scheitert Bitcoin als Zahlungsmittel (z.b. weil durch die hohe Volatilität Bitpay zahlungsunfähig wird), scheitert Bitcoin auch als Anlageklasse. |
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I'm not implying the guy is Satoshi, just saying that we probably figured out who had the privkey's for that address without writing a bad paper in the process. When you look at the guys resume it's not surprising he would have heard about it early on and been interested - security consulting.
It's official for more than a month. I can't blame the "scientists" for having the suspicion that Dustin Trammell is Satoshi. I thought so too, because the owner of 12higDjoCCNXSA95xZMWUdPvXNmkAduhWv mined a coin when the blockchain was only 10 days old, just one day after Satoshi sent his very first test transaction to Hal Finney. I blame them for connecting the owner of this address to SR though. Facts we know for sure: Dustin D. Trammell a.k.a. I)ruid was a member of 'The Cryptography Mailing List" and (one of) the first miner(s). He is the owner of 12higDjoCCNXSA95xZMWUdPvXNmkAduhWv and dumped his coins in June 2011 (worth $1.7m then) when Bitcoin was very volatile (after the first media attention of Silk Road and Bitcoin) on Bitcoin OTC. https://bitcointalk.org/index.php?topic=311216.0It's not suprising that his coins went throgh SR because back then demand for Bitcoin was mainly driven by SR users. It's very likely that he sold to people who spent their coins on SR. |
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I am trying to find simple, layman understandable, UK laws on operating an escrow service.
I am making the assumption that the UK laws that apply to Fiat currencies (ie UKPOUND) will also apply to BTC escrows.
I would be very grateful if anyone could provide me some basic details or point me in the right direction.
In addition, if the escrow service was offered worldwide, would this mean other countries regulations/laws would also apply (or be wise to abide by)?
Thanks
Ford
If you want a simple answer take a look at existing escrow services like www.transpact.com They are registered with - the Financial Conduct Authority as authorised payment institution - HM Revenue & Customs as a money services business You can find more information if you search for 'UK Payment Services Regulations' e.g. here: http://www.fca.org.uk/firms/firm-types/payment-services-institutions/psr-faqs |
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Enforcing said rulings however, may be a problem. This requires the access of personal information for starters, which currently a large portion of Bitcoin users do not want/like to do.
I would start with standard contracts for currency exchange and online auctions. The contracts would not be more complex than the terms of sites like localbitcoins, bitmit or bitcoin.de. The arbitration court would have the same role as the escrow service of e.g. localbitcoins.com, except one difference: Our business model is only focused on dispute resolution. Unlike escrow services we never hold any customer's funds, and that's a big regulatory advantage. Enforcement can be done easily with cryptographic signatures: a) 2-of-3 multi-signature transactions (slow and expensive, not widely supported yet) https://en.bitcoin.it/wiki/BIP_0011 https://blockchain.info/wallet/escrow b) a private key encrypted using Shamir's Secret Sharing (2 of 3 shares to decrypt the private key) http://en.wikipedia.org/wiki/Shamir%27s_Secret_Sharing |
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they will spend their own money and try to make money sending it very slowly over time.
I doubt that, it would be very risky for a payment processor because of high volatility. Your business model would be speculation, not payment processing. they say: BitPay consolidates market depth from multiple exchanges to provide buyers with a bitcoin best bid (BBB) exchange rate. |
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What do you think about founding a (or better more than one) Bitcoin Arbitration Court? - An arbitration court is easy to incorporate (as a non-profit foundation) and you won't need a license to operate an arbitration court - Thanks to the New York Convention (The Convention on the Recognition and Enforcement of Foreign Arbitral Awards) arbitral awards are recognized and enforceable in 146 countries. - Arbitration courts are independent from any national legislation International arbitration is an increasingly popular means of alternative dispute resolution for cross-border commercial transactions. The primary advantage of international arbitration over court litigation is enforceability: an international arbitration award is enforceable in most countries in the world. Other advantages of international arbitration include the ability to select a neutral forum to resolve disputes, that arbitration awards are final and not ordinarily subject to appeal, the ability to choose flexible procedures for the arbitration, and confidentiality.http://en.wikipedia.org/wiki/Convention_on_the_Recognition_and_Enforcement_of_Foreign_Arbitral_AwardsIt would be a more secure and legal alternative to escrow (where a third party holds funds) and can be perfectly used for 2of3 multsig transactions. |
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- BitPay, the world’s largest payment processor for virtual currencies, announces that it has processed its largest bitcoin merchant transaction ever, a single order for $1,000,000 for Kansas City-based bitcoin mining hardware manufacturer Butterfly Labs.- BitPay processed, cleared, and settled the transaction within their normal one business day time frame directly to Butterfly Labs’ bank account.http://finance.yahoo.com/news/bitpay-processes-1-million-bitcoin-133000619.htmlFacts: - BitPay received about 5,000 BTC from unknown and sent $1,000,000 Butterfly Labs. - because of low liquidity and market depth, if somebody sells 5,000 BTC within one day that means the market price will drop. Do you think this transaction was responsible for the price drop on Oct 24? Who would you think could have sent 5,000 BTC to Butterfly Labs apart from themselves? |
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I remember Satoshi sent 10BTC to Hal Finney to test the transaction system, perhaps you are referring to that user?
This is the transaction to Hal Finney (the first transaction ever) on 2009-01-12 03:30:25 http://blockchain.info/address/1Q2TWHE3GMdB6BZKafqwxXtWAWgFt5Jvm3Hal Finney sent the 10 BTC on 2010-11-16 to another address that is still active. There are no connections between '12hig' and Hal Finney's addresses. If it's not Satoshi, then somebody who started mining one day after Satoshi tested the transaction system the first time. |
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There is no information on where the numbers come from. They may be well researched for all I can tell, but they seem almost entirely arbitrary. You are right that there is still a lot of work to be done. We are constantly adding new information. You can find first data about Mt.Gox's company and network risk here: http://imfed.org/ratings/mt-gox-tibanne-co-ltd/ (see how often they had to change their bank, where you could sue them...) The exact numbers are based on facts but are still just an opinion. It is our goal to encourage people to discuss and share information about the specific risks. A lot has already be done in this forum. Our project will only make sense if the ratings are based on well discussed arguments. We are trying to collect and concentrate these arguments. |
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Very interesting that the USA are in this case less integrated than the EU. Paypal prefers 48 different state licenses as Money Transmitter over buying/starting a US bank or credit union. (In Europe they started as an EU-wide licensed E-Money Issuer (based in UK) and now are operating a bank in Luxembourg.) https://www.paypal-media.com/licensesI like the idea of a Bitcoin user powered credit union that provides a regulatory framework for Bitcoin-to-fiat-money transactions but agree with Stephen Gornick that buying a bank is easier (much faster, maybe cheaper as well) than starting your own bank or CU. Maybe this article about Paypal's regulatory situation in 2002 might be helpful: http://www.zdnet.com/news/fdic-decides-paypals-no-bank/121346As MTs need licenses in each state it is possible to register on a state-by-state basis after a regulator complains there. For Paypal, it was the easier way to grow slowly that way. |
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It all depends if they are competent banking lawyers, anything else doesn't matter, I have nothing against banking by itself, I just hate central banking propped up by governments.
It seems that they know the national and European laws and how to deal with the Austrian Financial Markets Authority (FMA). Other exchanges like Bitstamp (Slovenia) or Mt.Gox (Japan, Poland, Delaware) are more likely to be shut down by regulators. It's interesting to see that the only exchange that offers anonymous deposits via Paysafecard or Ukash has built a secure legal framework for their business model. |
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Bitcoin exchange VirWoX is controlled by a well known Austrian law firm that is specialized in banking and business law.
VirWoX is operated by Virtual World Services GmbH in Vienna, Austria, which is owned by HBA Beteiligungs GmbH, an investment vehicle that was registered at the address of law firm HBA (Held Berdnik Astner & Partner Rechtsanwälte GmbH) based in Graz.
HBA was founded by Dr. Guido Held (born 1944), a well connected Austrian lawyer who recently received 4,6 Mio. Euro from the Austrian Ministry of Finance to investigate the failure of the Austrian bank Hypo Alpe Adria. He was president of the Styrian Chamber of Lawyers and candidate for the Austrian Parliament (Link: PDF, page 21) for the Austrian Conservatives (ÖVP). The current Minister of Finance is also member of ÖVP. HBA employs about 50 lawyers with offices in Graz, Vienna and Klagenfurt. Full article: http://imfed.org/2012/12/03/austrian-banking-lawyers-invest-in-bitcoin-exchange/In our opinion VirWoX's business model (trading BTC only with "playmoney currency" SLL) has the lowest risk of being shut down by a government for regulatory reasons. A high profile law firm as official owner (or trustee) should be able to sustain low compliance risk. What do you think? Are banking lawyers the right owners for a Bitcoin exchange? |
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Thanks, that's what I thought but I wanted to make sure. In other words, contracts involving bitcoins are not enforceable in courts.
I'm wondering though, could you sue for breach of contract or something along those lines? And, in my first example, if you did accept $s but insisted on getting the going exchange rate for bitcoins (lets say 100 bitcoins at $11/each, $1100) would you expect the courts to rule in your favor in that full amount?
It depends on the contract and the jurisdiction. Are you talking about a contract to buy or sell BTC or a contract where you buy or sell goods and services and BTC is used as unit of account? Agreeing on a fixed exchange rate would be possible but it has to be reasonable. |
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One is that regulators and the courts would simply ignore what you've done there and assert you are still a securities issuer.
Some regulators understand Bitcoin very well and they know that it is not possible to regulate the bitcoin protocol or shut down the system. That does not mean that nothing within the Bitcoin system is subject to regulation. If you are a professional securities issuer you will stay a professional securities issuer when your securities are denominated in BTC. The question for regulators will always be in what scale you are issuing or buying securities. A p2p loan will be ok in most cases but if you are raising 100.000 BTC for your company publicly the SEC/FSA/BAFIN will knock on your door soon. (btw, thanks Mike for the great speech on contracts and external state, couldn't be in London but saw it on Youtube) Problem: we want to make a negotiable instrument ownership of which is identified cryptographically, but it might be legally problematic:
1. we don't know whether court system will recognize cryptographically signed transfers of ownership among anonymous parties
2. it might be illegal to make such instrument because it is seen as security, which is subject to regulations
Arbitration would be the best way: 1. You won't need a national court 2. Arbitration courts can have there own rules adjusted to Bitcoin 3. the "New York Convention" on the Recognition and Enforcement of Foreign Arbitral Awards is in the most cases internationally better recognized than national courts because this UN Convention has been ratified by 145 countries http://en.wikipedia.org/wiki/Convention_on_the_Recognition_and_Enforcement_of_Foreign_Arbitral_Awards4. Every legal entity can run an arbitration court It's zero cost and only some paper work to form your own Swiss Verein (used by global law firms, maybe the best legal structure for arbitration) http://en.wikipedia.org/wiki/Swiss_Verein5. Arbitration will never be subject to financial regulation We are trying to combine a 2 out of 3 escrow transaction with arbitration. We are using Shamir's Secret Sharing algorithm to encrypt a newly generated private key and only store one of the secret's shares. (when m-of-n escrow transactions are fully implemented we won't need this any more) It is also a big regulatory advantage, it is more secure and it reduces counterparty risk if you do not involve a "trust" or "escrow company" that holds customers funds but leave an encrypted code at an Arbitration court that does not have control over the funds in the escrow account. Arbitration courts with a secret share of a private key can enforce there decisions directly by issuing their share to one of the parties. |
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No
1. BTC itself IS the investment
2. No matter how much BTC are put into circulation, the total amount of BTC is very limited, this limited supply nature will never change, so if the demand changes dramatically, the price will change dramatically
BTC is not only an investment. People do not use it only as a store of value but also as a way to pay for services and goods. It will always help BTC when it is used by more people for new purposes. (It will also help investors if there is more liquidity) We were more talking about investments like depository receipts for equities in the real economy, that could be tradable within the bitcoin economy, rather than a currency peg like the hkdusd peg.
Do I understand correctly that these depository receipts would have to be issued by a central counterparty (like a Bitcoin exchange)? |
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