As many of you know, in addition to being an attorney in private practice, I am Chairman of the Bitcoin Foundation's Regulatory Affairs Committee.

The Foundation was invited to a private conference held yesterday by FinCEN in Washington, D.C.  In attendance were high-level representatives from FinCEN, IRS, FDIC, Federal Reserve, OCC, FBI, DEA, Secret Service, Department of Homeland Security and more.  It was a packed house.  FinCEN did an impressive job of bringing together in one room nearly all of the agency stakeholders in the Bitcoin issue.

At the conference, Patrick Murck, Peter Vessenes, Brian Klein, Jim Harper and I each gave presentations totaling about an hour.  We canvassed Bitcoin the protocol, bitcoins the currency, regulatory challenges, enforcement and investigation methodologies – everything under the Bitcoin sun.  We then responded to questions from the agency representatives for about an hour.  Our goal was to begin a frank dialogue with the federal government about Bitcoin and dispel some of the publicly-available misinformation.

It was a smashing success.  

First and foremost, we received a very friendly reception.  The attendees were engaged and interested in learning about distributed finance in general and Bitcoin in particular.  Each Foundation member lit the subject matter through his own lens.  Peter walked the government through a discussion of the core technology.  Brian, an ex-federal prosecutor, discussed investigative methodologies.

I, of course, discussed regulatory challenges.  I discussed some of the ways in which the regulatory landscape in the US did not achieve the government’s policy goals.  In particular, I spent a few minutes just going through the ambiguity in the March FinCEN Guidance, and emphasized the importance of supporting innovation in the Bitcoin industry.  I hit some points very hard – like how the regulatory environment has disincentivized businesses from launching in the US and from servicing US customers.  I also discussed how some businesses were simply picking up and leaving the US entirely.

Our message was straightforward: It is critical that the industry and the regulators work together to create a safe and sane regulatory environment for Bitcoin businesses in the United States.

To be sure, they asked the tough questions.  The agencies have some very real and legitimate concerns.  We often had to give the tough answers.  By the time we were through, though, many of the representatives approached me and some the other presenters to say that they had a much better understanding of the industry and the technology.  I don’t think anyone believes we achieved world peace, or solved the regulatory challenges once and for all.  

We started a dialogue – the first step in understanding each other.

A Federal Court yesterday agreed with the SEC, holding that, for the purposes of the definition of a security, Bitcoin is money:

The SEC argues that the BTCST investments are both investment contracts and notes, and, thus, are securities.

The term “security” is defined as “any note, stock, treasury stock, security future, security-based swap, bond…[or] investment contract…” 15 U.S.C. § 77b. An investment contract is any contract, transaction, or scheme involving (1) an investment of money, (2) in a common enterprise, (3) with the expectation that profits will be derived from the efforts of the promoter or a third party. SEC v. W.J. Howey & Co., 328 U.S. 293, 298-99 (1946); Long v. Shultz Cattle Co, 881 F.2d 129, 132 (1989). First, the Court must determine whether the BTCST investments constitute an investment of money. It is clear that Bitcoin can be used as money. It can be used to purchase goods or services, and as Shavers stated, used to pay for individual living expenses. The only limitation of Bitcoin is that it is limited to those places that accept it as currency. However, it can also be exchanged for conventional currencies, such as the U.S. dollar, Euro, Yen, and Yuan. Therefore, Bitcoin is a currency or form of money, and investors wishing to invest in BTCST provided an investment of money.

I don't think anyone should be surprised by this.  Of course an investment denominated in BTC is still an investment. No surprise there.  Unfortunately, this will have consequences far beyond the securities laws, and will spill into the payments sector.  It is precedent, and regulators will likely refer to this opinion, and those following it, to support their regulation of bitcoin as a transmission of money.

TL;DR: Bitcoin is money now, for the purposes of the securities laws.  MSB/MTB regulators will also likely rely on this opinion to support their regulation of Bitcoin activity in their jurisdiction, too.

http://www.courthousenews.com/2013/08/06/Bitcoin.pdf

The Foundation is distancing legitimate digital currency businesses from Liberty Reserve:

Here is the full text of the comments on Scribd: http://www.scribd.com/doc/154799860/Bitcoin-Foundation-Comments-on-Liberty-Reserve-Special-Measures-NPRM

And some words from Patrick on CoinDesk: http://www.coindesk.com/bitcoin-foundation-fincen-should-clarify-all-virtual-currency-transactions-arent-inherently-suspect/

http://www.fincen.gov/news_room/speech/pdf/20130613.pdf

Analysis forthcoming...

I'm in the middle of a legal research project that involves assessing risk of enforcement against the businesses selling unregistered, restricted securities on this board and  stock exchanges like Bitfunder, BTC-TC, etc.

Any idea where can I find a breakdown of each securities' market cap, or at least a reliable list of the total shares outstanding?

Thanks in advance.

Hi everyone. I'm a business attorney in New York City.  I've been involved in cryptocurrency for some time now.  I hope I can be of some help on this board.  I can't give you legal advice via posts, but if you PM me, we may be able to discuss the particulars of your business.

Full disclosure: There's no such thing as an expert or specialist in bitcoin law, and I am certainly not one.  I'm an attorney with experience in securities, civil fraud and other financial matters with particular emphasis in the tech realm.  There is almost zero judicial and legislative guidance out there for us practitioners, so many of us are trying to keep ourselves out in front of every new development as they arise.

I'm daily fascinated by what bitcoin is and what it can become, and I'm looking forward to becoming part of the community!

Hello everybody.  I'm an attorney that works with start-ups and the finance industry.  I tackle formation issues, together with intellectual property and commercial matters.  I'd just like to introduce myself.

I've lurked here for a bit and read a lot of people asking for a referral for a lawyer who is an expert in US bitcoin law.  I'm sorry to say that there aren't any.  In fact, there's really no such thing as bitcoin law, in the traditional sense.  There are a few rules and some guidance given by FinCen, but almost nothing from state authorities and even fewer actual, live cases.

There are plenty of attorneys who specialize in financial services regulation, but those of us who are interested in bitcoin know what we don't know - "known unknowns" as one of our leaders once put it.  

I hope that I can help around here!  I can't really give legal advice on the boards because I'm working with limited information.  Nonetheless, I will provide general information as best as I can.