2013-05-09 TheGenesisBlock.com - US Regulator’s Confusion Around Bitcoin Is Exac

[Stephen Gornick]

US Regulator’s Confusion Around Bitcoin Is Exactly Why No One Wants Them Involved
by Phil Archer
TheGenesisBlock.com

[CFTC's Bart Chilton] stated on bloomberg.tv: 'In essence, we’re talking about a type of shadow currency, and there is more than a colorable argument to be made that derivative products relating to Bitcoin falls squarely in our jurisdiction.'
[...]
Bitcoin clearly does not derive its value from the future purchase of an underlying asset. Therefore, if the CFTC plans to regulate bitcoin, they must consider bitcoin either a commodity or forex, with the intent to regulate bitcoin forex or bitcoin derivatives.
[...]
Since bitcoin is not the currency of a foreign government, but rather the first global currency, it would seem their power to regulate bitcoin as forex does not apply.
[...]
Bitcoin being declared a commodity would create an interesting contrast with fincen’s March guidance requiring bitcoin exchanges to be registered as Money Service Businesses (MSB).
[...]
So it seems the US Government has no idea how to classify bitcoin: is it a currency or a commodity? Any CFTC ruling would likely declare bitcoin a commodity and put it in a Schrodinger’s Cat state – it would coexist as both a currency and a commodity.
[...]
FinCEN was forced to create a new definition for virtual currencies, and we expect the CFTC to do the same. However, those living in fear of what the CFTC’s decision may hold should have solace in the fact that any regulations will be largely unenforceable anyway.

 - http://www.thegenesisblock.com/us-regulators-confusion-around-bitcoin-is-exactly-why-no-one-wants-them-involved/

[Stephen Gornick]

Now all we need is for the SEC to define Bitcoin as a security and we'll have a regulatory trifecta.

[cypherdoc]

well written and clearly elucidates the conundrum the regulators face.

not to mention the impracticality of any solution introduced.

[giszmo]

Now all we need is for the SEC to define Bitcoin as a security and we'll have a regulatory trifecta.

(Schrodinger’s Cat)²

[Gabi]

Great article!

[kjlimo]

Now all we need is for the SEC to define Bitcoin as a security and we'll have a regulatory trifecta.

(Schrodinger’s Cat)²

you had me at "largely unenforceable anyway"

hahaha, glgl

[kiko]

Just FYI, from a few days ago:

http://www.ft.com/cms/s/0/b810157c-b651-11e2-93ba-00144feabdc0.html

The CFTC regulates derivatives contracts and, under Dodd-Frank financial reform, has sweeping authority to oversee retail foreign exchange dealers.
<snip>
One person familiar with the discussions said Bitcoin would not become subject to CFTC jurisdiction unless it becomes the basis for a derivatives contract. The use of Bitcoin to pay for ordinary goods is outside the commission’s bailiwick.
Leveraged Bitcoin transactions that settled in more than two days – so-called “rolling spot” transactions – would also fall under CFTC jurisdiction, the person said.

[marcus_of_augustus]

You know to any reasonable outside observer this actually looks really, really bad for govt. inc. If they harboured any doubts or inklings that maybe the gubmint was getting a little too over-bearing now they are they thinking ...

"WTF, the CFTC wants to regulate on-line gaming tokens?!" "Have they lost their minds and gone full retard police state on us?"

"What about MF Global and Bernie Madoff and the bank bailouts, who was regulating them?!"

[cypherdoc]

Bart Chilton has never regulated a thing in his life and now he chooses to regulate a "toy currency"?

[Logik]

Bitcoin can never be regulated.

Businesses trading bitcoins can be regulated; but even that is a misleading statement, since most businesses trading anything are already regulated in some way or another. If we really boiled it down, we would say that businesses already being regulated, may or may not be regulated differently depending on the nature of the business they conduct (ie. how they may use bitcoins to conduct their business) - which is a largely pointless and uninteresting conclusion.. ie. one that you would likely never see in the mainstream press since it would cause people to fall asleep.

I'm more interested in bitcoin / money laundering regulations, since they would shed some light on the conspiracy theories regarding the CIA (if they CIA does indeed wish to use bitcoins to move clandestine funds around then they would be inclined to use whatever influence they have to oppose money laundering regulations?).

 

[ronfinberg]

Beyond financial regulation, I think accounting rules/regulation is a much more important area that needs to be addressed. 
areas that need to be answered
1) effects on balance sheets
2) collecting taxes
3) paying suppliers with bitcoins and being able to file as expenses

Not an accountant myself, just thinking aloud, so I figure this list is quite long.  Obviously there are cross currency accounting standards that exist that can be used as a framework.  But lets face it very few domestic businesses are ever involved with multiple currencies. But this changes as more merchants decide to accept bitcoins.   They could convert immediately to the local fiat, but this would seemingly go against the long term point of promoting bitcoin usage.

(side question - when will the spell check on the forum stop underlining in red 'bitcoin' ?)

[matonis]

You know to any reasonable outside observer this actually looks really, really bad for govt. inc. If they harboured any doubts or inklings that maybe the gubmint was getting a little too over-bearing now they are they thinking ...

"WTF, the CFTC wants to regulate on-line gaming tokens?!" "Have they lost their minds and gone full retard police state on us?"

"What about MF Global and Bernie Madoff and the bank bailouts, who was regulating them?!"

LMAO. On-line gaming tokens. Full retard police state.

Which government agency has responsibility for regulating options and calendar spreads on air guitars?
Is it the cool long-haired regulator?

[Lethn]

I'll tell you what this actually is, it is of course politicians being as stupid as ever, but it is also that they'll be desperate to not officially acknowledge Bitcoin as a currency, if they do, then that means there will be all sorts of different rules involved with Bitcoin and they may even have to declare it as a currency entirely seperate from the state.

You can bet that the central banks won't be having that because it would be a direct threat to them.

[cypherdoc]

You know to any reasonable outside observer this actually looks really, really bad for govt. inc. If they harboured any doubts or inklings that maybe the gubmint was getting a little too over-bearing now they are they thinking ...

"WTF, the CFTC wants to regulate on-line gaming tokens?!" "Have they lost their minds and gone full retard police state on us?"

"What about MF Global and Bernie Madoff and the bank bailouts, who was regulating them?!"

LMAO. On-line gaming tokens. Full retard police state.

Which government agency has responsibility for regulating options and calendar spreads on air guitars?
Is it the cool long-haired regulator?

Now now Jon, let's not get too testy here.

Otoh, EVEN Michelle Carrera-Cabruso was dumbfounded by the long haired cool regulators assertions that he would regulate her savings account and that she should be glad he'd do it.

She has been one of CNBC's greatest Babe-Apologists since the crisis of 2008.

I'd call that a bitch slap.

[cypherdoc]

I'll tell you what this actually is, it is of course politicians being as stupid as ever, but it is also that they'll be desperate to not officially acknowledge Bitcoin as a currency, if they do, then that means there will be all sorts of different rules involved with Bitcoin and they may even have to declare it as a currency entirely seperate from the state.

You can bet that the central banks won't be having that because it would be a direct threat to them.

But but if it's not official, how can it be official?