Saying "the medium of exchange is a gray area, so securities law doesn't apply" wont keep you out of court if you are the first one over the hill to test it. The legal fees just to have your day in court would bankrupt most small companies. Think of it this way: there is no law that says suffocating someone with a plunger is illegal, but I suspect any judge can apply existing laws to that situation. The fact that is a gray area means it has risk, not that its free from risk. Which is why some companies would be hesitant as stated earlier.
I'm not disagreeing with you, I'm just saying that there aren't any specific securities laws that deal solely in cryptocurrencies. There are definitely generic laws that can be manipulated to cover any form of currency exchange.
In the US, the Securities and Exchange Acts of 1933/1934 are legally worded to cover securities that are offered "using the means and instrumentalities of interstate commerce". Pretty vague. Using it as the basis of a filing for the prosecution is probably going to get it on the docket. If it does apply, then Rule 144 alone decimates Bitcoin stock exchanges since direct placement of those securities would have a holding period and resale restrictions (legal compliance opinions, transfer agents, street name registration, percentage sale limitations, etc).
Exactly. Securities Law of 1933 is all about pushing transparency, and 1934 is all about giving the SEC broad power to regulate the sale of any security. I'm sure any lawyer worth their salt could use these laws as a basis of attack for taking down GLBSE because it acts as a Security Exchange. The SEC seeks to regulate all types of investment schemes. The question is, is GLBSE that big of a deal to make it worth the SECs time to go after it? By and large, bitcoin is still very much a niche market with 200,000
global active users on Mt Gox (used as my basis since it's the most popular exchange,
https://mtgox.com/press_release_20120831.html) trading for normal currencies. Let's say there are 1 million active users throughout the world (which isn't too far fetched I think)...that's a sexy .015% of the total population.
On the other hand, the Jumpstart Our Jobs Act of 2012 makes it much easier to crowd source funding for small businesses without the strict registration requirements. This is where I would start if I was the defense. You can make the case that these businesses are exactly covered by the JOBS Act. Just stay under $10 million in funding and keep less than 500 unaccredited investors (or 2000 accredited and unaccredited investors). Also make sure you aren't taking more than 2% of someones yearly income or more than $10k from someone making $100k/year. I'm sure other rules apply.
I partially agree with this, mainly since the JOBS Act is all about helping businesses get funding, but a business started within GLBSE and solely based on Bitcoins wouldn't be subject to the same stipulations. This is because Bitcoins aren't a
recognized form of currency under the government, it isn't backed by any entity or asset, and the value of the coin is solely determined by users of the coin. The business may have the
equivalent of $10 million in funding one week, but $8 million the next..or $12 million the week after that. The regulations would probably come into play when the business exchanges Bitcoins for regulated currency, but I think the IRS would be quite a bit more interested in that than the SEC.
Anyway, Securities Law is INSANELY complex.
As far as the GLBSE BlueMarket, I think its a great idea. But the requirements should be simpler than a fully reporting company on the Nasdaq OTCBB or else the cost would be about the same to maintain both listings. (i.e. expensive).
Agreed. I came to GLBSE because I had an idea and I wanted to see if I could make that idea come to fruition. Adding tons of requirements and restrictions that bars those of us without an established business defeats the point of GLBSE and Bitcoin.
