Decentralized Currency Issuers May Still Require License

[ShelbyDev]

This is not fun stuff but hard to ignore.

For who's interested about regulation proposals in the US: this article is a bit dated (Feb 2015) but probably still relevant:

"Decentralized Currency Issuers May Still Require License - The first draft of the BitLicense stated that, “controlling, administering, or issuing a Virtual Currency” qualifies as Virtual Currency Business Activity subject to licensing. This remains unchanged in the new draft, and that’s unfortunate."
https://coincenter.org/2015/02/our-initial-thoughts-on-new-yorks-revised-bitlicense-proposal/

I'm not sure how things are going in Europe but I would guess regulation proposals will be fairly similar. From reading multiple articles it sounds like the biggest requirement to get legal will be "KYC" or Know Your Customer.

It's not a matter of "if", but "when" and if we can come up with a system that satisfies some of those requirements we can have a chance to play, otherwise it looks like much of the innovations will be pushed underground.

EDIT: here's the full text of the first New York proposed regulations: http://www.dfs.ny.gov/about/press2014/pr1407171-vc.pdf

Any thoughts?

[username18333]

Great Empire Coin™ (GEC) is the official currency of Great Empire of Earth, is divisible into cents and mills, and has denominations of mega-, terra-, and exacoins. Earth has a heterarchical monetary authority: anyone may “mint” coins through an official channel (e.g., Writcoin) and have these coins certified “Great Empire Coin (GEC)” by the Empire.

Great Empire of Earth > (The) United Nations > (The) United States of America > (The) State of New York

[adhitthana]

Does Satoshi need one too?

[muddafudda]

It's America, who cares?

[username18333]

It's America, who cares?

The government of New York (or [perhaps, more precisely] its lobbyists) likely does.

[muddafudda]

It's America, who cares?

The government of the State of New York (or [perhaps, more precisely] its lobbyists) likely does

Only a very small amount of people in the world reside in New York. I think it's a joke and makes the American financial system look like a bit of a joke.

[username18333]

Only a very small amount of people in the world reside in New York.

Likewise, the financial life of New York is irrelevant as well. 

[kelsey]

decentralised requiring a licience lol you do know the whole point of decentralisation?

[muddafudda]

decentralised requiring a licience lol you do know the whole point of decentralisation?

Yeah it's quite frankly a joke. Coins can be released with full anonymity.

[ShelbyDev]

Yeah it's quite frankly a joke. Coins can be released with full anonymity.

I agree with all of this and indeed coins can run anonymously... just wondering the effect on alt coin developments once licensing becomes a requirement to stay on the legal side of the law.

One of the issues that keeps coming up is the "KYC" aspect to prevent money laundering (is the governments argument). But I guess once you know your customer, there's no more anonymity.

Is there a balance possible?

[username18333]

Coins can be released with full anonymity.

And are likely to achieve ubiquity therefor.  

[tokeweed]

This is not fun stuff but hard to ignore.

For who's interested about regulation proposals in the US: this article is a bit dated (Feb 2015) but probably still relevant:

"Decentralized Currency Issuers May Still Require License - The first draft of the BitLicense stated that, “controlling, administering, or issuing a Virtual Currency” qualifies as Virtual Currency Business Activity subject to licensing. This remains unchanged in the new draft, and that’s unfortunate."
https://coincenter.org/2015/02/our-initial-thoughts-on-new-yorks-revised-bitlicense-proposal/

I'm not sure how things are going in Europe but I would guess regulation proposals will be fairly similar. From reading multiple articles it sounds like the biggest requirement to get legal will be "KYC" or Know Your Customer.

It's not a matter of "if", but "when" and if we can come up with a system that satisfies some of those requirements we can have a chance to play, otherwise it looks like much of the innovations will be pushed underground.

EDIT: here's the full text of the first New York proposed regulations: http://www.dfs.ny.gov/about/press2014/pr1407171-vc.pdf

Any thoughts?

But what about POW coins.. There was no issuer, the coines were mined.

[username18333]

But what about POW coins.. There was no issuer, the coines were mined.

A miner of a cryptographic currency, upon transferring ownership of the "mined" currency, would, presumably, be considered (at least, under the law being discussed) a "distributor" of the currency.

[tokeweed]

But what about POW coins.. There was no issuer, the coines were mined.

A miner of a cryptographic currency, upon transferring ownership of the "mined" currency, would, presumably, be considered (at least, under the law being discussed) a "distributor" of the currency.

There has to be a legal loophole there.

[BSdetector]

Poster of this topic totally clueless.

[sdmathis]

Yeah it's quite frankly a joke. Coins can be released with full anonymity.

I agree with all of this and indeed coins can run anonymously... just wondering the effect on alt coin developments once licensing becomes a requirement to stay on the legal side of the law.

One of the issues that keeps coming up is the "KYC" aspect to prevent money laundering (is the governments argument). But I guess once you know your customer, there's no more anonymity.

Is there a balance possible?

That's the whole purpose of "KYC" laws, to eliminate anonymity. The U.S., EU, China, Russia, and others will eventually try to eliminate anonymous coins through regulation making them useless in most of the developed world.

[MicroGuy]

I think regulation will be limited to the more easily definable targets such as merchants and exchanges. However, the current (and proposed) regulation is itself a stifling blow as it creates another barrier to entry for new businesses, and makes obtaining cryptocurrency more difficult.

The fundamental flaw at this point is people lack the incentive to buy crypto so they can then go out and buy something they could have already bought with the debit card in their pocket. What is the point in taking that extra step?

Regulation just means businesses are less likely to accept cryptocurrencies, and consumers have one more reason not to take that extra and "unnecessary" step of exchanging their fiat.

[ShelbyDev]

That's the whole purpose of "KYC" laws, to eliminate anonymity. The U.S., EU, China, Russia, and others will eventually try to eliminate anonymous coins through regulation making them useless in most of the developed world.

That's indeed the intention of those regulations. Will crypto coins continue to exist without anonymity? I would think so, although it's unclear in the long term how that will affect the evolution of alt coins.

[username18333]

The fundamental flaw at this point is people lack the incentive to buy crypto so they can then go out and buy something they could have already bought with the debit card in their pocket. What is the point in taking that extra step?

Code:

sendfreetransactions=1

Code:

sendtoaddress [address] [balance + amount]

Your “poor” could appropriate a greater portion of the (monetary) value of the GEC economy to themselves.

[ShelbyDev]

I think regulation will be limited to the more easily definable targets such as merchants and exchanges. However, the current (and proposed) regulation is itself a stifling blow as it creates another barrier to entry for new businesses, and makes obtaining cryptocurrency more difficult.

The fundamental flaw at this point is people lack the incentive to buy crypto so they can then go out and buy something they could have already bought with the debit card in their pocket. What is the point in taking that extra step?

Regulation just means businesses are less likely to accept cryptocurrencies, and consumers have one more reason not to take that extra and "unnecessary" step of exchanging their fiat.

Some interesting arguments and I thought about it for a while and I agree that the comparison of buying power of alt coins vs debit/credit cards lacks incentives for the every day user. Some advantages I can thinks of (feel free to add to the list) are:

• Low transaction cost
• International transactions
• Fast transactions
• Low entry threshold (no money/paperwork needed to setup an account)