Possible sale of LTC-GLOBAL site code to someone who wants to run a BTC exchange

[markm]

Maybe you can simply require all issuers to submit notarised affadivits asserting that their asset is fully compliant with all laws rules and regulations pertaining in their jurisdiction?

-MarkM-

I love it, that's brilliant!

An Englishman's home is his jurisdiction, heh heh?

("Scratch an Englishman, find a pirate"? )

-MarkM-

[Korbman]

Or, more likely they'll all ignore it and go on their merry way.

That is 100% what I intend to do. 

[BlackHeartFund]

I am meeting with my lawyers this week to investigate the legality of operating a bitcoin stock exchange, or something along those lines, in Canada. I deal with a global law firm that does a lot of work in the financial sector, so they should be able to provide me with a solid footing.

After the legal issues are sorted out, my main concern is how to create one that is not centralized, and not run by a small group of people. I am already working with some top notch security and hosting people, those problems can be managed fairly simply, if not inexpensively. However I would like to work with others in the bitcoin community to set up a transparent exchange with an accountable board of directors... if you are considering a similar project, we should talk.

Could encrypted bearer-type bonds be a potential solution to the risks of a centralized exchange being disrupted by hostile governments/hackers? Or is an exchange that operates completely via P2P the way we should be heading?

[markm]

Bearer bonds are apparently illegal nowadays in some places (such as the USA apparently? Maybe Canada too?)

I am in Canada I'm interested in what you find out.

I am concerned that coding "securities" into the blockchain could demonise the blockchain, making everyone who conspires to propagate it an accessory to securities fraud or something like that...

(Before you laugh, read up on the Liberty Dollar. A form of domestic terrorism, apparently...)


-MarkM-

[BlackHeartFund]

You're right that we should not attempt to code securities into the blockchain, that's not what I was thinking.

Bearer Bonds are basically illegal to issue everywhere, in the same way that all trades they can't federally regulate are illegal.

It seems to me that the difference is that BTC is not a fiat currency, no government has authority over it, so they can't regulate the types of stocks/bonds that people issue in Bitcoins. What they can control is what companies and individuals inside their borders do... and right now I don't think there are any clear laws in this country that govern this. We will only be taking in and distributing BTC, not exchanging BTC for fiat. We will see what the lawyers say, hopefully we can work within/around the laws of this country.

I will keep you updated, hopefully they are able to come up with a feasible plan for us.

[markm]

Maybe try out the game idea too. Each city on a Freeciv planet in the Galactic Milieu that builds a stock exchange city-improvment should be able to run an Open Transactions server to represent that stock exchange and allow players to play at trading stocks and shares and bonds and so on on that city's exchange...

In fact it might even be the case that having a city that far developed will cost enough in hosting fees as it is that not bothering to have a server set up so people can actually trade on your city's stock exchange would be like all those folk who pay for more hosting than they ever use thus subsidise those who make full use of their quotas. That is, we might not even have to charge extra to set up such a server since the cost of developing a city to such a high stage of civilisation might already cover such costs. (Plus the "usage tokens" for anyone actually using it might pay for it of course so plenty of chance it will seem no extra cost to the city ruler.)


-MarkM-

[burnside]

You're right that we should not attempt to code securities into the blockchain, that's not what I was thinking.

Bearer Bonds are basically illegal to issue everywhere, in the same way that all trades they can't federally regulate are illegal.

It seems to me that the difference is that BTC is not a fiat currency, no government has authority over it, so they can't regulate the types of stocks/bonds that people issue in Bitcoins. What they can control is what companies and individuals inside their borders do... and right now I don't think there are any clear laws in this country that govern this. We will only be taking in and distributing BTC, not exchanging BTC for fiat. We will see what the lawyers say, hopefully we can work within/around the laws of this country.

I will keep you updated, hopefully they are able to come up with a feasible plan for us.

Doesn't matter what you use to buy the security in the US, nor what you use for dividends, etc.  US definition of a security:

Code:

(1) The term "security" means any note, stock, treasury
stock, security future, security-based swap, bond, debenture,
evidence of indebtedness, certificate of interest or participation
in any profit-sharing agreement, collateral-trust certificate,
preorganization certificate or subscription, transferable share,
investment contract, voting-trust certificate, certificate of deposit
for a security, fractional undivided interest in oil, gas, or
other mineral rights, any put, call, straddle, option, or privilege
on any security, certificate of deposit, or group or index of securities
(including any interest therein or based on the value
thereof), or any put, call, straddle, option, or privilege entered
into on a national securities exchange relating to foreign currency,
or, in general, any interest or instrument commonly
known as a "security", or any certificate of interest or participation
in, temporary or interim certificate for, receipt for, guarantee
of, or warrant or right to subscribe to or purchase, any
of the foregoing.

If you're doing anything you see there, you have to be registering it with the SEC.  Doesn't seem to care much what currency you're using.  Could be swapping cats.

[BlackHeartFund]

Only securities issued in the United States have to be registered with the SEC. Canada doesn't have federal security laws, as far as I can tell they are provincial.

[burnside]

Only securities issued in the United States have to be registered with the SEC. Canada doesn't have federal security laws, as far as I can tell they are provincial.

If you dont want to deal with the SEC you need to ban US citizens from using it.

Or operate offshore and ignore their requests.

A company in Canada is not beholden to the SEC.  Though the SEC could relay requests through local enforcement.

As an exchange, complying with the SEC regs is definitely going to fall on the asset issuers, and MarkM had a revelation yesterday that I think is going to work for the exchange, which is, as a listing requirement you have to sign a document stating that you have followed all of your regional laws in the creation of the security.

[markm]

Not just "a document". A notarised affadavit. Because a real notary might balk at notarising something they know is a lie, and because an affadavit is, as far as I know but I am not a lawyer, a sworn statement for court, thus, I am hoping, subject to being nailed for perjury if its not true.

Another thought is, how does lawyer/client privilege hold up in KYC cases if for example a lawyer operates an account on behalf of an undisclosed client?

-MarkM-

[Korbman]

So...the ideas that everyone has provided thus far are great for legitimacy in the eyes of the government. But isn't that what GLBSE was all about as well? Look what happened to him.

@Burnside - You're currently running the litecoin security exchange "underground" I'm assuming? Why can't we continue the same exchange plan under BTC instead of LTC? The only difference between LTC and BTC is popularity...

Guys, is there any security exchange that is currently meeting regulation standards for their government?
There's a reason we invest with bitcoins, litecoins, and the like...it's because we don't have to follow the same governmental rules and regulations that tie us down in the first place. We're free to do and create whatever we want, yet everyone is going back to the consensus that we need government regulation.

I understand that regulations help to hamper scams...I understand that regulations helps established businesses...but that's not why I wanted to work with Bitcoin security exchanges. I came here because I don't have to fight over a mountain of governmental paperwork to create a business. I don't have to work with my bank to figure out funding. I can get creative and build my own business and get funding on the exchanges for a tenth the amount of work and hassle required by the government. Establishing a bitcoin mining business is 100% possible with what we've got going on here...the moment any one of you is able to go into your local bank, say you want a $30,000 loan to purchase ASIC mining equipment, and receive that loan, tell me so I can make a visit to your bank.

Look at what was started by the various community members under GLBSE or MPEx. Do you think half of their ideas could have flourished if they had to spend the amount of time, effort, and money to work through regulations?

I agree that scams are a problem, and some are vastly more obvious than others. I must be a better way to locally regulate the securities without the intervention of SEC, FSA, etc.

[burnside]

With Litecoin Global it's a lot easier to establish it as a game/learning experience.  LTC is a totally different ballgame when it has 1/240th the value, is all speculative, and you can't really buy (much of) anything else with it.

As an educational site, I don't think it'd be wise to do away with the stocks/bonds/funds names.  That's a large part of the education side. 

[Korbman]

With Litecoin Global it's a lot easier to establish it as a game/learning experience.  LTC is a totally different ballgame when it has 1/240th the value, is all speculative, and you can't really buy (much of) anything else with it.

As an educational site, I don't think it'd be wise to do away with the stocks/bonds/funds names.  That's a large part of the education side. 

Though I agree with that, Litecoins can still be exchanged for worldly currencies. From a legal perspective, it doesn't matter if litecoins are a billionth the value of a bitcoin. As long as you convert USD to LTC, park those LTC somewhere and make a return (or loss), it's considered investing.

On the other side of that, if we replace LTC with BTC in your sentence and modify it a bit we can make the same argument
"BTC is a totally different ballgame when it has 12x the value of a Dollar, is all speculative, and you can't really buy (much of) anything with it [compared to government backed currencies]."

[Bitcoin Oz]

With Litecoin Global it's a lot easier to establish it as a game/learning experience.  LTC is a totally different ballgame when it has 1/240th the value, is all speculative, and you can't really buy (much of) anything else with it.

As an educational site, I don't think it'd be wise to do away with the stocks/bonds/funds names.  That's a large part of the education side. 

That may be, but you still can't use anything you can then withdraw again to sell for money - it's a one way street.

If you sell "litecoupons" for litecoins and people exchange them off-exchange it's not on you if you specify those coupons have no redeemable value, its an educational game and not real financial instruments.

If people deposit litecoin the only thing they can do is exchange them for litecoupons they arent allowed to go back to litecoins.

If someone sets up an outside site to trade litecoupons for litecoins again its not your fault.

tl;dr youd better make damn sure that litecoupon exchange site isnt tied to litecoinglobal in any way and they need to comply with AML , tax and all the other nasties - just as ogrr.com does for wow gold

[Bitcoin Oz]

https://bitcointalk.org/index.php?topic=117317.msg1257909#msg1257909

I think the answer lies in the unit of account not being setup a real money in the first place so we need a "gamecoin"

Bitcoin was called a currency by its creator and you cant now say it isnt. Gamecoin is not a currency from  the get go

[markm]

Yeah there always seem to be places where players can sell in-game stuff for fiat, claiming in game's TOS that that is not allowed is maybe not good game design, a game designer I respect (R.I.P.) once told me never include a rule you cannot enforce.

Since you cannot prevent the entire internetz, Tor, i2p etc etc from having some place somewhere where players can sell game items you might as well toss that rule entirely and use blockchain based game-valuables so people can take their game-stuff home with them and even try to pass them off as "currencies" if they so desire.

Its amazing how the Hacker nation's currency "bitcoins" has taken off, big game-currencies fad in early 21st century on the planet known as Earth apparently.

-MarkM-

[DeathAndTaxes]

So...the ideas that everyone has provided thus far are great for legitimacy in the eyes of the government. But isn't that what GLBSE was all about as well? Look what happened to him.

@Burnside - You're currently running the litecoin security exchange "underground" I'm assuming? Why can't we continue the same exchange plan under BTC instead of LTC? The only difference between LTC and BTC is popularity...

Guys, is there any security exchange that is currently meeting regulation standards for their government?
There's a reason we invest with bitcoins, litecoins, and the like...it's because we don't have to follow the same governmental rules and regulations that tie us down in the first place. We're free to do and create whatever we want, yet everyone is going back to the consensus that we need government regulation.

I understand that regulations help to hamper scams...I understand that regulations helps established businesses...but that's not why I wanted to work with Bitcoin security exchanges. I came here because I don't have to fight over a mountain of governmental paperwork to create a business. I don't have to work with my bank to figure out funding. I can get creative and build my own business and get funding on the exchanges for a tenth the amount of work and hassle required by the government. Establishing a bitcoin mining business is 100% possible with what we've got going on here...the moment any one of you is able to go into your local bank, say you want a $30,000 loan to purchase ASIC mining equipment, and receive that loan, tell me so I can make a visit to your bank.

Look at what was started by the various community members under GLBSE or MPEx. Do you think half of their ideas could have flourished if they had to spend the amount of time, effort, and money to work through regulations?

I agree that scams are a problem, and some are vastly more obvious than others. I must be a better way to locally regulate the securities without the intervention of SEC, FSA, etc.

Way to miss the enitre point.  The discussion has NOTHING to do with scams and everything to do with the SEC (or your local equivelent) getting a court order, seizing everything you own and putting you in prison for the next 5 to 10 years for securities fraud.

[Korbman]

Way to miss the enitre point.  The discussion has NOTHING to do with scams and everything to do with the SEC (or your local equivelent) getting a court order, seizing everything you own and putting you in prison for the next 5 to 10 years for securities fraud.

Ah, well gosh jee whiz then this is a super easy problem to fix isn't it? Create a tor hidden service like the silk road and you won't have anything to worry about. And I see you've "missed the entire point" on the definition of securities fraud.

The goal is to find a balance between legality and a safe haven for investors. Going the full hidden route and negating the majority of your problems will ultimately create a problem unto itself, whereas going the full legal route will hinder any community member looking to kickstart their own bitcoin business.

[Bitcoin Oz]

So...the ideas that everyone has provided thus far are great for legitimacy in the eyes of the government. But isn't that what GLBSE was all about as well? Look what happened to him.

@Burnside - You're currently running the litecoin security exchange "underground" I'm assuming? Why can't we continue the same exchange plan under BTC instead of LTC? The only difference between LTC and BTC is popularity...

Guys, is there any security exchange that is currently meeting regulation standards for their government?
There's a reason we invest with bitcoins, litecoins, and the like...it's because we don't have to follow the same governmental rules and regulations that tie us down in the first place. We're free to do and create whatever we want, yet everyone is going back to the consensus that we need government regulation.

I understand that regulations help to hamper scams...I understand that regulations helps established businesses...but that's not why I wanted to work with Bitcoin security exchanges. I came here because I don't have to fight over a mountain of governmental paperwork to create a business. I don't have to work with my bank to figure out funding. I can get creative and build my own business and get funding on the exchanges for a tenth the amount of work and hassle required by the government. Establishing a bitcoin mining business is 100% possible with what we've got going on here...the moment any one of you is able to go into your local bank, say you want a $30,000 loan to purchase ASIC mining equipment, and receive that loan, tell me so I can make a visit to your bank.

Look at what was started by the various community members under GLBSE or MPEx. Do you think half of their ideas could have flourished if they had to spend the amount of time, effort, and money to work through regulations?

I agree that scams are a problem, and some are vastly more obvious than others. I must be a better way to locally regulate the securities without the intervention of SEC, FSA, etc.

Way to miss the enitre point.  The discussion has NOTHING to do with scams and everything to do with the SEC (or your local equivelent) getting a court order, seizing everything you own and putting you in prison for the next 5 to 10 years for securities fraud.

Prison isnt so bad here. More like a holiday camp 

[EskimoBob]

Maybe its time for bitcoin community to stop ego-tripping and stop using big words like securities, currency, corporation, IPO, bond, dividends, exchange etc.
Seriously.
None (most?) of the Corporations here are actually incorporated anywhere on this planet. Copy/pasting some bull shit legalese to a web page is not making your imaginary adventure a Co. Not in this planet.
None (most?) of the CEO's and what not have probably never ever met a RL CEO or owned a small business in the real world (RL).
Most of people here have 0 experience in investing in the real world and zero experience underwriting a IPO. Damn, mots IPO issuers do not even know what those 3 letters really mean and what are the consequences.

I know, most of you say that lets invent something new and do business the new way. Sad truth is that so far we have only seen scammers and thieves blowing the smoke up bitcoin community's collective ass.
If you do not know how business or markets works, you "new ways of doing stuff" are usually childish mistakes that the real world has all ready done, learned from those, fixed the problem and moved on.

How many of you have passed the S 7 exam? How did your S 63 go and for what state?
Do we have any CPA's around here? EU or USA background?

Wipe your tears, boys and girls. Truth is harsh.