So, stock exchange is not allowed in usa using bitcoins?

[Puppet]

You can sell your gigamining bonds to me or anyone you want, and gigaVPS wouldnt have a clue

That will be the case if I sell for fiat currency. In bitcoins is different. He will know if he cares to know. Information for every bitcoin transaction becomes publicly available in 10 minutes via the information for the blockchain. Again, only people directly involved will know what this transaction is about. Again, there is no need for a trusted middleman to verify identity of transacting parties.

What are you blabbering about? It doesnt matter if you traded your gigamining bonds with me for bitcoin, swapped them for other securities,  sold them for fiat. a pack of smokes or a date with your sister. As the owner of the bond, you could  sell them to whoever you want for whatever you want. GigaVPS would have  no say, yet his obligation would remain to the bondholder.  Thats a security. And bitcoin doesnt change a bloody thing about it.

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[becoin]

As the owner of the bond, you could  sell them to whoever you want for whatever you want.

Of course, I can. I may need issuer's permission or not, depends on my contract with him. Certainly, I don't need your permission as a regulator to do that. Bitcoin changes almost everything. Find another job!

[galambo]

3) Work for within the system.  
Get a broker dealer license, be regulated by SEC.  Comply with all regulation including KYC and AML.  Essentially the MtGox model except for securities.  A broker dealer can trade any security even "unlisted" securities (meaning not filed with SEC).   This is the so called pink sheets.   In theory a broker could accept Bitcoins (potentially only accepting Bitcoins) and allow trade in Bitcoin denominated securities for its private clients.   This option would require some significant legal research and has the highest cost.  It probably isn't viable at this point but if Bitcoin continues to grow it likely is inevitable.

Complying with the law is the best option, and I'd like to enhance your knowledge of this process. A clean, legal SEC-registered OTCBB shell company will run higher than most people's idea of pocket change. Please do your Due Diligence, YMMV. Also, you certainly must be registered with the SEC, unless you are classified under a Regulation D exemption.

[DeathAndTaxes]

3) Work for within the system.  
Get a broker dealer license, be regulated by SEC.  Comply with all regulation including KYC and AML.  Essentially the MtGox model except for securities.  A broker dealer can trade any security even "unlisted" securities (meaning not filed with SEC).   This is the so called pink sheets.   In theory a broker could accept Bitcoins (potentially only accepting Bitcoins) and allow trade in Bitcoin denominated securities for its private clients.   This option would require some significant legal research and has the highest cost.  It probably isn't viable at this point but if Bitcoin continues to grow it likely is inevitable.

Complying with the law is the best option, and I'd like to enhance your knowledge of this process. A clean, legal SEC-registered OTCBB shell company will run higher than most people's idea of pocket change. Please do your Due Diligence, YMMV. Also, you certainly must be registered with the SEC, unless you are classified under a Regulation D exemption.

OTC-BB isn't the same thing as the Pink Sheets.  OTC-BB stocks stocks must register with SEC, unlisted securities do not.  The pink sheets are simply a centralized third party which maintains a list of independent brokers and the unlisted securities they trade.  Note it isn't a requirement for an unlisted security to be on the pink sheets.  Think of pinksheets as like a digital phonebook of brokers.  Say you want shares of unlisted security xyz.  Your broker can use the pinksheets to find that broker abc has shares of xyz (it may be the only broker in the world that does).  Your broker can then buy shares from broker xyz and simply assign them in your account.  Remember only broker dealers can trade in unlisted securities.

Reg D BTW doesn't relate (directly) to what securities broker dealers can TRADE.  It deals with the issuance (i.e. selling new shares) of securities.   While GLBSE did multiple things normally these are separate actions.  Reg D deals with the legality of a company issuing new securities.  Broker dealers are required to trade unlisted securities.

Edited for clarity.

[galambo]

OTC-BB isn't the same thing as the Pink Sheets.  OTC-BB stocks stocks must register with SEC, unlisted securities do not.  The pink sheets are simply a centralized third party which maintains a list of independent brokers and the unlisted securities they trade.  Note it isn't a requirement for an unlisted security to be on the pink sheets.  Think of pinksheets as like a digital phonebook of brokers.  Say you want shares of unlisted security xyz.  Your broker can use the pinksheets to find that broker abc has shares of xyz (it may be the only broker in the world that does).  Your broker can then buy shares from broker xyz and simply assign them in your account.  Remember only broker dealers can trade in unlisted securities.

Pink sheets and OTCBB are the same thing. They are competitors.

The exemptions are very strict and your Regulation D exempt stock will have a restrictive legend on it that does not allow free trading (meaning no pink sheets).

Reg D BTW doesn't relate (directly) to what securities broker dealers can TRADE.  It deals with the issuance (i.e. selling new shares) of securities.   While GLBSE did multiple things normally these are separate actions.  Reg D deals with the legality of a company issuing new securities.  Broker dealers are required to trade unlisted securities.

Edited for clarity.

You do not need a broker-dealer or market maker. You need a Transfer Agent. Let's be completely clear -- a broker-dealer is not required.

[JoelKatz]

This wasn't about possession, but it was about issuing and creating a market.

Issuing what?

A security.

Paying with what? Paying with alphanumerical text strings representing what?

It doesn't matter.

To have a market you must have money circulating on it! Because this is the definition for market - buying and selling against money.

Nope. A barter exchange is a type of market. You just need something that has a value to be exchanged.

Bitcoin is not money. Money === legal tender. Bitcoin != legal tender.

I agree with the first part and the last part but not the middle part. The general consensus seems to be that legally Bitcoin is more like a volatile commodity than money -- something with an established, but unstable, market value.

If government changes tax laws and allows individuals to pay taxes with bitcoins only then they will have the right to interfere in private relations based on bitcoin!

That's pure craziness. I think you are confusing what you imagine an ideal world might be like and the world we actually live in. You can't pay your taxes in nuclear weapons or sheep. Does that mean the government has no right to restrict a trade of nuclear weapons for sheep?

[DoomDumas]

I thought bitcoins were pretty safe from this crap.

Bitcoins themselves are pretty safe, but not the services and people who use them without extra precautions.

+1

Indeed, the Bitcoin protocol can be used in a really safe way !   All flaws and scandals that happens in the Bitcoin history to date are due to scammer (and naive peoples using those scam) and stolen wallet from not enought secured wallet in web service..

BTC are still intact, and have'nt been regulated in anyway yet, as far as I know !  All depends on the user/service provider ability to do thing a secure way.

I'm not sure, but I think that the bitcoin fundation as been setup to build trust and help service provider / user to use bitcoin the safe and legel way !

was my 2 satoshi

[DeathAndTaxes]

Pink sheets and OTCBB are the same thing. They are competitors.

The latter is correct the former isn't.

http://www.sec.gov/answers/pink.htm
http://www.sec.gov/answers/otcbb.htm

The OTC-BB requires listed companies to be registered with the SEC (as well as meet some minimum level of reporting standards).
The pinksheets have absolutely no listing requirements.

The exemptions are very strict and your Regulation D exempt stock will have a restrictive legend on it that does not allow free trading (meaning no pink sheets).

However there are exceptions.  The restrictive legend can be removed.  Still generally speaking this is likely beyond what the bitcoin economy could support at this time.  The cost and complexity doesn't warrant the size of the issuance.

[SEC agent]

3) Work for within the system.  
Get a broker dealer license, be regulated by SEC.  Comply with all regulation including KYC and AML.  Essentially the MtGox model except for securities.  A broker dealer can trade any security even "unlisted" securities (meaning not filed with SEC).   This is the so called pink sheets.   In theory a broker could accept Bitcoins (potentially only accepting Bitcoins) and allow trade in Bitcoin denominated securities for its private clients.   This option would require some significant legal research and has the highest cost.  It probably isn't viable at this point but if Bitcoin continues to grow it likely is inevitable.

Complying with the law is the best option, and I'd like to enhance your knowledge of this process. A clean, legal SEC-registered OTCBB shell company will run higher than most people's idea of pocket change. Please do your Due Diligence, YMMV. Also, you certainly must be registered with the SEC, unless you are classified under a Regulation D exemption.

Working within the system is always the smartest option. Unless you are a fan of prison rape.

[galambo]

The exemptions are very strict and your Regulation D exempt stock will have a restrictive legend on it that does not allow free trading (meaning no pink sheets).

However there are exceptions.  The restrictive legend can be removed.  Still generally speaking this is likely beyond what the bitcoin economy could support at this time.  The cost and complexity doesn't warrant the size of the issuance.

[/quote]

There are other rules that can be used as well, but I believe the goal is to raise money for bitcoin related products from normal people, so Reg D is the most appropriate.

Just for completeness the list of ways to investigate are:

1) Full Registration (S-1, and others)
2) Regulation D
3) Regulation A
4) Intrastate offering
5) Rule 144
6) Reverse Merger into a reporting shell company
7) Private placement
Accredited Investor Offering

After the stock is issued and the legends are removed you can find a broker-dealer to help with Rule 15c2-11 (Form 211) quotations.

I'm unsure what the regulations are for starting your own exchange!

[Bitcoin Oz]

Bitcoin doesn't "magic" away laws simply because ... Bitcoin.

It does! Bitcoin is not money. A stock exchange that doesn't deal with money shouldn't be regulated by the government.

The regulation comes from issuing and trading securities. It has nothing to do with what the securities are exchanged *for*.

"You are charged with the heinous crime of sharing the profits on a BFL single. How do you plead ? "

They once transported people to Australia for stealing a loaf of bread. Yes the law is that retarded.

[Bitcoin Oz]

I thought bitcoins were pretty safe from this crap.

Bitcoins themselves are pretty safe, but not the services and people who use them without extra precautions.

+1

Indeed, the Bitcoin protocol can be used in a really safe way !   All flaws and scandals that happens in the Bitcoin history to date are due to scammer (and naive peoples using those scam) and stolen wallet from not enought secured wallet in web service..

BTC are still intact, and have'nt been regulated in anyway yet, as far as I know !  All depends on the user/service provider ability to do thing a secure way.

I'm not sure, but I think that the bitcoin fundation as been setup to build trust and help service provider / user to use bitcoin the safe and legel way !

was my 2 satoshi

It kinda makes bitcoin useless for its intended purpose though.

[becoin]

This wasn't about possession, but it was about issuing and creating a market.

Issuing what?

A security.

This was already discussed. Your definition for "security" does not match characteristics of the shares measured in bitcoins and traded against bitcoins on the bitcoin stock exchange! Those assets measured in bitcoin terms do not have any of the material or monetary interest described in your definition. They would have such if they represent and are traded against fiat currencies, oranges and apples, but they are not! They represent pure bitcoin assets and are traded against bitcoins. And bitcoin is not money! Your definition of money does not correspond to what bitcoin is. Or, your broad definition of money is including just every object material or digital in this Universe. Are you going to regulate for the purpose of taxation every transfer of every object from point A to point B?

One bitcoin is the standard measurement of trust that participants in the bitcoin network have among each other. You can not tax and regulate my private relations and confidence in some other people or entities just because trust increases/decreases and changes from time to time. I don't need enforced by the government agency to tell me whom should I trust and to what extend. If you continue to insist you should regulate bitcoin transactions the next step would be to tax and regulate my email messages signed with my pgp key. Because if there is a valuable information in there those messages can be securitized? And who decides this information is of value or not? Are you going to tax and regulate the entire message exchange on the Web?

[Puppet]

This wasn't about possession, but it was about issuing and creating a market.

Issuing what?

A security.

This was already discussed. Your definition for "security" does not match characteristics of the shares measured in bitcoins and traded against bitcoins on the bitcoin stock exchange!

How often do we need to quote the law before you will bother to read it? The law defines ANY bond,  transferable share, evidence of indebtedness, profit sharing agreement etc as a security. It doesnt matter if the debt is denominated in Dollar, Yen, oil, bitcoin or peanut butter. It doesnt matter if the profit is generated in dollars, yen, bitcoins or barrels of oil The law mentions none of them, but applies to all of them. It doesnt matter if the asset itself relates to drilling oil, growing banana's or mining bitcoins, the law states none of them. but applies to all of them. It  doesnt matter if you trade those securities against fiat, bitcoins or coconuts, because selling is defined as trading these securities for anything of value.

FFS, you argue like a 5 year old that has fingers in his ears yelling "LALALALALA,  it doesnt say bitcoin in the law, so it doesnt apply". Do you really think law makers and judges are as stupid as you are?

[Puppet]

You know what becoin, lets make it a bet that serves a purpose. You can request the SEC issue no-action letters if you are convinced a certain security is except from regulation. You can do so here:

https://www.sec.gov/forms/corp_fin_noaction

I thought there was a $200 fee, though I cant find that stated anywhere, so perhaps its even free. If you describe Gigamining bonds in a way that we both agree  is a fair and complete description, and you do indeed receive a no-action recommendation from the SEC for it, I will refund your fee (and Im sure GigaVPS and many other asset issuers will gladly chip in to make it worth your while).

[becoin]

It doesnt matter if the debt...

There is no debt!

[Puppet]

It doesnt matter if the debt...

There is no debt!

Isnt there? So if you loan me your car, and I dont return it, all is good? Its not money, so I wouldnt owe you anything, right?
And since no law would describe your exact brand and type of car, Im sure no law covers it anyway.

[Bitcoin Oz]

http://www.slcapex.com/

“[...]a fictional stock market simulation game operating for entertainment and educational purposes only” and reinforce with: “To be very clear, Capital Exchange is not a real-world stock exchange and does not offer opportunity for direct real-world investment or profit. Shares purchased on this stock exchange simulation game do not entitle you to any legal real-world rights to a listed virtual company. Please play accordingly!”

and reading the tos of linden labs it says

“The terms “profit” and “earnings” as used within the context of the CapEx.com website, and any claim of monetary value therein, relates solely and specifically to the valuation of $Lindens as specified in the Linden Lab Terms of Service, Section 1.4 (http://secondlife.com/corporate/tos.php). [Note: should read 5.1]

The $Linden “currency” is a limited license right available for purchase or free distribution at Linden Lab’s sole discretion, and is not redeemable for monetary value from Linden Lab or from CapEx.com.”

It doesnt matter one iota that you can redeem lindens for usd anywhere else. Just as a GLBSE "game token" it wouldnt matter if you use bitcoins somewhere else if you use the same TOS.

[becoin]

It doesnt matter if the debt...

There is no debt!

Isnt there?

Bitcoin bond is not debt. Bitcoin obligation != Debt

By definition: Every debt can be repaid with the legal tender. This is what the law says. If I owe you 2 apples and I have no apple but want to pay you US dollars instead (if we are in the US), you have no right to refuse or you'll be sent to jail. Everyone can repay their debt whatever it is in dollars fbecause it is the legal tender in the US. This is not the case with bitcoins. If you have to repay your bitcoin obligation you have to find someone willing to exchange their bitcoins for your dollars and just after that having bitcoins you can repay your loan.

As already said, bitcoin is trust. Sometimes more, sometimes less trust as per your wallet.dat file. And as we all know, all the dollars, euros, pounds or yen in the world can not make people have greater confidence and trust more in current fiat money system. Bitcoin obligation can be paid only in bitcoins. Period.

Remember: bitcoin bond is not debt, because it lacks a major characteristic of what debt is described by current law. You can repay a bitcoin obligation only with bitcoins. It is technically impossible to pay your bitcoin obligation with US dollars, and no law can help you!

[DeathAndTaxes]

http://www.slcapex.com/

“[...]a fictional stock market simulation game operating for entertainment and educational purposes only” and reinforce with: “To be very clear, Capital Exchange is not a real-world stock exchange and does not offer opportunity for direct real-world investment or profit. Shares purchased on this stock exchange simulation game do not entitle you to any legal real-world rights to a listed virtual company. Please play accordingly!”

and reading the tos of linden labs it says

“The terms “profit” and “earnings” as used within the context of the CapEx.com website, and any claim of monetary value therein, relates solely and specifically to the valuation of $Lindens as specified in the Linden Lab Terms of Service, Section 1.4 (http://secondlife.com/corporate/tos.php). [Note: should read 5.1]

The $Linden “currency” is a limited license right available for purchase or free distribution at Linden Lab’s sole discretion, and is not redeemable for monetary value from Linden Lab or from CapEx.com.”

It doesnt matter one iota that you can redeem lindens for usd anywhere else. Just as a GLBSE "game token" it wouldnt matter if you use bitcoins somewhere else if you use the same TOS.

Possibly with that disclaimer, if also actively enforced by the exchange, and the assets operating on that exchange were bought and sold with that understanding.  A judge generally speaking looks at all the facts, it isn't some word game puzzle where the magic combinations of words gets you the super combo and you winz.   A prosecutor would likely pull the worst contracts, get statements from victims, dump forum posts, etc.   Based on all the evidence if it overwhelmingly seemed like a game then likely GLBSE would be fine.  If it seemed like some dubious wordplay to get around securities law then a judge is going to rule on it for what it is.  

Then again who would be willing to buy Gigamining bonds (as an example) if there was a caveat that Giga could simply 100% legally and lawfully walk away with all the coins in "entertainment".  It is part of the game right?  I mean would you buy assets if they had this disclaimer:
"Shares purchased on this stock exchange simulation game do not entitle you to any legal real-world rights to a listed virtual company. Please play accordingly!".  

The reality is GLBSE only has value if the contracts have real value.  If they don't have real value nobody is going to pay anything for them.   If they DO have real value the disclaimer will just be struck down in court.  Many people have tried the whole "it is just for entertainment value"* to run gambling operations with very predictable results.  

So which is it?

* I would point out the law is always evolving so even if hypothetically a judge bought the "entertainment value only" argument over time people as people got scammed "in good fun" and didn't take it as fun and sought legal recourse, filed police reports, sued GLBSE, etc those actions would be precedent for future cases.   Based on the new evidence some future judge would rule that, no in some cases it isn't entertainment value and even these "entertainment value securities" are real securities.