Report on the Bitcoin Foundation's Trip to Washington D.C.

[MSantori]

As many of you know, in addition to being an attorney in private practice, I am Chairman of the Bitcoin Foundation's Regulatory Affairs Committee.

The Foundation was invited to a private conference held yesterday by FinCEN in Washington, D.C.  In attendance were high-level representatives from FinCEN, IRS, FDIC, Federal Reserve, OCC, FBI, DEA, Secret Service, Department of Homeland Security and more.  It was a packed house.  FinCEN did an impressive job of bringing together in one room nearly all of the agency stakeholders in the Bitcoin issue.

At the conference, Patrick Murck, Peter Vessenes, Brian Klein, Jim Harper and I each gave presentations totaling about an hour.  We canvassed Bitcoin the protocol, bitcoins the currency, regulatory challenges, enforcement and investigation methodologies – everything under the Bitcoin sun.  We then responded to questions from the agency representatives for about an hour.  Our goal was to begin a frank dialogue with the federal government about Bitcoin and dispel some of the publicly-available misinformation.

It was a smashing success.  

First and foremost, we received a very friendly reception.  The attendees were engaged and interested in learning about distributed finance in general and Bitcoin in particular.  Each Foundation member lit the subject matter through his own lens.  Peter walked the government through a discussion of the core technology.  Brian, an ex-federal prosecutor, discussed investigative methodologies.

I, of course, discussed regulatory challenges.  I discussed some of the ways in which the regulatory landscape in the US did not achieve the government’s policy goals.  In particular, I spent a few minutes just going through the ambiguity in the March FinCEN Guidance, and emphasized the importance of supporting innovation in the Bitcoin industry.  I hit some points very hard – like how the regulatory environment has disincentivized businesses from launching in the US and from servicing US customers.  I also discussed how some businesses were simply picking up and leaving the US entirely.

Our message was straightforward: It is critical that the industry and the regulators work together to create a safe and sane regulatory environment for Bitcoin businesses in the United States.

To be sure, they asked the tough questions.  The agencies have some very real and legitimate concerns.  We often had to give the tough answers.  By the time we were through, though, many of the representatives approached me and some the other presenters to say that they had a much better understanding of the industry and the technology.  I don’t think anyone believes we achieved world peace, or solved the regulatory challenges once and for all.  

We started a dialogue – the first step in understanding each other.

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[bitcoinstarter]

Thank you sir , for this update. I was beginning to wonder what came of it.

[acoindr]

+1

I discussed some of the ways in which the regulatory landscape in the US did not achieve the government’s policy goals.  In particular, I spent a few minutes just going through the ambiguity in the March FinCEN Guidance, and emphasized the importance of supporting innovation in the Bitcoin industry.  I hit some points very hard – like how the regulatory environment has disincentivized businesses from launching in the US and from servicing US customers.  I also discussed how some businesses were simply picking up and leaving the US entirely.

I'm particularly glad you emphasized this.

[Singlebyte]

Thank you sir , for this update. I was beginning to wonder what came of it.

Update very appreciated.  Thanks.

[jbreher]

I am skeptical over engaging TPTB in any fashion. BTAIM, I am appreciative of the follow-up report. I would welcome additional missives from your colleagues, if they deign to inform us -- the great unwashed masses.

[str4wm4n]

 

[superduh]

toughest questions and response? if you are allowed to disclose

[LightRider]

What regulatory and enforcement methodologies did you endorse?

[wopwop]

Lol, USGOV is just probing the Bitcoin Foundation, not Bitcoin.

They are checking the legitimacy of the members of Bitcoin Foundation, to see if they are fit.
The members of Bitcoin Foundation know this (if not, oops). This isn't a quest of Bitcoin, this is a quest for becoming a high-ranked advisor of the USGOV.
It's a battle for people like MSantori though, they are fighting to become part of the high club.

Now that in itself is nothing to be ashamed off. Just that it's on the back off others is slightly itchy, but that's all. Go for it.

[acoindr]

I am skeptical over engaging TPTB in any fashion. BTAIM, I am appreciative of the follow-up report. I would welcome additional missives from your colleagues, if they deign to inform us -- the great unwashed masses.

I think this course is the only chance we have at softer interaction from the inevitable collision of the two communities, and therefore entirely appropriate. Your post puts a huge grin on my face, though. 

[QuestionAuthority]

Were the attending community members "invited" or issued a "subpoena" to attend? The difference would set the tone of the meeting. Did the government representatives offer any advice to the Bitcoin businesses operating in the US currently as a friendly gesture to keep more seized bank accounts from happening? I'm sure Mark Karpeles would like to know how to get back his 5 million dollars.

I trust a thief in the night more than I trust the US Federal government because I always know the exact motivation of the thief.

[acoindr]

Were the attending community members "invited" or issued a "subpoena" to attend? The difference would set the tone of the meeting. Did the government representatives offer any advice to the Bitcoin businesses operating in the US currently as a friendly gesture to keep more seized bank accounts from happening? I'm sure Mark Karpeles would like to know how to get back his 5 million dollars.

I trust a thief in the night more than I trust the US Federal government because I always know the exact motivation of the thief.

I read a couple news articles on this. I believe everyone was invited by FinCEN. One news article said the Foundation was 'host' which fits with MSantori's account. The Foundation was essentially presenting information and answering questions about Bitcoin to a regulatory community very much curious about and new to it.

[acoindr]

I think that is highly unlikely.  They would have to announce a public meeting.  I suspect the BF requested a meeting and was granted a meeting and then they chose who would attend and they probably ran the list by FinCEN to make sure they wouldn't object.  (I am just speculating but this is usually the way it goes).

I didn't mean FinCEN made the initial invitation. That may have happened, but I don't know. I meant FinCEN was more of the lead agency orchestrating the meeting. Whether it was the Bitcoin community or regulatory community that reached out first I don't know. I don't think that really matters as both would have motivation for such a meeting to happen.

[blockgenesis]

Great critical job being done, thanks for taking this seriously. You seem to have done a very profesionnal job and I wish that you continue this education effort. You're helping them to better understand Bitcoin and make more informed and coherent decisions about it.

[QuestionAuthority]

Thanks for the clarification. I would like to know if the gradual education of the government is going to be a process of court trials involving businesses until none are left that are willing to operate in this country. The best way for the agencies to act from this point forward is using complete transparency and communication with business operators. If regulators feel that a business is violating a law they should clarify and seek compliance. Unfortunately, they are more likely to grandstand and prosecute. Sensationalism and media attention wins votes even if the prosecuting agency later loses the case.

[jbreher]

I am skeptical over engaging TPTB in any fashion. BTAIM, I am appreciative of the follow-up report. I would welcome additional missives from your colleagues, if they deign to inform us -- the great unwashed masses.

I think this course is the only chance we have at softer interaction from the inevitable collision of the two communities, and therefore entirely appropriate. Your post puts a huge grin on my face, though. 

...and with that, my work here is done.

waitaminnit - nope, not quite

MSantori - was this meeting recorded? Is there a transcript available? If not, why not?

[LightRider]

I am skeptical over engaging TPTB in any fashion. BTAIM, I am appreciative of the follow-up report. I would welcome additional missives from your colleagues, if they deign to inform us -- the great unwashed masses.

I think this course is the only chance we have at softer interaction from the inevitable collision of the two communities, and therefore entirely appropriate. Your post puts a huge grin on my face, though. 

...and with that, my work here is done.

waitaminnit - nope, not quite

MSantori - was this meeting recorded? Is there a transcript available? If not, why not?

Government industry collusion is not a very transparent process.

[MSantori]

To address a few questions:

FinCEN hosted the meeting, not the Foundation.

It did not subpoena the foundation. We went willingly

As far as I know, it was not recorded.  It wasn't open to press either.

The Foundation did not endorse any particular investigative or regulatory methods, nor did we lobby for any particular policy position.  The meeting was the beginning of a conversation, not a debate.  Moreover, the Foundation has not developed any particular policy position as of yet.  It is in the midst of determining its policy positions by democratic, community-driven process.  If you'd like your voice heard in this process, or would like to know more about how it works, you should consider joining the Foundation.  

I should say that we made one particular point very strongly, that the Foundation does not represent "Bitcoin".  We represent our constituent members.  We tried to be as transparent as possible about that.

[Phinnaeus Gage]

As many of you know, in addition to being an attorney in private practice, I am Chairman of the Bitcoin Foundation's Regulatory Affairs Committee.

The Foundation was invited to a private conference held yesterday by FinCEN in Washington, D.C.  In attendance were high-level representatives from FinCEN, IRS, FDIC, Federal Reserve, OCC, FBI, DEA, Secret Service, Department of Homeland Security and more.  It was a packed house.  FinCEN did an impressive job of bringing together in one room nearly all of the agency stakeholders in the Bitcoin issue.

At the conference, Patrick Murck, Peter Vessenes, Brian Klein, Jim Harper and I each gave presentations totaling about an hour.  We canvassed Bitcoin the protocol, bitcoins the currency, regulatory challenges, enforcement and investigation methodologies – everything under the Bitcoin sun.  We then responded to questions from the agency representatives for about an hour.  Our goal was to begin a frank dialogue with the federal government about Bitcoin and dispel some of the publicly-available misinformation.

It was a smashing success.  

First and foremost, we received a very friendly reception.  The attendees were engaged and interested in learning about distributed finance in general and Bitcoin in particular.  Each Foundation member lit the subject matter through his own lens.  Peter walked the government through a discussion of the core technology.  Brian, an ex-federal prosecutor, discussed investigative methodologies.

I, of course, discussed regulatory challenges.  I discussed some of the ways in which the regulatory landscape in the US did not achieve the government’s policy goals.  In particular, I spent a few minutes just going through the ambiguity in the March FinCEN Guidance, and emphasized the importance of supporting innovation in the Bitcoin industry.  I hit some points very hard – like how the regulatory environment has disincentivized businesses from launching in the US and from servicing US customers.  I also discussed how some businesses were simply picking up and leaving the US entirely.

Our message was straightforward: It is critical that the industry and the regulators work together to create a safe and sane regulatory environment for Bitcoin businesses in the United States.

To be sure, they asked the tough questions.  The agencies have some very real and legitimate concerns.  We often had to give the tough answers.  By the time we were through, though, many of the representatives approached me and some the other presenters to say that they had a much better understanding of the industry and the technology.  I don’t think anyone believes we achieved world peace, or solved the regulatory challenges once and for all.  

We started a dialogue – the first steps in understanding each other.

Try accomplishing that without a The Bitcoin Foundation.

+1(+) for The Bitcoin Foundation.

I guess it's time for me to become a member and support them.

[bg002h]

Were the attending community members "invited" or issued a "subpoena" to attend? The difference would set the tone of the meeting. Did the government representatives offer any advice to the Bitcoin businesses operating in the US currently as a friendly gesture to keep more seized bank accounts from happening? I'm sure Mark Karpeles would like to know how to get back his 5 million dollars.

I trust a thief in the night more than I trust the US Federal government because I always know the exact motivation of the thief.

I read a couple news articles on this. I believe everyone was invited by FinCEN. One news article said the Foundation was 'host' which fits with MSantori's account. The Foundation was essentially presenting information and answering questions about Bitcoin to a regulatory community very much curious about and new to it.

The deadline for these agencies to report back to the senate is august 30...see the last paragraph on page 3:
http://www.hsgac.senate.gov/download/letter-to-secretary-napolitano-on-virtual-currencies

I'm sure getting help understanding this stuff was greatly appreciated...kinda like getting tutored the day before a test...