Why was USA Senate so friendly to Bitcoin?

[marcus_of_augustus]

.... the senate was quiet and smiley because they know that their regulators are out there stabbing it in the back to death on a daily basis ....

watch what they do, not what they say.

ok what are regulators doing in the usa regarding bitcoin?

... so far we've had pre-emptive seizure of Gox funds (main exchange), cease and desist orders, industry-wide subpoenas in State of NY, warning letters from FinCEN (makes me wonder if any of the mega banks ever got warning letters, cease 'n desist or subpoenas for sub-prime CDO mark-to-model accounting?), banks severing business without warning or reasons offered may also be due to regulator pressure ... and probably more ... but most of the original entrepreneurs in bitcoin space have given up on US, the only ones playing now seem to be able to 'know' how to grease the palm of the regulators to keep their doors open

[BCB]

Am I naive to think that the Senate believes that expanded jobs and business based around cryptocurrency technology could be good for the U.S. (lower unemployment, more tax revenue)? And that politicians don't want to see all the business, talent, and capital associated with Bitcoin go to countries with more favorable attitudes? And perhaps they are able to recognize the parallels to the early days of the internet, and the see how well that worked out (for commerce and spying)?

That is a complicated question.  As a political issue of course Legislators are considered about tax revenue, unemployment and consumer protection.

Unfortunately the regulators do not care about this.   Read the senate testimony.  Then are on the record as saying that any benefit gained from moving a business off shore will be short lived as other countries will catch up the the level of US regulation.  And we have already seen this most recently in China and India.

[Peter R]

#7.  Most people in government are still normal, thoughtful and open-minded.  The hearing wasn't a "love fest" but was instead a balanced discussion about a powerful and exciting new technology.  

[BCB]

We must understand that almost anyone born before 1964 can not possibly understand the tremendous potential of virtual currencies.  (My apologies to those that do).

As the younger generation to comes into power in business and government we will see this type of technology fully adopted.

[BCB]

I'll just leave this here.

The next Steve Jobs may be reading:

“Here's to the crazy ones. The misfits. The rebels. The troublemakers. The round pegs in the square holes. The ones who see things differently. They're not fond of rules. And they have no respect for the status quo. You can quote them, disagree with them, glorify or vilify them. About the only thing you can't do is ignore them. Because they change things. They push the human race forward. And while some may see them as the crazy ones, we see genius. Because the people who are crazy enough to think they can change the world, are the ones who do.”

[Carlton Banks]

^(what are you still doing here BCB, talking like a paedophile?)

Am I naive to think that the Senate believes that expanded jobs and business based around cryptocurrency technology could be good for the U.S. (lower unemployment, more tax revenue)? And that politicians don't want to see all the business, talent, and capital associated with Bitcoin go to countries with more favorable attitudes? And perhaps they are able to recognize the parallels to the early days of the internet, and the see how well that worked out (for commerce and spying)?

Slightly.... I think that the government organisations must realise that if only one country refuses to play ball on treating bitcoin harshly, then they're trying to hold back the tide. I think the Japanese have proved this with allowing Mt Gox to run for so long. Bitcoin would have been seriously weakened if Mt Gox had been taken out of business in the early days. Instead, they expanded into offering 16 different major currencies. That's a serious middle finger to any other government or political figures who might want to slow down bitcoin take-up.

So, bearing in mind you can't beat this thing, the best option is just to embrace it. Reluctantly. And so you shut down all the homegrown startups who aren't in with the in-crowd, and allow existing corporations to take over running bitcoin service companies. Which is broadly what's happened. I expect someone like Bitpay or Coinbase have had good political connections from the start, or now have some new lawyers and board members.

[Lethn]

3. Those that consult the Senate are completely corrupt with their insider trading, financial instrument inventions, and back door dealings. So those consulting the Senate are poised to profit from Bitcoin success in some way. Coupled with Senate elect stupidity and they are easily lured into positive statements and a laissez-faire attitude.  

I'm going with this option, they're that greedy it's actually working in our favour, think about it as well, because of Bitcoin being very difficult to trace by government authorities they're going to be able to take all kinds of political donations and bribes without anybody knowing about it, it's simply too good for them to outlaw. The only person who actually wants to have free market currency competition in the whole government I suspect is Ron Paul, the rest of them are looking at it because it's a new way of making money.

[DieJohnny]

We must understand that almost anyone born before 1964 can not possibly understand the tremendous potential of virtual currencies.  (My apologies to those that do).

As the younger generation to comes into power in business and government we will see this type of technology fully adopted.

I wasn't born before 1964, however, I don't agree. I have not seen any difference at all whatsoever in explaining bitcoin to a gray hair as opposed to a SnapChatter. If anything, Gray Hairs are far more likely to have an interest and the light go on, from what i have gathered. I do think Gray hairs are more likely to have a red light go off as well and avoid it all together.

[DieJohnny]

.... the senate was quiet and smiley because they know that their regulators are out there stabbing it in the back to death on a daily basis ....

watch what they do, not what they say.

ok what are regulators doing in the usa regarding bitcoin?

... so far we've had pre-emptive seizure of Gox funds (main exchange), cease and desist orders, industry-wide subpoenas in State of NY, warning letters from FinCEN (makes me wonder if any of the mega banks ever got warning letters, cease 'n desist or subpoenas for sub-prime CDO mark-to-model accounting?), banks severing business without warning or reasons offered may also be due to regulator pressure ... and probably more ... but most of the original entrepreneurs in bitcoin space have given up on US, the only ones playing now seem to be able to 'know' how to grease the palm of the regulators to keep their doors open

I always understood any actions so far from the USA government have been warranted issues about laundering, crime, et cetera. I am relatively new and haven't researched all of these events, but keeping USD/BTC exchanges in line with standard banking laws would make sense to me. Just because it is BTC doesn't mean you can ignore existing law with regard USD.

I haven't seen anything yet from the USA that suggests they are truly fearful of this as a currency, yet those in the know most certainly would be.

[BCB]

We must understand that almost anyone born before 1964 can not possibly understand the tremendous potential of virtual currencies.  (My apologies to those that do).

As the younger generation to comes into power in business and government we will see this type of technology fully adopted.

I wasn't born before 1964, however, I don't agree. I have not seen any difference at all whatsoever in explaining bitcoin to a gray hair as opposed to a SnapChatter. If anything, Gray Hairs are far more likely to have an interest and the light go on, from what i have gathered. I do think Gray hairs are more likely to have a red light go off as well and avoid it all together.

That is encouraging. But is has not been my experience.

Regarding legality FinCEN included the term "or other value that substitutes for currency" to include virtual currency so even if you are trading on Cryptsy that is money transmission according to US law.

[cbeast]

We must understand that almost anyone born before 1964 can not possibly understand the tremendous potential of virtual currencies.  (My apologies to those that do).

As the younger generation to comes into power in business and government we will see this type of technology fully adopted.

Who was born before 1964, has two thumbs, and is an all-in hodlor? This Guy! d[ o_0 ]b

[johnyj]

It is very simple: A government could benefit hugely from bitcoin and erase their national debt by investing in bitcoins first and sell the coins to peoples in other countries later 

[minerva]

I think the senators are early adopters of bitcoin.

[quone17]

It was weird, it's like the Senate was friendly to BTC but some other US actions have not been so friendly.  I think the Congress needs to get a policy together on BTC but I doubt that will happen.  The thought has also occurred to me that they are being friendly because China's yuan will be taking over but if the US moves first on cryptocurrency we can have a reserve currency to compete with China's because it won't be the dollar.

[DieJohnny]

It was weird, it's like the Senate was friendly to BTC but some other US actions have not been so friendly.  I think the Congress needs to get a policy together on BTC but I doubt that will happen.  The thought has also occurred to me that they are being friendly because China's yuan will be taking over but if the US moves first on cryptocurrency we can have a reserve currency to compete with China's because it won't be the dollar.

I can't help but think that the government will come out with its own crypto currency in the near future (within 36 months). Therefore they are sending a message that this is great technology but not endorsing Bitcoin per se. Build confidence in the subject but then provide a mainstream alternative that lets them stay in control.

If the government came out with its own currency, the masses would buy it over Bitcoin. I think i am in the vast minority when it comes to my Libertarian tendencies, most people would trust a US Government backed Crypto currency.

[BCB]

In 1995 the 104th Congress's House of Represenetatives Subcommittee on Domestic and International Monetary Policy of the Committee on Banking and Financial Services held 4 separate hearings on "The Future of Money."  Alan Blinder, then Vice Chairman of the FED testified:

"Discussing that point raises the question of whether the Federal Government should issue its own electronic currency. Government-issued electronic currency would probably stem seignorage losses and provide a riskless electronic payment product for consumers. In addition, should the industry turn out to he a natural monopoly, dominated by a single provider, either regulation or government provision might be an appropriate policy response. But to draw that conclusion now seems much too premature. The availability of alternative payment mechanisms will mitigate any potential exercise of market power, and government issuance might preempt private sector developments and stifle important innovations.

Finally, the government's entry into this new and risky business could prove unsuccessful, costing the taxpayer money. So while we do not rule out an official electronic currency product in the future, the Federal Reserve would urge caution. "

They didn't do it then and I don't believe they would do it now.  Certainly not after the recent roll out of the Health Care debacle.
https://archive.org/details/futureofmoneyhea02unit


Canada however has been developing a centralized electronic currency, the "mint chip," over the past few years.
http://www.mint.ca/store/news/royal-canadian-mint-launches-mintchiptm-developer-challenge-14900005?cat=News+releases&nId=700002&nodeGroup=About+the+Mint#.UsWqpvS1y-0

[black_swan]

It was weird, it's like the Senate was friendly to BTC but some other US actions have not been so friendly.  I think the Congress needs to get a policy together on BTC but I doubt that will happen.  The thought has also occurred to me that they are being friendly because China's yuan will be taking over but if the US moves first on cryptocurrency we can have a reserve currency to compete with China's because it won't be the dollar.

I can't help but think that the government will come out with its own crypto currency in the near future (within 36 months). Therefore they are sending a message that this is great technology but not endorsing Bitcoin per se. Build confidence in the subject but then provide a mainstream alternative that lets them stay in control.

If the government came out with its own currency, the masses would buy it over Bitcoin. I think i am in the vast minority when it comes to my Libertarian tendencies, most people would trust a US Government backed Crypto currency.

I agree with you. Libertarian tendencies tend to go after personal profits and many will only look at what they can get out of bitcoin.
Possibly the US hasn't forbidden bitcoin yet as they want to see the reaction from the masses but they will someday, for sure, somehow they went against *everything* they didn't like during the last decades. how can they leave bitcoin?

[BCB]

I don't believe the US will ever "forbid" bitcoin.

If the US government wants to make bitcoin go away all they have to do is issue onerous tax guidance that make use of bitcoin more expensive then other value transfer systems. To the extent other jurisdictions follow suite, the price goes to zero.

[DieJohnny]

In 1995 the 104th Congress's House of Represenetatives Subcommittee on Domestic and International Monetary Policy of the Committee on Banking and Financial Services held 4 separate hearings on "The Future of Money."  Alan Blinder, then Vice Chairman of the FED testified:

"Discussing that point raises the question of whether the Federal Government should issue its own electronic currency. Government-issued electronic currency would probably stem seignorage losses and provide a riskless electronic payment product for consumers. In addition, should the industry turn out to he a natural monopoly, dominated by a single provider, either regulation or government provision might be an appropriate policy response. But to draw that conclusion now seems much too premature. The availability of alternative payment mechanisms will mitigate any potential exercise of market power, and government issuance might preempt private sector developments and stifle important innovations.

Finally, the government's entry into this new and risky business could prove unsuccessful, costing the taxpayer money. So while we do not rule out an official electronic currency product in the future, the Federal Reserve would urge caution. "

They didn't do it then and I don't believe they would do it now.  Certainly not after the recent roll out of the Health Care debacle.
https://archive.org/details/futureofmoneyhea02unit


Canada however has been developing a centralized electronic currency, the "mint chip," over the past few years.
http://www.mint.ca/store/news/royal-canadian-mint-launches-mintchiptm-developer-challenge-14900005?cat=News+releases&nId=700002&nodeGroup=About+the+Mint#.UsWqpvS1y-0

Wow great post, thanks. However, things change overnight in the computer age. I wouldn't be surprised if Bitcoin in 2014 forces the governments hand.

With about 10 alt coins showing up a day, certainly the governments ability to generate their own would not be too incredibly difficult.

[quone17]

I don't believe the US will ever "forbid" bitcoin.

If the US government wants to make bitcoin go away all they have to do is issue onerous tax guidance that make use of bitcoin more expensive then other value transfer systems. To the extent other jurisdictions follow suite, the price goes to zero.

Not a bad idea.  There seem to be a few exchanges and bitcoin related businesses in the US but I wonder if they are all following regulations or just trying to get away with it as long as they can.  Then one day the gov. can crack down and put some out of business.  But even if there is bad tax guidance can't the black market still use the coin?