The SEC Shows Why Bitcoin is Doomed.

[QuestionAuthority]

Exactly.

Instead of posting rants on bitcointalk.org we have to engage the regulators.  Are you familiar with Millybitcoin/Atlantic Bitcoin?  He recently challenged the March 18th 2013 FinCEN guidence that says ALL miners are "moneytransmitters" (a legal term) and won.

http://www.slashgear.com/bitcoin-miners-do-not-have-to-register-as-money-transfer-services-ruling-28310218/

I also know of another bitcoin business who challenged this guidance and won but the information is not public yet.

Perfect example! Fighting the system when it's wrong and working within it where possible can make Bitcoin a strong contender against the multitude of new financial instruments currently popping up. I knew Bitcoin was something special and a strong contender when I witnessed Amazon Coin, MintChip and a multitude of others spring into existence. Copying is the highest form of flattery.

It's been disappointing to watch good people like Mike Caldwell and Charlie Shrem succumb to attacks from those who wield government regulation against them like the Sword of Damocles. I've met Charlie in person in San Francisco. I think I'm a pretty good judge of character and he strikes me as someone that's just excited by Bitcoin and wants nothing but success for it. The users of Bitcoin are making good people with energy and determination fall under government control faster than it can survive: http://betabeat.com/2013/08/class-action-suit-filed-against-bitinstant-for-misrepresenting-the-speed-of-its-services/

[1714911544]

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[marcus_of_augustus]

For the record FinCEN's mission is to safeguard the financial system from illicit use and combat money laundering and promote national security through the collection, analysis, and dissemination of financial intelligence and strategic use of financial authorities.

That is their stated mission ... as with everything to do with govt. the actual mission is much deeper and more subtle and has been determined by lobbyists and cunning lawyers writing in loopholes and hooks to get the "framework" that state-sanctioned cartels and cronies can operate with impunity under.

I see you are still on the deluded trip that the regulations are there for your benefit. Newsflash, they are not or the financial/monetary system would not be in such a parlous state and bitcoin would not be needed or demanded ... i.e. you wouldn't be here incessantly spouting the establishment line.

[QuestionAuthority]

Regarding Mike and the Casascius coins, Mike just chose not to get the licensing. (Which is proving great for those who already have his coins as the price has of course shot up. But bad for newcomers).
Titan has the licensing and they have also raised prices A LOT. Go figure. I do think Mike will get the licensing, at least in some states as he was doing just too well imo.

SEC stopping BTC? LOL, please, this isn't just about America, much less regulations...

Of course, that's the point of the article. Did you read it?

SEC isn't attempt to stop Bitcoin. Again, that's what they are talking about. Bitcoin isn't about America. It's about India, the UK, China, the EU and everywhere else. What's happening in India and China right now?

I had not read it but gave it a read and am still not clear on it! These titles are just getting a bit old and I once again was only partly pulled in.

Regarding India and China, first India, I think they are trying to get a grasp on what BTC is. They seem a bit against it.
China on the other hand, and shockingly so, seem to just want to separate it from their money system and categorize it as a commodity. I'm still shocked by it.
It will take time to play out and I think the run continues once things get clear in China (then later, much later, India). Of course, it can get ugly in either case, but at least with regards to China, I'm not so worried.

Your perspective on India and China?

I understand. I kept the shock title from the story because that seems to be what draws attention to a thread.

I see China and India as predictable outcomes. I was more shocked to see Bitcoiners put their faith in a country that regulates how many children it's citizens can have. India has a thriving black market (even cows are traded as food) and Bitcoin can work its way into that fabric quite nicely. I think Bitcoin will be big in China and in India eventually but it will develop as a black market with likely great success. Futuristic governments would recognize that and openly accept its inevitability but those two are not well known for forward thinking.

[TheButterZone]

If FinCEN loses they say "hmm well now we know" and there is absolute no consequence.  Even the cost of the trial was simply paid for by taxpayers (including Mike indirectly). If Mike loses they judicial system could take everything he owns, include his freedom for the next thirty years.  Not really worth it.

Imagine we played a game of poker and if you win I have to say "I was wrong" in public, if I win you get executed.  Now you are 80% sure you can beat me in poker, everyone says you have a very sold game.  Would you play?  How about if you were 99.9% sure?

Everybody thought I was exaggerating. "It's no problem - we'll talk to the regulators and do what it takes to become compliant like a good citizens and everything will be fine," they said.

Future Bitcoin services need to be run as if they are illegal enterprises, like Silk Road, even if what they are doing is apparently legal.

Why:

• Laws change.
• Regulations are vague and open-ended, and it's probably impossible to operate a business without accidentally violating one.
• Even if you do manage to operate without violating any rule law enforcement agencies do not always limit themselves to the letter of the law when deciding to begin an enforcement action.
• Governments are not the only threats to a successful business. Non-governmental organized crime is almost equally capable of extortion.

The solution is to run all services in the darknet, not tied to any physical location or legal jurisdiction, and without any explicit connection to a real-life identity.

[BCB]

Charlie is a great guy and one of the best and earliest proponents of Bitcoin.  Unfortunately his company may not have been operating within the the limits of the law.  Word on the street was his legal counsel suggested he shut the site down. (Bitinstant was one of the 22  Companies that received the Subpoena from the Ben Lawsky, New York State's Commissioner of Financial Institutions).  Every time I run in to Charlie he says the site will be back up "in two weeks."  And that has been going on since it went down.

Bitinstant was also somehow involved with a company called TCash/Trust Cash that received a civil asset forfeiture complaint as an  unlicenced money transmitter" in voilation of 18 USC 1960.
http://www.justice.gov/usao/nj/Press/files/pdffiles/2013/TCash%20Complaint.pdf

Again, in countries where there are laws and regulation you have to be aware of who you are transacting with or you run the risk of implicating yourself regardless of your knowledge of your counterparties illicit or illegal activities.

You also have to look at a companies like Coinbase and/or Campbx.  Two US bitcoin companies that "seem" to be operating with in the law as their companies are still operational.   They must be doing something right.

[btchedge]

Jeez. I wonder if we will ever get past this phase of utter stupidity and lack of intellectual competence in journalism with respect to BTC.

[mises]

thats from the Aug 8, 2013.

also:

in my opinion not a special article.

yes, its a high risk investement if you see it like this. you probably lose all money. you should sell when you dont believe in it.

Ya there's tons of articles for and against BTC. Reality is nobody is certain about what's going to happen to its value, but those whose position on BTC gets validated in the future will say they knew all along.

[BCB]

Jeez. I wonder if we will ever get past this phase of utter stupidity and lack of intellectual competence in journalism with respect to BTC.

+++++1

Every bitcoiner should just understand NOT to believe anything you read in the mass media (you should also take EVERYTHING you read posted by the Libertarian KOOKS here on bitcointalk.org with a grain of salt.)

Almost every single bitcoin new story includes factual errors that expose that fact that many of the experts they interview and the "journalists" themselves just don't understand the protocol.

[DeathAndTaxes]

You also have to look at a companies like Coinbase and/or Campbx.  Two US bitcoin companies that "seem" to be operating with in the law as their companies are still operational.   They must be doing something right.

What is Coinbase and/or CampBX doing that BitInstant didn't?  You are implying those entities have state licensure as money transmitters are you?  If they did it would be pretty easy to verify yourself as that information is public record.

For example CA:  http://www.dbo.ca.gov/Licensees/money_transmitters/money_transmitters_directory.asp

The reality is that at the state level most of the regulation is simply a giant unknown at this point.   No two states have the same requirements, no two states even share the same definition of money, money transmitter, or even transmission.  Many states explicitly use the word "currency of the united states", some doesn't even include "foreign currency".   Some states limit their oversight to negotiable instruments (such as checks).   Does Bitcoin meet the regulatory definition of all states?  Maybe, doubtful but there has been no definitive statement by all state regulators ... yet.  However that cuts both ways, to my knowledge no state has said "exchanging Bitcoin isn't covered by statuatory definitions" either.

Bitcoin isn't just cutting edge technology, it is cutting edge in the legal space as well.  It probably will take decades, and countless court cases to resolve it all.   Most big (and no Bitcoin company is even close to "big" I am talking multi billion dollar company) simply get licensed everywhere it is possible to be licensed because despite the up front cost (eight figures easy) it is "cheaper" than the unknown.   Better to be licensed and not need to be then be not licensed and need to.  That simply isn't an option for ANY startup.

To my knowledge no Bitcoin related company US or foreign has a money transmitter license in all states that issue licenses to money transmitters.  I don't believe any Bitcoin startup even has a money transmitter license in a single state.  Someone correct me if I am wrong with cites from one or more state money transmitter registries.  Generally when seeking a license you are implicitly saying "yes I believe our activity is regulated and engaging in this activity without a license is criminal".  By definition that would imply you need to stop business to even attempt to seek the license.  Generally regulators don't issue licenses who are defacto breaking the law at the time they are seeking the license. 

[QuestionAuthority]

Charlie is a great guy and one of the best and earliest proponents of Bitcoin.  Unfortunately his company may not have been operating within the the limits of the law.  Word on the street was his legal counsel suggested he shut the site down. (Bitinstant was one of the 22  Companies that received the Subpoena from the Ben Lawsky, New York State's Commissioner of Financial Institutions).  Every time I run in to Charlie he says the site will be back up "in two weeks."  And that has been going on since it went down.

Bitinstant was also somehow involved with a company called TCash/Trust Cash that received a civil asset forfeiture complaint as an  unlicenced money transmitter" in voilation of 18 USC 1960.
http://www.justice.gov/usao/nj/Press/files/pdffiles/2013/TCash%20Complaint.pdf

Again, in countries where there are laws and regulation you have to be aware of who you are transacting with or you run the risk of implicating yourself regardless of your knowledge of your counterparties illicit or illegal activities.

You also have to look at a companies like Coinbase and/or Campbx.  Two US bitcoin companies that "seem" to be operating with in the law as their companies are still operational.   They must be doing something right.

They do appear to be doing something right but how long will that last. Every new regulation enforced brings a new cost of doing business. My worry is that the cost of entry will eventually become too high. My favorite thing about Bitcoin is it's ability to enable unencumbered worldwide transfer of value. In my mind, this puts it in a league by itself with no competition. Pegging Bitcoin's value to fiat currency is drawing the bullseye on it in every country. Is there no reasonable method of barter that can happen quickly where Bitcoins can be bartered outside of a fiat system? Selling used or new items directly through an eBay type system works but isn't good enough. We need someone to sell a pound of bread flour for btc and have the flour mill pay it's workers in btc.

[BCB]

DeathAndTaxes

You bring up a HUGE issue.  There is no Regulator at the Federal Level for "money transmitters" the "Money Service Business" category that FinCEN put the bitcoin industry in with the March 18th Guidance.

This is some thing the National Money Transmitter Assocaition is trying to address with upcoming "Industry Symposium for Legislative Action - (ISLA)" February 18, 2014 9:00 AM to 5:00 PM EST in Washington DC.


Carnegie Endowment for International Peace  
1779 Massachusetts Avenue NW
Washington, DC 20036-2103
  
This will be an all-day forum, hosted by the NMTA, that seeks to bring together everyone in the payments services industries to discuss what a National Payments Services Act might look like. Here is why we believe such an Act would be beneficial:
To make the regulation of payments services providers more economical, efficient and effective for both the government and private sectors.

To better protect the United States from financial crime and the funding of terrorism.

To better protect the rights of consumers and ensure a fair, transparent marketplace for payments services.

To provide a national insurance fund for the protection of money transmission consumers.

To provide regulators and law enforcement with a centralized, national database of all those companies licensed to do money transmission in the United States and their agents.

To provide regulators and law enforcement with timely, actionable information.

To establish minimum regulatory standards for all payments services providers serving the US public and to promote greater regulatory consistency across the states.

To allow better communication and coordinated action among the federal government and the various States, in the regulation of payments services providers.

To ensure regulation is consistent, continuous and appropriate across all types of money transmitting industries and all money transmitting business, no matter of what size.

To monitor the orderly banking of payments services providers and provide reasonable access to the banking system for licensed money transmitting companies that are essential to our economy.

To allow non-US providers of payments services with no physical location in the US, to serve the US market and to ensure they meet regulatory standards that are consistent and centrally-administered.

To promote competition and remove unnecessary barriers to interstate trade.

To encourage the healthy development and growth of money transmitting companies and support public confidence in those companies.
To encourage and promote technological innovation in financial services.

To ensure that any US consumer no matter where located, can patronize any licensed US provider of payments services, no matter where that company is located.

To provide a framework within which the payments services industries can regulate themselves to the greatest extent possible.

To ensure that US financial marketplaces remain competitive on the world stage.

To better provide for coordinated action among the US government and foreign governments in the prudential and anti-money laundering regulation of the various payments services industries.

This meeting is for the payment services industries, their trade associations, independent reviewers and legal advisers. This includes not only money transmitters of all kinds, but also money order issuers, check cashers, foreign exchange dealers, web-based transmitters, prepaid access providers, mobile money transfer operators, third party payment services providers and virtual currency dealers.  
 
Attendees are encouraged to address the group, and your written materials will be posted. If you are interested in attending ISLA, please click here to register. Registration is free, lunch is on your own.
 
Help us hammer out a regulatory framework that will let all US consumers use any licensed provider, and enable the normalized banking of these vital industries.
 
Regards,
 
- David Landsman

https://events.r20.constantcontact.com/register/eventReg?oeidk=a07e8ofjkaq22e8c4db&oseq=&c=&ch=

[DeathAndTaxes]

DeathAndTaxes

You bring up a HUGE issue.  There is no Regulator at the Federal Level for "money transmitters" the "Money Service Business" category that FinCEN put the bitcoin industry in with the March 18th Guidance.

This is some thing the National Money Transmitter Assocaition is trying to address with upcoming "Industry Symposium for Legislative Action - (ISLA)" February 18, 2014 9:00 AM to 5:00 PM EST in Washington DC.

I agree to a certain extent.  I generally oppose new regulation but the current situation is just a nightmare of asinine proportions.  They are less than 100 companies in the world which have licenses in all fifty states.  There is some legal opinion that is is easier and cheaper today, to form a new bank (or buy an existing bank or credit union) and thus bypass the entire issue because banks and credit unions are not MSBs and their national charter makes them outside the regulatory scope of most state regulations.  When it is easier to form a bank then issue a prepaid card for example you know something is wrong.

Still this has been a problem for twenty years now.  Decades before Bitcoin was even born there have been attempts to create a single national license because the current system is broken but all attempts to date have been futile.  The states certainly don't want to give up that power and control.   The existing players who have already gone through that nightmare don't want it to go away.  PayPal LOVES the excessive, asinine regulation.  It all but guarantees there will never be a PayPal direct competitor because the burden on any startup is simply too high and without a startup the risk is too much to dump the tens of millions to jump right to the next stage of the game.   The current MSB/MT regulation is a massive economic boom for the GreenDots, PayPals, and Western Unions of the world.  They will move massive sums of money in lobbying to kill any attempt that opens the flood gates for competitors.

Maybe this time will be different, it certainly is needed.

[BCB]

There was an attempt to create a "Uniform Money Services Act"

http://www.uniformlaws.org/ActSummary.aspx?title=Money%20Services%20Act

But it is enacted in only five (5) states!! (Edit: and 2 territories).

http://www.uniformlaws.org/Act.aspx?title=Money%20Services%20Act

[QuestionAuthority]

DeathAndTaxes

You bring up a HUGE issue.  There is no Regulator at the Federal Level for "money transmitters" the "Money Service Business" category that FinCEN put the bitcoin industry in with the March 18th Guidance.

This is some thing the National Money Transmitter Assocaition is trying to address with upcoming "Industry Symposium for Legislative Action - (ISLA)" February 18, 2014 9:00 AM to 5:00 PM EST in Washington DC.

I agree to a certain extent.  I generally oppose new regulation but the current situation is just a nightmare of asinine proportions.  They are less than 100 companies in the world which have licenses in all fifty states.  There is some legal opinion that is is EASIER and cheaper to form a new bank (or buy an existing bank or credit union) and thus bypass the entire issue because banks and credit unions are exempt from MSB requirements (although they have their own) and exempt from state regulations.

Still this has been a problem for twenty years now.  Decades before Bitcoin was even born there have been attempts to create a single national license because the current system is broken but all attempts to date have been futile.

The states certainly don't want to give up that power and control.   The existing players who have already gone through that nightmare don't want it to go away.  PayPal LOVES the excessive, asinine regulation.  It all but guarantees there will never be a PayPal direct competitor because the burden on any startup is simply too high and without a startup the risk is too much to dump the tens of millions to jump right to the next stage of the game.   The current MSB/MT regulation is a massive economic boom for the GreenDots, PayPals, and Western Unions of the world.  They will move massive sums of money in lobbying to kill any attempt that opens the flood gates for competitors.

Maybe this time will be different, it certainly is needed.

If I'm reading this right, you are predicting the inevitable failure of Bitcoin as a mainstream financial tool. Start-ups can't afford the cost of entry and power-brokers with deep pockets will crush new legislation, yes?

[BCB]

Death and Taxes

I hear you and certainly share your frustration.  But I really do think there is something very different about the peer to peer nature of individuals transacting with individuals that will make it VERY difficult to regulate it out of existence.  

QuestionAuthority, Absolute NOT.


Again i point to the Millybitcoin ruling and the other resent (non-public) ruling that show that individuals can make a difference and individuals united to achieve the same goal can have a HUGE impact regardless of the opposition.

[QuestionAuthority]

Death and Taxes

I hear you and certainly share your frustration.  But I really do thing there is something very different about the peer to peer nature of individuals transacting with individuals that will make it VERY difficult to regulate it out of existence.  

QuestionAuthority, Absolute NOT.


Again i point to the Millybitcoin ruling and the other resent (non-public) ruling that show that individuals can make a difference and individuals united to achieve the same goal can have a HUGE impact regardless of the opposition.

Ok, what was the outcome of this symposium? http://nmta.us/site/page.php?570

[Bob Derber]

Anyone look at the idea of purchasing a bank seriously.  We thought finding a federal charter was interesting but have not pursued the practicality yet.  I also like what Milne did at Dwolla through their association with Veridian Credit Union.... you know of other examples that takes care of the register-in-every-state nightmare?  CA registration alone takes months and even for those out of state they want to personally visit.....

[BCB]

Anyone look at the idea of purchasing a bank seriously.  We thought finding a federal charter was interesting but have not pursued the practicality yet.  I also like what Milne did at Dwolla through their association with Veridian Credit Union.... you know of other examples that takes care of the register-in-every-state nightmare?  CA registration alone takes months and even for those out of state they want to personally visit.....

Bob.
If you are serious about a federally charted bank PM me.

[QuestionAuthority]

Anyone look at the idea of purchasing a bank seriously.  We thought finding a federal charter was interesting but have not pursued the practicality yet.  I also like what Milne did at Dwolla through their association with Veridian Credit Union.... you know of other examples that takes care of the register-in-every-state nightmare?  CA registration alone takes months and even for those out of state they want to personally visit.....

What would Bitcoin become in your newly purchased banking system? A replacement system for ACH/EFT? A separate service offered. Banks, more than ever, need to be profitable. Remember, 465 failed banks from 2008 to 2012.

[BCB]

QuestionAuthority,

Because "Money Transmitters" and therefore bitcoin businesses, have no Federal Regulator, FenCEN and the Department of Treasury has made BANKS the de facto regulator of "money transmitters."  FinCEN has also labeled "money transmitters" "HIGH RISK" so instead of banking money transmitters banks are just closing their accounts and thus putting bitcoin companies out of business.  See tradehill.com

A federally chartered bank that would assume the "risks" associated with virtual currency business would be a game changer.

Silicon Valley Bank (SVB) is banking coinbase.com and they are now a front runner in the new economy where the traditional backs may end up like classified advertising in newpapers after the advent of craigslist.com, potentially non-existent.