EU to declare bitcoin as 'overlay currency'

[joepie91]

<genjix> joepie91: there is going to be an EU directive for bitcoin
<joepie91> elaborate?
<genjix> they're going to classify it as an overlay currency
<genjix> but EU directives are slow. they can take months or years (especially with finance)
<genjix> doesn't look like the FSA are going to make any ruling right now, but if they do it's highly speculative what they'll rule bitcoin as (it could be a store of value)
<genjix> joepie91: feel free to attribute that to us.

Posted here on request of genjix

EDIT: For those who can't immediately recall who genjix (Amir Taaki) is, he's part of Bitcoin Consultancy / #bitcoinconsultancy / Britcoin / Intersango. Don't think there's really any other source yet.

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[Gabi]

Any link to that?

[mizerydearia]

Any link to that?

https://bitcointalk.org/index.php?topic=41155.msg501859#msg501859  ^_^

[evoorhees]

Help I'm an ignorant American... what is an "overlay currency" in the EU??

[Vladimir]

.

[hugolp]

Any link to that?

https://bitcointalk.org/index.php?topic=41155.msg501859#msg501859  ^_^

Very funny.  I actually felt for that.

[becoin]

Help I'm an ignorant American... what is an "overlay currency" in the EU??

Overlay manager is a firm that is managing your currency hedging against currency exposures, not only in EU. So, currency overlay is the process or practice of hiring such firms. But I've never heard about overlay currency. Bitcoin as 'overlay currency' sounds like overcoin to me.  

[Gabi]

And how that would apply for bitcoin?

[cypherdoc]

Any link to that?

https://bitcointalk.org/index.php?topic=41155.msg501859#msg501859  ^_^

Very funny.  I actually felt for that.

"fell"?

at least "overlay" sounds legal and not illegal.  sounds promising.  buy, buy, buy.

[esse83]

http://en.wikipedia.org/wiki/Currency_overlay - still as confused..

[Gabi]

This definitely do NOT apply for bitcoin

[JackH]

Err how was this information obtained? Did the person talk to FSA or someone in the EU commission? Is there any EU politician or finance ministry that is semi-publicly stating this? And IRC chat log doesnt seem that creditable.

[geek-trader]

It's a rumor.

You buy on the rumor.   

[becoin]

If there is any truth in what OP is suggesting then financial authorities are positioning themselves to regulate and tax bitcoin purchases as cross-border institutional investments.

[Gabi]

I am still wondering how bitcoin can be:

Currency overlay is a financial trading strategy or method conducted by specialist firms who manage the currency exposures of large clients, typically institutions such as pension funds, endowments and corporate entities.

[becoin]

I am still wondering how bitcoin can be:

It is not, but who cares? They need to put you within a certain existing regulatory frame. The rest is just details. Why did you ask FSA for a permission to trade bitcoin in the first place? The only reason I can think of is if you are chasing cheap publicity! If you ask a question you get an answer. Good or bad, this is it. Now you have to do a lot of paper work if you want to stay... hmm... 'legal'. This is not a buy. This is a sell IMHO.

[ElectricMucus]

Currency Overlay in this context would mean the EU would be attempting to manipulate the bitcoin market.

I suspect a troll
hard.

[BitcoinPorn]

joepie91, I would like to subscribe to your newsletter to I don't miss random updates like these

[wareen]

Why did you ask FSA for a permission to trade bitcoin in the first place?

It is important for reputable businesses that Bitcoin gets a solid legal foundation - otherwise they would never consider accepting it as payment. If you want to use Bitcoin in an illegal manner then no legislation can stop you - Bitcoin is no different to cash in this respect.

Now you have to do a lot of paper work if you want to stay... hmm... 'legal'.

Well, legit businesses have to do paperwork anyway - no matter how they treated Bitcoin up until now. With a sound legal basis for Bitcoin they now know at least which paperwork exactly they have to do.

This is not a buy. This is a sell IMHO.

I can't follow your logic here - with Bitcoin fitting into a legal framework, it will be possible for serious businesses to accept it without having to fear any troubles with the law. Bitcoin will just get access to a greater market share - nothing prevents you to continue using Bitcoin like you did up until now if you like, so everybody is a winner here. No?

[defxor]

Err how was this information obtained? Did the person talk to FSA or someone in the EU commission? Is there any EU politician or finance ministry that is semi-publicly stating this? And IRC chat log doesnt seem that creditable.

I'd suggest asking the Pirate Party representative in the EU parliament as a good way of finding out. I don't think the Swedish Pirate Party has an official stance on Bitcoin yet but at least they're not of the boring mainstream politician breed.

http://christianengstrom.wordpress.com/category/english/

[cypherdoc]

genjix and Donald Norman are on record numerous times trying to seek a regulatory framework for Bitcoin in the UK for better or for worse.  i'm sure he's just revealing this tidbit of info from his negotiations.

[becoin]

It is important for reputable businesses that Bitcoin gets a solid legal foundation - otherwise they would never consider accepting it as payment.

Bitcoin CAN NOT get solid legal foundation because there is no precedent. If Bitcoin has to be regulated new laws has to be created from scratch. The law has to follow Bitcoin and not vice versa! Asking FSA for permission to trade Bitcoin is the same as asking the coachmen syndicate for permission to assemble and drive the first automobile just after the modern internal combustion engine was invented back in 1862... It is quite obvious what answer you can expect.

The legal foundation of Bitcoin already exists and is indeed fundamental - Everything that is not forbidden is allowed! And this is the leading principal of the entire humankind progress.

Now, if OP's information is correct, a total regulatory mess is in the pipes. Not only reputable businesses but also not quite reputable businesses will give up using Bitcoin.

[cypherdoc]

It is important for reputable businesses that Bitcoin gets a solid legal foundation - otherwise they would never consider accepting it as payment.

Bitcoin CAN NOT get solid legal foundation because there is no precedent. If Bitcoin has to be regulated new laws has to be created from scratch. The law has to follow Bitcoin and not vice versa! Asking FSA for permission to trade Bitcoin is the same as asking the coachmen syndicate for permission to assemble and drive the first automobile just after the modern internal combustion engine was invented back in 1862... It is quite obvious what answer you can expect.

The legal foundation of Bitcoin already exists and is indeed fundamental - Everything that is not forbidden is allowed! And this is the leading principal of the entire humankind progress.

Now, if OP's information is correct, a total regulatory mess is in the pipes. Not only reputable businesses but also not quite reputable businesses will give up using Bitcoin.

well in that case then it'll just trade like gold; the price will skyrocket and no one will do business in it.

[defxor]

Everything that is not forbidden is allowed!

I strongly advice you to not bet on that being true for all different national jurisdictions.

[cbeast]

I googled 'overlay currency' and found nothing. Currency Overlay is a strategy conducted by a firm. So if this is the case, then it's unlikely that firms will use bitcoin for this type of strategy. I don't see how this will affect bitcoin in any way.

[becoin]

I strongly advice you to not bet on that being true for all different national jurisdictions.

You don't know what are you talking about, do you? What I'm talking about is a very basic legal principal that exists in every modern legal system since the times of the ancient Roman jurisprudence! Do you think UK is an exception?

[Piper67]

I strongly advice you to not bet on that being true for all different national jurisdictions.

You don't know what are you talking about, do you? What I'm talking about is a very basic legal principal that exists in every modern legal system since the times of the ancient Roman jurisprudence! Do you think UK is an exception?

Heh, actually, the UK is THE exception to Roman Jurisprudence!!!

[joepie91]

I strongly advice you to not bet on that being true for all different national jurisdictions.

You don't know what are you talking about, do you? What I'm talking about is a very basic legal principal that exists in every modern legal system since the times of the ancient Roman jurisprudence! Do you think UK is an exception?

Heh, actually, the UK is THE exception to Roman Jurisprudence!!!

To the best of my knowledge, the Common Law that is used in the UK has the same very basic principle. In fact it goes even further, and under common law itself it would not even be possible to make bitcoin illegal.

[defxor]

You don't know what are you talking about, do you? What I'm talking about is a very basic legal principal that exists in every modern legal system since the times of the ancient Roman jurisprudence! Do you think UK is an exception?

Some countries go mostly by "letter of the law". Some mostly by "spirit of the law".

I live in the latter. I can only assume you live in the former.

[wareen]

The legal foundation of Bitcoin already exists and is indeed fundamental - Everything that is not forbidden is allowed! And this is the leading principal of the entire humankind progress.

You misunderstood me - it's not about Bitcoin being forbidden - it's about accounting principles, tax purpose, dealing with gains/losses/currency conversion in the books etc. It's about the "how" not the "if".

Now, if OP's information is correct, a total regulatory mess is in the pipes. Not only reputable businesses but also not quite reputable businesses will give up using Bitcoin.

Quite the opposite I'd say - every business has to treat Bitcoin somehow in the books and right now everyone can only make intelligent guesses and hope nobody complains. Even if the regulations would somehow limit the usefulness of Bitcoin (eg. stricter KYC rules), the situation would probably still be an improvement because businesses at least know exactly how to handle BTC.

But we probably have to wait until we know more before we can draw any conclusions...

[Vladimir]

as wareen said.

uncertainty is bad for biz

[Piper67]

It is important for reputable businesses that Bitcoin gets a solid legal foundation - otherwise they would never consider accepting it as payment.

Bitcoin CAN NOT get solid legal foundation because there is no precedent. If Bitcoin has to be regulated new laws has to be created from scratch. The law has to follow Bitcoin and not vice versa! Asking FSA for permission to trade Bitcoin is the same as asking the coachmen syndicate for permission to assemble and drive the first automobile just after the modern internal combustion engine was invented back in 1862... It is quite obvious what answer you can expect.

The legal foundation of Bitcoin already exists and is indeed fundamental - Everything that is not forbidden is allowed! And this is the leading principal of the entire humankind progress.

Now, if OP's information is correct, a total regulatory mess is in the pipes. Not only reputable businesses but also not quite reputable businesses will give up using Bitcoin.

Precisely the opposite. With a currency/commodity like Bitcoin, a regulatory framework is a fantastic idea, because bypassing it, while not exactly easy, is certainly possible. More and more we're going to see in the developed countries what the "developing" world has known for decades: a hybrid of legality and pseudo-legality in the economy.

In most of the world, there is a legal economic framework on the surface, supported by another, in some cases fully illegal, in others of dubious legality. These frameworks coexist and actually require each other for the country's economy to survive.

Bitcoin fits this model perfectly. Some things above board and open, others hidden, both coexisting and supporting one another.

[Stephen Gornick]

In the U.S. there is regulation that goes into effect this month that could possibly have an impact on Bitcoin.

FinCEN (U.S. Dept. of Treasury) has made a Final Ruling on Prepaid Access.

There has been surprisingly little concern over it, either from Bitcoiners or from Prepaid Card Vendors whose business will most definitely be impacted:
 - http://www.bitcoinmoney.com/post/8412471372
and a countering argument here:
 - http://blogdial.wordpress.com/2011/08/03/bitcoins-are-baseball-cards

This lack of concern could be because it really is a stretch to classify Bitcoin as either a stored value instrument or a prepayment of a value.

That bitcoin might be considered a "stored value" allegedly comes a FinCEN staffer "Bradley Stevens" who left a voicemail for the now defunct Bitcoin USA in response to their request to know how FinCEN would classify Bitcoin:
 - http://bitcointalk.org/?topic=5627.msg108978#msg108978
 - http://www.bitcoinmoney.com/post/5431115607/bitcoins-legal-status

[Christian Pezza]

Just a though

http://en.wikipedia.org/wiki/Currency_overlay

[wareen]

http://en.wikipedia.org/wiki/Currency_overlay

Thanks, but it was already explained what 'currency overlay' is - we're still trying to figure out what exactly an 'overlay currency' might be and what consequences this has.

In the U.S. there is regulation that goes into effect this month that could possibly have an impact on Bitcoin.

I don't think Bitcoin is affected by this particular upcoming regulation but it might be by the next one.

AFAIK there is no clear community consensus about what Bitcoin should be in the context of current laws but it might be desirable to get to such a point because then we could speak unisono for/against certain kinds of regulations.

IMHO treating them as collectibles (the Baseball card analogy from the blog post you linked) would be the most rational thing to do. Not only because it will be hard to overly regulate dealing with collectibles but also because I honestly don't see how it can currently be viewed as anything else (not being pegged to anything, etc...).

Maybe we should advertise them as pieces of mathematical art because that's what they are, really

[becoin]

as wareen said.

uncertainty is bad for biz

Yeah, stick to government's fiat money. You'll have certainty for sure. Don't push people to Bitcoin.

[SolidCoin]

In economics, regulatory capture occurs when a state regulatory agency created to act in the public interest instead advances the commercial or special interests that dominate the industry or sector it is charged with regulating. Regulatory capture is a form of government failure, as it can act as an encouragement for large firms to produce negative externalities. The agencies are called "captured agencies".

So the companies that are regulated and have to bear huge overheads in taxation and paperwork go after the ones who dont have the burden ie they divide and conquer.

[Anduril]

Err how was this information obtained? Did the person talk to FSA or someone in the EU commission? Is there any EU politician or finance ministry that is semi-publicly stating this? And IRC chat log doesnt seem that creditable.

+1

[S3052]

ia there any news on this topic?

[conspirosphere.tk]

Everything that is not forbidden is allowed!

everything IS forbidden.
What do you think we have zillions of laws for?

[genjix]

No updated news on an EU directive that is going to take months (if not years).

BTW I should've said currency overlay, not overlay currency as someone correctly pointed out.

I don't post often on the forums, so please direct your questions to me on IRC: genjix in #bitcoinconsultancy

[fivebells]

What would be the regulatory implications of such a declaration?

[Elwar]

What would be the regulatory implications of such a declaration?

It means that just before Greece crashes and burns they will implement a few stores that use Bitcoins then blame it for the financial collapse.

So "overlay currency" translates to "scapegoat".

j/k

[Frozenace]

The bitcoin economy is peanuts compared to the money that's being thrown around by banks. Everything seems to be credit credit credit anwyay.

You can't really have a negative bitcoin balance in your wallet.

You can't even be sure where your Gold is, if it's not physical Gold in your house.

[matonis]

Maybe we should advertise them as pieces of mathematical art because that's what they are, really

I like the mathematical art analogy. The first legal case will be interesting when defendant has to stand up and spill the bitcoin out of his head because he used BrainWallet. https://en.bitcoin.it/wiki/Brainwallet

[BTCurious]

Watching thread.

[BTCurious]

Oh hey, this was revived from 5 months ago. Nevermind…