Bitcoin in France: first legal decision directly related to Bitcoin?

[randomguy7]

Btw, isn't cryptography illegal in France if you don't own some weird special permission? I mean bitcoin contains quite a bit of cryptography.

[Serith]

I don't buy the defense that bitcoin ≠ money, nor do I buy the defense that it's just a protocol. But I do think it's clearly a commodity. If Bitcoin wasn't worth money, there wouldn't be a whole lot of reasons for us to accept it as a gambling payment method, would there? But it's just a commodity -- we take it as barter and convert it in and out of currency. It's not a form of money in and of itself; it's a bridge, an e-currency, a store of value. A commodity holds its value indefinitely against fiat currencies, regulated only by supply and demand; as a limited resource, that's exactly what Bitcoin does. As a commodity, betting on it is just another speculative gamble against floating currencies. Does France stop its investors from buying pork bellies on the CME? Doubt it. What jurisdictional right would they have to do so? Under what law can France stop its citizens from paying a company in another jurisdiction to invest in a commodity on their behalf? Investing in Bitcoin isn't any different from investing in gold or copper or anything else with a limited supply. That's the way to approach it and to fight this thing.

There is no such thing as bitcoin, it doesn't exits. There is Bitcoin Network, Bitcoin Blockchain and Bitcoin Transaction, but bitcoin it self is nothing, zero, NOT DEFINED. When you transfer one bitcoin, you only send the message that one bitcoin was transfered, but it doesn't say anything about what bitcoin is. Same thing with blockchain it only stores transaction history. Therefore bitcoin is not money or commodity, because commodity is definitely not nothing. Does the idea that you trade USD for NOTHING scares you?

EDIT: it doesn't meat that court can't rule as it pleased, just that without entirely new regulations it would be nonsense.

[ercolinux]

I don't buy the defense that bitcoin ≠ money, nor do I buy the defense that it's just a protocol. But I do think it's clearly a commodity.

Assuming that bitcoin is commodity (that's also what I think is) has a big drawback: commodities can be taxed by VAT (or almost is what occours in a lot of country for the commodities): having all the transaction encumbered with a 20-22% of tax will kill almost instantly all the appeal bitcoin can have for the merchant. And also limits a lot the internation exchange of BTC (again moving commodities between borders can be regulated - you can't cross Italian-Swiss border to make an example with 10Kgs of gold without paying taxes).

[phillipsjk]

I am going to have to get around writing that letter to Fintrac, asking for clarification of their guidlines in light of Bitcoin.

Okay, but if the law comes out in your favor, all the people saying "Bitcoin is money" are basically not telling the truth?

"money" is defined as "a medium of exchange." Something can be money without being a "virtual currency", which is often issued by a specific issuer, pegged to a specific currency, and redeamable for goods/services at the issuer. A "virtual currency" is essentially a coupon.

The difficulty is that even if bitcoin is just considered money, it is still a regulatory pain. For example, if just relaying transactions makes you a Money services businesses (in Canada), the Guideline 6C: Record Keeping and Client Identification for Money Services Businesses is impossible for a bitcoin node to meet. Specifically, section 3.7 Records about certain funds remitted or transmitted

If you send an electronic funds transfer (EFT) of any amount, at the request of a client, you have to include originator information with the transfer. Originator information means the name, address and, if any, the account number or reference number of the client who requested the transfer. You should not send any EFTs without including originator information.

An EFT means the transmission–through any electronic, magnetic or optical device, telephone instrument or computer–of instructions for the transfer of funds to or from Canada. In the case of messages sent through the SWIFT network, only SWIFT MT 103 messages are included. In addition, only in the context of originator information, an EFT includes any transmission of instructions for the transfer of funds within Canada that is a SWIFT MT 103 message.

An EFT does not include the following transactions:

• that use credit or debit cards, when the recipient has an agreement with the payment service provider for the payment of goods and services;
• where the recipient withdraws cash from their account;
• that use direct deposits or pre-authorized debits; or
• that use cheque imaging and presentment.

Essentially, no Electronic Funds Transfers involving an annoymized, public transaction record.
Edit: (I think it may be possible to convince FINTRAC to leave bitcoin alone by burying them in paper following the letter of their guidelines)(bold in original)(Possible loophole: does FINTRAC follow RFC 2119 when they use the word "should"?)

I think this "security theater" needs to end. We should declare that the Terrorists won the "War on Terror" by convincing the worlds largest supserpower to strangle its economy with dangerous and pointless "security" measures. Since September 11, 2001, I don't believe it anymore when I am told something is done for "security reasons". Since August 6, 2006 (temporary liquid ban is obviously not temporary), I don't want to fly anymore. Since Mahar Arrar (a Canadian citizen) was arrested  (on a stop-over in the states) and deported ot Siria for torture, I don't want to set foot in or overfly the US anymore. Since an innoncent electrician was shot in the head by police following the London Underground Bombings, I have been more concerned about being killed in police action than terrorist activity.

[rouhaud]

for your information: in french by the responsable of macaraja society :

go to see all information with judgement in pdf

https://bitcointalk.org/index.php?topic=41391.0

[istar]

Very interesting.

I wonder what would happen to mining Bitcoin. Would it be illegal if Bitcoin was money? In some places yes.

However Bitcoin is not money, if bitcoin is money than it will also mean that it would be illegal to print limited edition art, since those could also be traded. It would mean that anything that is in limited edition would be illegal since it can be sold and bought/exchanged for money.

Even comicbooks are traded. Are secondhand comicbook shops illegal?

 

[indio007]

 You are trying to FORCE a specific bank to hold your money and perform banking functions?  That is completely against the spirit of capitalism and free enterprise.

The monopoly that the banks have is totally against capitalism and the free enterprise system. Why aren't you bitching about that? What other recourse does he have than to force them not to lock him out?
When you benefit from a government granted monopoly, you give up the right to pick and choose who you do business with.

[Inedible]

I don't mean to be rude, but the glowing support in this thread took me by surprise.  It is unwarranted, and Tux deserves a rebuke.  Tux:

First you royally screw up running your site and end the big rally by closing the exchange on which it was occuring while simultaneously leaking the emails and password hashes of practically every bitcoin user onto the public internet.  

Now, in the same quarter(!), you are royally screwing up a bitcoin court case of first impression by discussing the ongoing litigation informally in a public forum.  What law firm or lawyer advised you to come here and tell us all this information?  Isn't it bad enough that all your statements made in the past are going to be a part of the litigation, why oh why can you possibly think it is a good idea to continue making statements during the litigation.  

Instead, you should have started a legal defense fund from the very beginning, sought the help of the EFF (is there a french equivalent or sister organization?), and had some discussion about what firm/lawyer would best represent the interests of the community as a whole.  You probably would have been able to raise quite a bit of money for your case.  You also could benefit greatly from the guidance of older, wiser, more experienced businessmen and lawyers than yourself.  

Do you have any experience in business before running mtgox?  My guess: no!

Is this your first experience with a lawsuit, as a litigant?  My guess: yes!

Why a pseudo-socialist, nanny state, police state, big-government country like France, out of all the EU nations?  My guess: you're french!

Going this alone without seeking input from the bitcoin user base is nothing less than foolish arrogance.  You are not qualified to decide, for all of us, which court is most likely to grant a favorable ruling, and on which issues?  

The whole case seems ridiculous, as well.  You are trying to FORCE a specific bank to hold your money and perform banking functions?  That is completely against the spirit of capitalism and free enterprise.  I can't make any sense of your goal at all.  Besides screwing over bitcoin, presumably inadvertently, what could you possibly hope to accomplish?

That was pretty harsh.

All good points though.

Perhaps you know how old MagicalTux is. I don't but until I do, I'll gladly give him benefit of the doubt that he could be quite young and inexperienced. As such, he could either be doing a fantastic job (bar the password leak) or he's much older and a few strokes under par.

It's hard to know what the best thing to do is without experience. You definitely sound experienced and maybe MagicalTux needs some guidance (I don't know) but your post seems to suggest he shoulders some huge responsibility for taking Bitcoin in the right direction but I'm not sure that's true.

To me it just sounds like he's getting on with business the best he knows how and isn't attempting to pioneer the best path for Bitcoin. Maybe he does have a higher duty to us and maybe he's never realised this until now but with the info in your new post, maybe he'll make that consideration.

Also, I don't agree that he's trying to force a bank to provide him banking facilities more than he's saying they're being discriminatory.

Who knows, with more people providing guidance like yours, maybe we can all take Bitcoin to a better place.

[niko]

I am not qualified to judge what outcome would be best for Bitcoin.  Perhaps it's best to ask ourselves what outcome would be most desirable for those who oppose it?

There are prior examples of informal opinions from the government agencies - here is one:

HMRC, the UK government's tax-collecting body, says people do not incur a tax liability when trading in bitcoins as long as they do not turn their profits into regular cash. Once conventional money is involved, however, the income could become taxable, HMRC told New Scientist.

source: http://www.newscientist.com/article/mg21028155.600-future-of-money-virtual-cash-gets-real.html

[BitcoinStars.com]

Please France say Bitcoin is a virtual currency 

[Serith]

I am not qualified to judge what outcome would be best for Bitcoin.  Perhaps it's best to ask ourselves what outcome would be most desirable for those who oppose it?

I think the best outcome would be, if the court rules that bitcoin is not subject of any existing regulation and therefore we can do whatever we want with it.

[mrb]

On top of that French laws define virtual currencies as a form of debt (so you can cash out anytime from the issuer), which is clearly not what bitcoin is.

I agree.

I think the closest thing bitcoins can be compared to is rare collectible objects, traded by people, since there are a known limited number of them (21M).

[Serith]

On top of that French laws define virtual currencies as a form of debt (so you can cash out anytime from the issuer), which is clearly not what bitcoin is.

I agree. I think the closest thing bitcoins can be compared to is rare collectible objects, traded by people, since there are a known limited number of them (21M).

again: There is no such thing as bitcoin, it doesn't exist. There is Bitcoin Network, Bitcoin Blockchain and Bitcoin Transaction, but bitcoin it self is nothing, zero, NOT DEFINED. When you transfer one bitcoin, you only send the message that one bitcoin was transfered, but it doesn't say anything about what bitcoin is. Same thing with blockchain it only stores transaction history.

[ssaCEO]

The right to make war is what separates sovereigns from petitioners and peasants. Sovereigns rule by mandate. Mandate is lost when the people lose faith. Just sayin'.

[coinjedi]

There is a bet created on the court rule:
http://betsofbitco.in/item?id=89

I thought you might be interested

[sunnankar]

I am not qualified to judge what outcome would be best for Bitcoin.  Perhaps it's best to ask ourselves what outcome would be most desirable for those who oppose it?

I think the best outcome would be, if the court rules that bitcoin is not subject of any existing regulation and therefore we can do whatever we want with it.

Not only is this the best outcome but also, in my legal opinion and the legal opinion of several of my lawyer colleagues, the most likely outcome. BitCoin is not money, currency, virtual currency or stored value in either the US, France or any other jurisdiction we are aware of. For the most part for legal purposes BitCoin is undefined. Most people do not realize just how much legal protection this affords them.

BitCoin would most likely not be considered money or currency under US law. US law can be extremely broad in application because of the doctrine of stare decisis. French law is based on civil or continental law which is even more code based and thus likely to be less broad in application.

There will need to be legislation written to define BitCoins but, at least in the US, this will be almost impossible to do if it is to pass Constitutional muster given doctrines such as void for vagueness under due process in contrast to ignorantia juris non excusat.

[MagicalTux]

As many have been talking about all kind of things let me add a few points.

• No, I am not doing this alone. I have people with me, some with deep understanding of bitcoin, some with deep understanding of french laws.
• I have a few years of experience running businesses, it's however my first time going in court for a system similar to bitcoin
• All the information published here (including the court decision) are public and published by the French tribunal too, since it's not "ongoing litigation" as someone said, but a closed case.
• Technically you do not own bitcoins, but you own keys to those coins, which have an intrinsic value equivalent to the controlled "coins". That makes stealing a wallet equivalent to stealing the coins. This has nothing to do with the defense anyway at this point, just thought I'd fuel a bit the troll.
• If anyone wants to help, it's welcome. If you could just avoid citing other countries laws, but EU regulations and/or French law it'd be even better.

.
Now, the bank claiming "bitcoin is a virtual currency" seems a bit far fetched, as they had no supporting material other than internet articles and similar things. The law defining a "virtual currency" in France is even more strict than the related EU regulation, and goes even further in a direction opposite to bitcoin.

Chances are the court will say "we never had to deal with Bitcoin before, we need new laws". We'll see how this goes.

[BitcoinStars.com]

Really want those clowns to proclaim it's a virtual currency

That would be epic  

[niko]

I am not qualified to judge what outcome would be best for Bitcoin.  Perhaps it's best to ask ourselves what outcome would be most desirable for those who oppose it?

I think the best outcome would be, if the court rules that bitcoin is not subject of any existing regulation and therefore we can do whatever we want with it.

again: There is no such thing as bitcoin, it doesn't exist. There is Bitcoin Network, Bitcoin Blockchain and Bitcoin Transaction, but bitcoin it self is nothing, zero, NOT DEFINED. When you transfer one bitcoin, you only send the message that one bitcoin was transfered, but it doesn't say anything about what bitcoin is. Same thing with blockchain it only stores transaction history.

At the first glance I'd agree with you, but we need to be careful with what we wish for here. What are the implications?  If Bitcoins are not subject to any existing regulation because they are, essentially, nothing - then stealing someone's Bitcoins would not and should not be sanctioned in any way. In fact, it would be impossible to steal Bitcoins. I see more than a logical problem there, because I pay taxes, and I call the police if I am robbed. Most judges do too.

The fact is, most (but not all) of the opposition to regulation stems simply from not wanting to pay taxes to the government. Even most of the cries for anonymity boil down to this. This is fine, it's a matter of personal interest, preference, ideology, and the political system one lives in. I just wouldn't want Bitcoin to be abused and to fall victim of personal preferences and ideologies. If someone doesn't want to pay taxes, they should take it up with their government rather then try to seek shelter in Bitcoin. Bitcoin won't save them anyway, but it will suffer damage as a result. Similarly, MagicalTux should be careful with what he argues for in the court. What's good for his business in the short run may be detrimental to Bitcoin in the longer run.

[2112]

Firstly, IANAL, but I have a number of good friends who are lawyers.

It seems like Mr. MagicalTux doesn't have a good legal representation in the EU.

EU laws are all rooted in the Roman law. Roman law has already regulated bitcoin as a form of "depositum irregulare". The Roman law was actually about storing grains and other similar commodities. Meaning if you give a bushel of rye for safekeeping the holder of the deposit: (1) can use the deposited rye and (2) will return to you not the exact rye seeds that you deposited, but a bushel of rye seeds of the same kind. I believe the closest legal term in the Anglo-Saxon jurisprudence is "fungible".

This is still a subject worth of discussion. But you have to be aware of the history. In Europe the "depositum irregulate" laws were used to tax Jews for their bogus transaction during jubilee years.