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Author Topic: Potential Regulation Discussion - December  (Read 2035 times)
Big Time Coin
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December 14, 2011, 05:47:39 AM
 #1

I copied this from the thread it was posted in because it was not responsive to the OP and really deserves its own thread.

I have no legal expertise, but it sure seems to me that there are a lot of ways to argue for the legality of bitcoin.  Even if it were to be outlawed, what would that do? Downloading music is illegal, look how swimmingly that has worked out.

Nobody's actually argued that Bitcoin per se is illegal.  The grey areas it falls into at the moment are the ways in which it's used - buying/selling drugs or gambling online with Bitcoin isn't going to make those activities more legal - and the services which have grown up around it (the exchanges and payment processors currently being unlicensed and unregulated).

In the short-term, there probably don't need to be any special Bitcoin specific laws to address those issues.  In a lot of jurisdictions, supply and possession of certain drugs are illegal whether or not money changes hands so whether Bitcoin is "money" would only be relevant in terms of trying to seize "proceeds of crime" from dealers (and a lot of places don't require that proceeds of crime be only money, either - pretty much any "asset" can be seized). 

Likewise, trying to avoid the laws regarding accepting funds from those in the US for online gambling is an offence in itself according to the US DoJ - that's what the whole shit-storm targeting payment processors and seizing the domains of offshore gambling operators earlier this year was about.  Once again, it's not necessary to define Bitcoin as "money" in order to crack down on it being used for online gambling - although it may be considerably more difficult for the DoJ to force operators to return player balances if there's no record of the true owners of those balances.

The continuing e-gold drama suggests that even if Bitcoin became a preferred method of money laundering, it's more likely that the exchanges would be restrained from allowing users to trade and that the government would seek forfeiture of the Bitcoins and funds they hold on behalf of users than that there'd be a need to specifically outlaw Bitcoin.

Maybe, just maybe, if Bitcoin became a conduit for financing terrorism the government might go after Bitcoin itself.  Once again, though, financing terrorism is illegal in and of itself in most Western countries.  The Bitcoin economy might also be too small at the moment for it to be useful  for moving large amounts of money undetected - significant deviations from established patterns would probably be noticed fairly quickly if counter-terrorism analysts had reason to suspect that Bitcoins were making their way to groups high on the government's watch-list.

I agree with repentance in this.  The exchanges are the juicy targets, without them everything is different and much harder to do for bitcoin. 

Still, keep in mind that although bitcoin is a big deal to us enthusiasts, it means very little to any government or politician at the moment.  It is such a small economy for enthusiasts, it isn't even as big as a moderately successful MMO.  It is not as big a deal as EVE online, for instance, let alone WoW, Lineage, or 2nd Life.  And those economies have not been regulated or banned or shut down.  Neither have the exchanges.

I wish some of the people on this forum would just tone it down on the political provocation angle.  It's like they are waving and shouting "this is a political protest please come break it up".  Look at what happens to people that do that in real life.  There are more police than protesters showing up to some of these big hyped "political" events.  Conversely, there can be 1 million people gathered for a peaceful, albeit mildly political, primarily apolitical purpose like a love parade or rock concert, and just a handful of police are there.  Bitcoin is not political by nature.  It is just a virtual currency, it has no political agenda.

People playing a game can move a billion dollars a month in value around internationally with no bank and no transaction fees, no problem - World of Warcraft.  If people use bitcoin peacefully as a virtual currency in legitimate business transactions, for gaming, fun, love, etc. it will be fine.  Unfortunately, many seem compelled to call governmental attention to the bitcoin project prematurely by financing and making bold political statements with it or using it criminally, flagrantly to defraud others, trade in contraband, etc.

Much of what we will see in terms of additional regulation and direct legal attacks on the exchanges will be the result of how things play out with existing factions within the bitcoin community.  If we can police ourselves and drown out the bad guys' harm to the bitcoin project with good guy legitimate economic activity, then a good argument can be made against regulation.  If the good guys factions' can grow and recruit faster than the "hacker, fraudster, trafficker" factions, we should not have many problems with regulation.  Otherwise, most of the transactions in the blockchain will be for crime, and expect the exchanges to get shut down. 

(I see a Comparison to "substantial non-infringing use" as held in Sony, as discussed at length in the Grokster SCOTUS opinion.  But that is a HUGE can of worms/other post.)

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Boussac
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December 27, 2011, 04:26:01 PM
 #2

I tend to agree with you and OP.
The powers to be in favor of the status quo have an easy game: they would like to outlaw bitcoin because bitcoin would be restrained to serving illegal transactions.
It's  a self-fullfilling prophecy and a blatant fallacy.
Bitcoin will serve more legitimate activities if and when it's legal status is clarified.
We badly need monetary diversity as the current monetary monopoly has proven to result in a disfunctional economy.
It's hard not to take a political stance because laws are passed by politicians and regulators are sponsored by the banking cartel (their self proclaimed independence is a joke: central bankers are selected exclusively from the banking cartel they are supposed to regulate).
As you suggest pointedly, the political stance better be articulate rather than inflamatory.
Then again, bitcoin is the currency of the 99% competing against dollars and euros controlled by the  1%.

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April 11, 2012, 05:14:32 AM
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Bitcoin is Open Source software ... if anybody has a problem with it (legal, regulatory, morally, financially, whatever!), chnage the source code and see if it flies.

There is absolutely no need to regulate a piece of Open Source software ... why haven't the legal eagles picked up on this yet (in their haste to regulate, strangulate)??

If you don't like it, change it and put it out there .... or shut up and get out of the way.

Big Time Coin
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April 11, 2012, 03:25:29 PM
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Bring back this old thread? 

@Marcus: the software is irrelevant to the "legal eagles".  If it adds and subtracts from an account, purported to be a currency, they couldn't care less what is under the hood.  Such a huge amount of time, effort, and money has been put into regulating and securing the existing system of electronic bank deposits it is mind boggling. 

It is an ancient beast that has, remarkably, survived from the dark ages of computer programming to the modern day with very few highly publicized security breaches.  Quite a feat, but very expensive to pull off.

That sunk cost, along with the current income flow (which is an order of magnitude larger than the entire bitcoin economy), is the reason ANY open source currency needs to fear death by regulation, regardless of the code.

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marcus_of_augustus
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April 11, 2012, 09:21:37 PM
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Open Source software, by its design is almost impossible to regulate.

What are you going to write laws directed at, lines of code?

People need to take a step back and realise the ridiculous of what they are talking about. You can't regulate open source software it is an idiocy and will undermine any institution attempting to do so ... legal eagle or not.

As the old adage goes, "laws are for lawyers".

Big Time Coin
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May 08, 2012, 05:27:03 AM
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Open Source software, by its design is almost impossible to regulate.

What are you going to write laws directed at, lines of code?

People need to take a step back and realise the ridiculous of what they are talking about. You can't regulate open source software it is an idiocy and will undermine any institution attempting to do so ... legal eagle or not.

As the old adage goes, "laws are for lawyers".

Did you read the part where I said the software is irrelevant?  It really doesn't matter how the software is implemented.  It doesn't matter if it is open source or closed source.

Imagine if the software that ran the current system of electronic bank deposits was open-source.  It would not change the banking, privacy, money laundering laws at all.  The software will not be regulated.  The purchasing power, the ability to trade for things of value.  The core use of bitcoin can be regulated.

Social interaction is the target of the law.  It doesn't matter what is being passed from hand to hand, box to box, or mind to mind.  If it exists and people can give it to each other, it can be regulated.

In fact, if you were to talk to an FBI agent specializing in computer forensics, and you used the key bitcoin phrases "open source", "peer to peer", and "cryptography", that agent would immediately think "kiddie porn".  Because that is where law enforcement officers learn these phrases, at the conventions and conferences dedicated to educating law enforcement about how to collect evidence and prosecute child pornographers.

So don't try to argue that the law can't regulate an open source technology based activity shielded by cryptography carried on in a completely de-centralized manner.  There are thousands of people doing hard time behind bars in protective custody that can serve witness against that argument.  It is an ignorant view that is sadly widespread among bitcoiners.

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marcus_of_augustus
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May 08, 2012, 10:36:06 PM
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Okay, colour me ignorant, call me whatever names you like.

If they aren't going to regulate the software, just what are they going to regulate (I don't think I read that anywhere in your rant above)?

BladeMcCool
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May 08, 2012, 11:14:13 PM
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Don't worry there will always be someone willing to meet you in a back alley and buy your Bitcoins for Silver. Regulate that. LOL. And food for thought -- what did banning cocaine do? I'll tell you, it pushed the price through the roof Cheesy ... how many people that wanted to use cocaine have been stopped from using it by the ban? I'm guessing the number is close to zero. LOL! So governments, regulate away! Do your worst! Meanwhile we shall eat roflcakes and lolpies, and continue to push through mysterious transactions originated from magical ephemeral places that you cannot pinpoint.
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May 09, 2012, 10:02:33 PM
 #9

The purchasing power, the ability to trade for things of value.  The core use of bitcoin can be regulated.

Social interaction is the target of the law.  It doesn't matter what is being passed from hand to hand, box to box, or mind to mind.  If it exists and people can give it to each other, it can be regulated.
True, laws try to target the concepts rather than the implementation - that's why we have regulations for "informal value transfer systems". But you also have to acknowledge that at some point courts will have to draw the line and rule exactly what's the qualitative difference between a Bitcoin transaction and any other kind of traffic on the Internet. For example: why should I have to obey AML regulations when I give you access to my news site for running a JavaScript Bitcoin miner but not if I require you to watch or click on ads? Who says which bits are valuable enough and which are not? What about access codes to games, VPN accounts or online storages? At which point is the transfer of a digital good valuable enough to require you to KYC? We have opened a whole new can of worms here: traditionally all things were somehow traded for or at least measured in USD/EUR/... It now gradually becomes possible to transact on a large scale without a money transmitter and without having any connection to fiat currencies. Making a business of trading WoW gold for Linden Dollars? Can do! With Bitcoin you no longer even have corporations involved! Add potential anonymity to this mix and I wouldn't want to be the lawyer having to figure out how to word such a regulation.

Now I'm not saying that is impossible, but that enforcing laws which target the "concept" behind Bitcoin (ie. transferring "digital value") will inevitably lead to a whole lot of other things on the Internet being suddenly regulated where most people wouldn't even remotely think of somehow touching money transmitter laws.

If you have a look at the EU electronic money directive for example, you'll see that although they went to great lengths to be as general as possible and "...to cover not only all the electronic money products available today in the market but also those products which could be developed in the future." Most of the points do simply not apply to Bitcoin: Issuing institution? Nope! Par value? Not really! Redeemability? No!
If you just strip all the requirements that are just not applicable because of technological advances such as, but not limited to, Bitcoin, you end up needing a license for being allowed to send an ICMP ping request (ok, I'm kidding but you get the idea).

The whole issue is similar to the copyright debate. Traditional models of thinking about them simply cannot be applied anymore and have to be re-thought completely. Copying and shipping media is near-zero cost and no matter how much the [RI|MP]AA tries to change that - traditional models built around charging for copying and distribution do not work anymore. The Internet has changed our world - society needs time to adapt and laws lag behind as usual but they will adapt eventually as well.

More to the point: People value bits and bytes - to stop people from transferring value over the Internet is to stop people from using the Internet!
marcus_of_augustus
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May 09, 2012, 10:43:13 PM
 #10

Quote
More to the point: People value bits and bytes - to stop people from transferring value over the Internet is to stop people from using the Internet!

Shhh, don't give them any ideas, the racket-protecting parasites are doing enough damage already.


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