Ouch, I was really looking forward to these regulations coming out, but this sounds a bit ominous. None of this is already set in stone, is it? I hear mention of CA... have any drafts come out from there?
The NY regulations are still in the draft phase and the regulator is soliciting comments from the public.
IMO these regulations are good for bitcoin over the long term as they only apply to exchanges and payment processors, and in simple terms only make exchanges hold sufficient bitcoin in reserve to cover all of their customer's deposits. The regulations also subject exchanges to audits to make sure they are complying with the above requirement. I would argue that the regulation would make it less likely that we would encounter another GOX type situation.
In that case, it would be far more reassuring if the drafter sounded like he wandered in from the Securities and Exchange Commission rather than from the U.S. Department of Justice.
Speaking of securities regulation: as part of my slew of responsibilities as part of the dev team for the
Nxt clone NFD, I bought a complete, ~3,500 page paper copy of the complete securities regulations of my home domicile of Ontario, Canada. Carswell Publishers (Thomson-Reuters) was good enough to later send me an updated copy of the same book as part of my "subscription." Real masochists lug paper.
What was worrying me was how Nxt's (and NFD's) "
Asset Exchange" would look to an Ontario Securities Commission enforcement officer if he or she found out about it.
I was disappointed, but not really surprised, to see that the Ontario legislation's definition of "security" was so broad that a clever accountant could argue that good ol' "
Canadian Tire Money" is a security. Inventory, or goods available for sale, is (of course) a current asset.
Now, Canadian law has a buzzword - "reasonable" - that Canadians in the law take seriously. If some intrepid accountant lodged a complaint about Canadian Tire money being an out-of-bounds security, an OSC enforcement officer would congratulate him for being clever but would end with: "of course, you're being unreasonable." And then, the officer would joke about it in private with his or her colleagues.
But something like the "feeshare" - a grey-area legal gimcrack something like a permanent prepaid lease on a house, only it's supposed to be a grey-area not-quite-a-common-share - would get an enforcement officer's serious attention. And not in a good way.
That's not a worry in the NFD nano-world, at the moment, but it's a big worry for the Nxters. The
listings of the Nxt Asset Exchange are chock-full of feeshares. I know for a fact that one of the issuers is domiciled in Ontario, Canada. The name escapes me - damn my rickety memory.
What does this have to do with Bitcoin? Simple. If the Bitcoin world comes up with a Bitcoin-centered suite of Crypto 2.0 solutions, like an Asset Exchange, the legal fate of Nxt's is going to be very relevant to Bitcoin. In this sense, Nxt and its offshoots are a kind of advanced expeditionary force for Bitcoin. If the Nxt AE gets slaughtered in court, Bitcoiners will know that an Asset Exchange is a no-go. On the other hand, if Nxt's AE survives and you come across Nxters doing a victory-parade kind of happy dance, you know that some kind of Asset Exchange is more-or-less legally safe for Bitcoin itself.
In this sense, Nxt and its offshoots are "good" altcoins in the old-school sense. They're serving as pilot plants for the Bitcoin world and the crypto world in general.
