Chunk of Bitcoin Network Being Cut-Off Due to US Regulations

[MicroGuy]

One of the first casualties in the US regulatory war on Bitcoin announced today that it will suspend operations on November 30th, effectively shutting down 5% of the Bitcoin network hashing power.

BTC Guild, one of the oldest remaining Bitcoin mining pools, announced today that it would be closing its doors and shuttering its business. Registrations are closed to new users effective immediately.

The site’s founder, Michael Marsee, cited US regulation as one of the main reasons for his regretful decision.

"US government/regulators are already taking stances against specific business types in Bitcoin, applying requirements which would be impossible for BTC Guild to operate under if they attempt to extend regulation into pooled mining, either directly or indirectly due to unclear definitions."

Marsee went on to explain further:

"Nobody will mine on a pool which requires them to provide personally identifiable information when they can change a single line in their configuration to point elsewhere."

According to Andrew Ittleman, an attorney at Fuerst Ittleman David & Joseph, PL, this week’s FinCEN rulings are a troubling sign for how the Bitcoin industry could be treated by the agency as a whole.

"It seems to me that, according to FinCEN, any company that’s dealing with bitcoin is a money transmitter, and I don’t know if I could have said that before before I read the payment processor note."

If government regulators can continue to successfully pressure mining pools into shutting down, we could eventually begin to see an impact to the overall security and stability of the Bitcoin network.

Mining pools are a way for miners to combine their computer resources and share their hashing power, while splitting the reward equally, according to the amount of shares they contribute to solving a block. These pools are crucial in the operation of the Bitcoin network.

Full Story: http://altcoinpress.com/2014/10/chunk-of-bitcoin-network-being-cut-off-due-to-us-regulations/

[tspacepilot]

Well but if the miners on that pool can simply change the pool they mine for (and that is the case) then how does this cut off 5% of the network.  Isn't it just that the hashing power moves to another pool?

[dasource]

What a load of nonesense .... You think farm operators/rig operators do not know how to configure failover pools? Jeez!

[Cryptowatch.com]

Well but if the miners on that pool can simply change the pool they mine for (and that is the case) then how does this cut off 5% of the network.  Isn't it just that the hashing power moves to another pool?

Agreed. The only way that the network would lose percentages of hashing powers would be if BTC Guild operated their own mining equipment and then chose to shut this down. Otherwise members will only switch to other mining pools.

However, I think they're giving up too easily in this case. If they're profitable, and have amassed some funds, the first thing I would've done if I was them, if they truly believe in the concept of bitcoin, and are not just into it to make money, would be to move operations abroad. They have all the source code and knowledge, so they could establish themselves offshore, and in addition it would be possible to renounce their US citizenship to make their stance.

There's always the negative and positive consequences of every action, and if they chose to give in now, one can only assume that they chose that option, because it's the option that they think is best for them.

In my view however, although I don't at all like the regulatory environment that seems to become a reality, it's not the regulations that is shutting them down, but rather they're shutting themselves down because they can't or are unwilling to adapt to the new reality.

Heck, surely, if I personally had funds to set up shop offshore, and had to leave my current country because of regulatory uncertainty, I would do so in a heartbeat. However, if I did not believe so much in Bitcoin, I would rather shut it down and jump into any other business where I could make money.

As it's hard to know all the reasons why BTC Guild is deciding to shut down, pointing to the govt. and saying it's their fault we need to stop our business operations, is in my view giving up a little bit too easy.

[MicroGuy]

As it's hard to know all the reasons why BTC Guild is deciding to shut down, pointing to the govt. and saying it's their fault we need to stop our business operations, is in my view giving up a little bit too easy.

According to the attorney in the article, there is grave danger that any company dealing with Bitcoin in the US could be defined as a money transmitter. This pool will probably be bought and moved offshore. However, if the US continues to ratchet up the regulatory oversight, there will be a lot more companies running in the future.

Here is an article published today at Coindesk that discusses the difficulty that comes along with being classified as a money transmitter.

http://www.coindesk.com/new-fincen-guidance-means-us-bitcoin-companies/

My primary concern would be that other countries could continue to crackdown until there is nowhere left to run.

[Cryptowatch.com]

As it's hard to know all the reasons why BTC Guild is deciding to shut down, pointing to the govt. and saying it's their fault we need to stop our business operations, is in my view giving up a little bit too easy.

According to the attorney in the article, there is grave danger that any company dealing with Bitcoin in the US could be defined as a money transmitter. This pool will probably be bought and moved offshore. However, if the US continues to ratchet up the regulatory oversight, there will be a lot more running in the future.

Here is an article published today at Coindesk that discusses the difficulty in being classified as a money transmitter.

http://www.coindesk.com/new-fincen-guidance-means-us-bitcoin-companies/

What would be funny was if all companies just left. Then the 'regulators' would stand there, scratching their head. Who to 'regulate' now? It seems to me regulators have been so incredibly successful in the past, both regulating, investigating and punishing everyone involved in the Madoff Scandal, HSBC mondering cases etc.

It's all a power play, to keep the power and control in the hands of the bankers. The politicians are only tools for the bankers hands. The phrase 'grave danger' in relation to being a money transmitter only exists because businesses willingly accepts it. Move shop, move offshore and renounce citizenship, it's the only viable alternative imo. Wasting your life, trying to fight regulators with enormous financial muscles, it seems like an incredible futile project. Perhaps it would help if everyone concerned teamed up in a joint effort, but more likely than not, it would only end in tears as all companies not 'adhering' to the regulations would face legal consequences.

I would personally say to everyone at risk: Protect yourself and act wisely.

[TheButterZone]

Some would prefer not to have to bribe countless government officials after expatriation, to be able to defend themselves and not be murdered, raped, maimed etc. with impunity. I do not blame anyone for wanting to stay in the US, when we might finally have the human right to self-defense de-infringed in a matter of decades or less, rather than centuries.

[ScryptAsic]

As it's hard to know all the reasons why BTC Guild is deciding to shut down, pointing to the govt. and saying it's their fault we need to stop our business operations, is in my view giving up a little bit too easy.

According to the attorney in the article, there is grave danger that any company dealing with Bitcoin in the US could be defined as a money transmitter. This pool will probably be bought and moved offshore. However, if the US continues to ratchet up the regulatory oversight, there will be a lot more companies running in the future.

Here is an article published today at Coindesk that discusses the difficulty that comes along with being classified as a money transmitter.

http://www.coindesk.com/new-fincen-guidance-means-us-bitcoin-companies/

My primary concern would be that other countries could continue to crackdown until there is nowhere left to run.

US regulators have previously said that anyone engaging in the practice of mining is not considered to be a money transmitter. I have no idea why the attorney in the article would say otherwise (probably to get a little bit of free press while having no idea as to what he is talking about)

[QuestionAuthority]

That's too bad. Eleuthria's pool paid me lots of coin in 2011-12. It's sad to see him go out of business. I'm sure he has enough coin stashed to last a lifetime so I'm not too sad.

[Cryptowatch.com]

US regulators have previously said that anyone engaging in the practice of mining is not considered to be a money transmitter. I have no idea why the attorney in the article would say otherwise (probably to get a little bit of free press while having no idea as to what he is talking about)

Maybe there's a difference about being a pool operator, and running a mining machine in your basement in this regard? Anyway - it feels kind of wasted to concern ourselves with all these legal matters. Life's so friggin' short. I never saw a bird or a fish engage in legal matters, why should humans engage in these matters, who benefits from it, apart from the lawyer companies?

[BayAreaCoins]

It is a good clean exit to dip out on regulation news.

[novacn]

BTC deserves more freedom. Now this is not much better than Internet control in some countries.

[seriouscoin]

US regulators have previously said that anyone engaging in the practice of mining is not considered to be a money transmitter. I have no idea why the attorney in the article would say otherwise (probably to get a little bit of free press while having no idea as to what he is talking about)

Maybe there's a difference about being a pool operator, and running a mining machine in your basement in this regard? Anyway - it feels kind of wasted to concern ourselves with all these legal matters. Life's so friggin' short. I never saw a bird or a fish engage in legal matters, why should humans engage in these matters, who benefits from it, apart from the lawyer companies?

Because Human is predator. It wants to control others.

[Q7]

What good does it do when operations can always be moved offshore. Even if that is not possible there are probably other mining pools that would continue as usual. Doubt that would make any difference overall

[Cryptowatch.com]

What good does it do when operations can always be moved offshore. Even if that is not possible there are probably other mining pools that would continue as usual. Doubt that would make any difference overall

Yes, the headline in this thread is not accurate. The OP should change it to something less dramatic.

[LiteCoinGuy]

https://bitcointalk.org/index.php?topic=49417.msg9397724#msg9397724

[pitham1]

Satoshi Dice is closed to US players too. 

http://www.coindesk.com/bitcoin-gaming-site-satoshidice-closes-to-us-players/

[Lethn]

I was wondering when they would get even more stupid this is going to be fun, time to start encrypting lolcatz memes everybody!

[bitnanigans]

Wow, that sucks. Still haven't taken a closer look at the US regulations though. I should get to it at some point.

[Soros Shorts]

Satoshi Dice is closed to US players too. 

http://www.coindesk.com/bitcoin-gaming-site-satoshidice-closes-to-us-players/

That article is over 18 months old.