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US States Edge Toward Cryptocoin Regulation
SonicSpike points out an article from the Pew Charitable Trusts' Research & Analysis department on the legislation and regulation schemes emerging in at least a few states in reaction to the increasing use of digital currencies like Bitcoin. A working group called the Conference of State Bank Supervisors’ Emerging Payments Task Force has been surveying the current landscape of state rules and approaches to digital currencies, a topic on which state laws are typically silent.
In April, the task force presented a model consumer guidance to help states provide consumers with information about digital currencies. A number of states, including California, Massachusetts and Texas, have issued warnings to consumers that virtual currencies are not subject to “traditional regulation or monetary policy,” including insurance, bonding and other security measures, and that values can fluctuate dramatically. ...
The article focuses on the high-population, big-economy states of New York, California and Texas, with a touch of Kansas -- but other states are sure to follow. Whether you live in the U.S. or not, are there government regulations that you think would actually make sense for digital currencies?
Crytocoins are designed to be de-centralized in order to not be controlled by any dominant party
I wonder how are they going to "regulate" something that is not supposed to be regulate-able ?
Muchas Gracias, Señor Edward Snowden !
perhaps they will require a licence to accept payments using them?
The key phrase is about what makes sense.
To a legislator bought by the banking and payday loan industries, there will be a sense of panic to at least be _seen_ to be doing _something_; so that will make sense.
To an ambitious prosecutor, there will appear an opportunity to bring the full weight of the criminal 'justice' system down on some poor schmuck who orders something legal-but-distasteful using MathMoney without paying sales tax or submitting the forms no one can figure out how to order let alone fill out (NJ handgun laws), so that will make sense.
In short, jumping up and down, waving flags and flares, daring regulators to come after you pretty much guarantees the most draconian possible response (designer recreational drugs) because 'think of the children!'
You're looking for quotes? See my journal.
I think you misspelled the british 'gaol.'
You're looking for quotes? See my journal.
By treating it like currency and passing laws about what you can do it?
They make not be able to regulate the entire currency, but they can certainly pass laws regarding their own people and what they are required to do.
Did anybody really think that you could simply say you have a form of currency which isn't regulated and expect governments to just say "well, they've beaten us"?
That would be a neat trick.
Lost at C:>. Found at C.
The laws should be identical to the extent possible, between different forms of currency.
Don't waste your vote! Vote for whoever you want, unless you live in a swing state it won't matter anyways
I imagine that the sorts of things we'd want to regulate about "digital currencies" are the same things we'd want to regulate about any foreign or domestic currency; e.g.:
- You can't use it to pay for illegal goods or services
- You can't receive it in payment for illegal goods or services
- You can't use it to hide other transactions related to illegal goods or services (i.e., money laundering)
So... can we just formally decree that cryptocoins meet the definition of a "currency", and be done with it? Otherwise I'm afraid that we'll be creating another legal (and patent) swamp where "...with Bitcoins" will become the new "...on the Internet".
Koans and fables for the software engineer
Crytocoins are designed to be de-centralized in order to not be controlled by any dominant party
I wonder how are they going to "regulate" something that is not supposed to be regulate-able ?
The NSA owns your computer, and the computer you want to trade bitcoins with*. They could enforce any regulations if they were willing to admit to this. Being a cryptocurrency rather than a physical one also means that they can vanish your money with the click of a button instead of having to personally visit you.
* Maybe I'm just paranoid, but there are so many hardware and software components, any of which could have backdoors or keyloggers installed. They could demand any domestic product secretly contain them from manufacture, and "inspect" any imports. Even easier with domestic software, or they could get a few of their agents helping to develop the software (I hear they have lots of talented folks).
Don't waste your vote! Vote for whoever you want, unless you live in a swing state it won't matter anyways
Over half the Bitcoin exchanges have gone bust. Entire Bitcoin "stock exchanges" disappeared with the money. Bitcoin "investments" promising substantial returns each month were, of course, Ponzi schemes.
Bitcoin is a scam magnet. Irrevocable, remote, anonymous money transfers are the scammer's dream. (Yes, there are people talking about cryptographic escrow schemes so you can buy something with Bitcoins and have some recourse if it doesn't show up. So far, that hasn't reached usability.)
That's why Bitcoin needs regulation. If you're going to hold other people's money, you have to be regulated. Deal with it.
The irony is, in designing a de-centralized currency, I was thinking of the children.
It's a currency designed to be difficult to regulate. Of course the first adoptors are going to be those to whome conventional finance is unavailable. Those on the fringes of the law, or in outright violation of it. Not just drugs and violence though - The Pirate Bay accepts bitcoin donations, and there are a number of internet gambling sites accepting payment in it to draw the business of those living in states where internet gambling is prohibited.
People don't just adopt a new techology, much less a new finance paradigm, without a good reason. The big hope of the bitcoin community is that the paranoids and outcasts may be the first to adopt, but they will then form the core around which a new legitimate economy can cluster. That does seem to be happening, as an increasing number of legitimate companies start accepting bitcoin as a promotional measure. It gets them press coverage.
Enforcement would be very difficult. A forensic accountant could pierce the trail together given enough time, yes - but the cost of paying someone to spend days going through the blockchain and trying to prove each of these addresses belongs to a certain individual would be far greater than the cost of subpoenaing a suspect's bank account and getting instant proof of illicit income. The higher the cost of enforcement, the fewer cases the government can bring, and the less risky the crime becomes - potentially reaching the level of copyright infringement, where tens of millions completly ignore the law because they know their chance of getting caught is miniscule.
Actually, I think you mean, "with employer-declared or bank-mediated income, there's a paper trail." If I pay someone in small green pieces of paper to mow my lawn, and they keep it under their mattress until they need it, then there's no paper trail at all.
Koans and fables for the software engineer
I certainly hope not, because ultimately they're completely unlike other foreign or domestic currencies in that they have nothing backing their worth*. They're much more like coupons, casino tokens, or tasting tokens at a beer festival than real money. They're a medium of exchange not a store of value. The flaw in the logic behind cryptocurrencies is that their inventors and proponents fail to recognize this.
* Generally the economy of the issuing country.
Um, yes, they do. If you do work, and get paid for it, whether in US$, Japanese Yen, gold ingots, BitCoin, WoW gold, Tickle-Me-Elmos, or whatever, that's income, and it's taxable.
Nonono! You are thinking about the wrong children. In politics the only children that matter are the ones of the oligarchy. BitCoin would make other children middle class and independent of the ruling class' iron grip on their money.
The IRS has ZERO jurisdiction over digital "currency."
Yeah? Well the IRS disagrees with you.
perhaps they will require a licence to accept payments using them?
Regulations? Licenses? Hmm. As it happens, we already have pertinent "regulations".
U.S. Constitution, Article 1, Section 10:
"No State shall ... make anything but gold and silver Coin a Tender in Payment of Debts"
if it looks, acts, and tastes like digital gold, why not?
I certainly hope not, because ultimately they're completely unlike other foreign or domestic currencies in that they have nothing backing their worth*.
Ask yourself what backs the value of UPS shipping labels, that people are willing to give substantial sums to obtain one? Intrinsically the label is just sticky paper with some printing on it. The answer is the UPS network of trucks and distribution terminals. They enable a package with a label on it to get from one place to another.
In a similar way, the Bitcoin network of p2p nodes, mining hardware, desktop apps, merchants accepting it, and user wallets enable moving money from one place to another. A bitcoin address with a non-zero balance is like a prepaid shipping label, ready to be used to transfer value to another address. But without the network, the transfers would be nearly impossible. The network makes bitcoin balances useful, and therefore have value.
In a money transfer system, the internal units don't have to have any particular value, as long as everyone agrees on their value at a given time. If I want to pay a Romanian programmer and buy X dollars worth of bitcoins, transmit them, and the programmer converts them to Leu locally, the value only needs to be stable during the time the transfer takes to be acceptable. The particular number of bitcoin units in between is immaterial, it is just an accounting unit.
People who hold bitcoin units for longer periods are speculating that demand for them will go up, or at least remain level. Since the number of units is relatively fixed (it is increasing at 11%/year currently, and will taper off to zero over time), demand will drive the exchange rate up or remain level. If you live in a country that is rapidly increasing the money supply, like Venezuela or the United States, a stable supply of an alternative good can be attractive. That store of value function is separate from the value transfer function.
Well, they can try, but it will be about as successful as controlling bitTorrent, or cannabis.
The proposed New York State regulations require the "issuer" of a virtual currency to get a license if they have users in the state. Who exactly in the bitcoin community would that be? Satoshi Nakamoto? Chinese mining farms? So I agree, good luck. At most some bitcoin-based businesses will just not deal with New York customers.