Just to bump this up.
The New York Department of Financial Services hearing is now scheduled for Jan. 28. RSVP required if you want to attend.
More details available at http://www.businessinsider.com/here-are-all-the-details-about-the-upcoming-new-york-bitcoin-hearings-2014-1
Topic: Bitcoin Regulation Watch (Read 1171 times)
This is my newbie post.
While the long-term price of Bitcoin may be determined by its usefulness as a disruptive value transmission protocol, at present, the driving force seems to be speculative sentiments. And nothing affects speculative sentiments in the Bitcoin market like regulatory actions do. We need only to look at what the one-two punch by the Chinese regulators had did to Bitcoin prices for an example of this causal link.
As such, it is important for any serious Bitcoin traders to anticipate when major regulatory moves would occur next. Below are four events excerpted from a watchlist that I have assembled. I hope the readers of this post will find them helpful.
Tax -- IRS's treatment of Bitcoin trading gains/losses
April 15 will soon be upon us. This year, given all the media attention, IRS may decide it's time to clarify whether Bitcoin trading gains/losses are capital gains/losses or not. This action may occur any time during the next 3 month. Anticipated effect: positive. IRS cannot "ban" Bitcoin. Any clarification on Bitcoin's tax status would only help add legitimacy and certainty to the Bitcoin economy.
Federal Anti-Money Laundering / Restricition on the financing of criminal activities in general
FinCEN issued a warning about the AML risks of Bitcoin in March, spoke on the same issue at a senate hearing in November, and recently ruled that Bitcoin miners are not money transmitters, thereby exempted from associated AML obligations (mainly the duties to keep records and report suspicious activities). Given AML issues and preventing the rise of Silkroad 2.0 appear to be what the government concerns most about Bitcoin, FinCEN will likely issue formal AML guidance for Bitcoin transactions this year. Anticipated effect: positive, as long as the guidance does not amount to a prohibition. Clear FinCEN guidance will lead to legal certainty, and will greatly facilitate business acceptance of Bitcoin as a payment method.
State AML / Consumer Protection -- New York
New York's new Department of Financial Services indicated that it would hold a public hearing on Crypto currencies in November. Like FinCEN, the state is mostly worried about AML issues and the financing of criminal activities. Although a date is TBD, the hearing will most likely happen by April. All Bitcoin supporters are strongly encouraged to attend or to submit well articulated proposals for New York State's regulation of crypto currencies. Anticipated effect: possible, for similar reasons as above.
China - the third punch
BTC China and other Chinese exchanges dependent on third-party payment processors were hit hard by the Chinese government's decision to ban processors' involvement in Bitcoin-RMB clearing and settlement. But these exchanges, especially Huobi, are now relying on ambiguity in the regulation to continue their operations: namely, the regulation can be read in a way to permit banks' online banking facilities to transfer customers' funds to the exchanges' bank accounts. It is just like any other online wire transfers, after all.
Well, maybe not. The Chinese government may decide that Bitcoin is risky in that a crash in price may result in protestors in the streets, and protectors in the streets are what China hates most. So the Chinese regulators may decide to issue a third joint announcement that bans all meaningful ways for exchanges to accept RMB. Liklihood: low, as certain government officials appear to have vested interest in Bitcoin (so that they could silently move embezzled funds abroad). Anticipated effect: negative. If RMB funds are forced to retreat, a major correction could happen.
Two related notes on china: the country is in an indisputable housing bubble (which may burst in 2014) and may go to war with Japan (very unlikely). Huge amount of RMB will flow into Bitcoin if any of the two events is to happen. This compounded with US institutional investors' entrance may well push the price into 5 digits.
While the long-term price of Bitcoin may be determined by its usefulness as a disruptive value transmission protocol, at present, the driving force seems to be speculative sentiments. And nothing affects speculative sentiments in the Bitcoin market like regulatory actions do. We need only to look at what the one-two punch by the Chinese regulators had did to Bitcoin prices for an example of this causal link.
As such, it is important for any serious Bitcoin traders to anticipate when major regulatory moves would occur next. Below are four events excerpted from a watchlist that I have assembled. I hope the readers of this post will find them helpful.
Tax -- IRS's treatment of Bitcoin trading gains/losses
April 15 will soon be upon us. This year, given all the media attention, IRS may decide it's time to clarify whether Bitcoin trading gains/losses are capital gains/losses or not. This action may occur any time during the next 3 month. Anticipated effect: positive. IRS cannot "ban" Bitcoin. Any clarification on Bitcoin's tax status would only help add legitimacy and certainty to the Bitcoin economy.
Federal Anti-Money Laundering / Restricition on the financing of criminal activities in general
FinCEN issued a warning about the AML risks of Bitcoin in March, spoke on the same issue at a senate hearing in November, and recently ruled that Bitcoin miners are not money transmitters, thereby exempted from associated AML obligations (mainly the duties to keep records and report suspicious activities). Given AML issues and preventing the rise of Silkroad 2.0 appear to be what the government concerns most about Bitcoin, FinCEN will likely issue formal AML guidance for Bitcoin transactions this year. Anticipated effect: positive, as long as the guidance does not amount to a prohibition. Clear FinCEN guidance will lead to legal certainty, and will greatly facilitate business acceptance of Bitcoin as a payment method.
State AML / Consumer Protection -- New York
New York's new Department of Financial Services indicated that it would hold a public hearing on Crypto currencies in November. Like FinCEN, the state is mostly worried about AML issues and the financing of criminal activities. Although a date is TBD, the hearing will most likely happen by April. All Bitcoin supporters are strongly encouraged to attend or to submit well articulated proposals for New York State's regulation of crypto currencies. Anticipated effect: possible, for similar reasons as above.
China - the third punch
BTC China and other Chinese exchanges dependent on third-party payment processors were hit hard by the Chinese government's decision to ban processors' involvement in Bitcoin-RMB clearing and settlement. But these exchanges, especially Huobi, are now relying on ambiguity in the regulation to continue their operations: namely, the regulation can be read in a way to permit banks' online banking facilities to transfer customers' funds to the exchanges' bank accounts. It is just like any other online wire transfers, after all.
Well, maybe not. The Chinese government may decide that Bitcoin is risky in that a crash in price may result in protestors in the streets, and protectors in the streets are what China hates most. So the Chinese regulators may decide to issue a third joint announcement that bans all meaningful ways for exchanges to accept RMB. Liklihood: low, as certain government officials appear to have vested interest in Bitcoin (so that they could silently move embezzled funds abroad). Anticipated effect: negative. If RMB funds are forced to retreat, a major correction could happen.
Two related notes on china: the country is in an indisputable housing bubble (which may burst in 2014) and may go to war with Japan (very unlikely). Huge amount of RMB will flow into Bitcoin if any of the two events is to happen. This compounded with US institutional investors' entrance may well push the price into 5 digits.
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