Topic: REGULATION: Allow me to give you an Idea of What Is at Stake/a Day in the life - page 2. (Read 2519 times)

Excellent example of changing the subject after losing the point.

This post is not a diss toward the OP, for I was with you the entire way till I reached the bottom of the post.


With all that education and thought that went into this, I bet you don't see the error made in naming the entity as you did, do you?

In fact, there are two issues.

Soooooooooooooooooooooooo many people wanted to "bring Bitcoin to the public" and now they have.

They will also reap what they have sown.

My $.02.

I was responding to what you said above which is that "without regulation" exchanges go under.....the implication is that regulation prevents this.  It doesn't.   Instead of backing up that argument by saying yes regulation does prevent people like Maddoff, you've moved to a different argument which is that regulation helps people get money back and makes criminals go to jail.   I also disagree with this...the overwhelming majority of people who lose money in these types of situations do not get it back....and people who commit fraud and are caught go to jail with or without special new regulations.

If a victim of Madoff lost less than $500,000, they got it back from the Securities Investors Protection Fund insurance.  Above that, money has been slowly clawed back from Madoff's cronies who made big profits, and the bigger Madoff victims are getting about half their money back. Meanwhile, Mr. Madoff is Prisoner #61727-054 at Butner Federal Correctional Institution.

How is getting money back from Intersango working out for you? Or Tradehill? Or Mt. Gox?

Right and regulations like this on Bitcoin companies would affect the entire community, the starup environment, VC investment etc etc etc. all in very negative ways.

Will people fail and "disappear with customer funds" with no regulation.  **Yep**

But if you think regulation will stop crooks then you only need to talk to a victim of Bernie Madoff who scammed more than six times the entire value of all Bitcoin on earth to see the answer.

Those regulations only apply to brokers and exchanges - people who handle other people's money. If you're trading for yourself, or mining Bitcoin, you don't need to qualify as a broker.

Over half of Bitcoin exchanges have failed, often disappearing with customer funds. That's what happens with no regulation.

I don't understand what gives them the right to regulate me? If it was up to me I would leave bit coin alone but people consider me a lunatic for thinking this way, I consider them a $@#$@# and now we are stuck. What's the problem , why can't we be left alone?

Thank you.

The problem with inviting the fox into the hen house is that the nature of regulators is to take more and more power, grow their agencies and influence (often because of political or private sector career ambitions) and seek larger staffs and more influence.

If we have a little 10 person "Bitcoin division" of the State Banking or Securities regulators ....it won't stay small for long.   If Bitcoin grows like it has potential to we can see more oversight and regulation grow with it.

As for your question-- yes that clarity is ideal and exactly what we should be asking for....in Charlie's defense I hope that is what he meant...clarity, not regulation.

Unfortunately, to a hammer all problems look like a nail and Mr. Lawsky and others have already essentially said that they WILL regulate more...opening the door to a more nightmare scenario like this.

Also, some assume it goes without saying that Bitcoin exchange be counted as "money transfer" I would personally have preferred that even this basic step be skipped....we could have treated it like the transfer of frequent flyer miles or WOW money and not even had this much regulation.   The money transmitter registration has to be done in all 50 states and has many burdens surrounding it.

There is great danger in laws which give regulators broad power to interpret things and make new regulations as we go.

This is why the hearings were not in front of law makers but regulators.   Once law makers give power to regulators the regulators can simply make things up as they go and the regulations become very bloated.

The term "regulation" can mean quite a few things. What most of the investor and entrepreneur panels' panelists were arguing for (either explicitly or implicitly) when they made pro-regulation statements, boils down to a few fairly simple things:
1) Clarity that existing AML/KYC/BSA rules that are applicable to money services businesses cover virtual currency businesses to the satisfaction of regulatory bodies.
2) Some way of streamlining the current state-by-state patchwork of money-transmitter rules, and even the definition of "money transmitter".
3) Determination of whether bitcoin is a currency or commodity, neither, or both (as absurd as it is for a gov body, or anyone, to slap such labels on something that can be anything).
4) Clarity from the IRS on tax treatment of virtual-currency gains, and what constitutes a taxable event.


The regulatory nightmare you outlined in your OP is not even on anyone's radar (which I get is the whole point of this thread). So thank you for providing a detailed image of what this could eventually look like. The ecosystem is definitely immature; with both entrepreneurs and VCs in the space having almost no prior experience in institutional finance.

That said, OP, do you think it's possible for regulators to specifically address the items above without leading to a framework with such ridiculous and onerous symptoms as what you describe? How? It's become very clear that the above *does* need to be addressed in order for businesses to flourish (or to even get bank accounts...).


And sidenote: Andreas would be great on any panel, but Keiser is full of hot-air, and would make an awful ambassador for bitcoin (or pretty much anything).

I lost my respect for Charlie Lee. He gains from regulation, most of us lose.

Thank you -- had I known what the panelists would have said I would have absolutely insisted on being there to give a more balanced view.

I thought the hearings would be one side (the regulators) calling for more regulation with the other side (the panelists/ witnesses) calling for them to not regulate.

Instead we had a pro regulation government question 15 or so witnesses of which only two or so were anti-regulation and 3-5 (Winklevoss, Charlie Lee etc) were pro regulation and a few (Professor "Bitcorn" Williams among them) completely anti Bitcoin.

It was a disgrace -- if Williams was bumped and a few others like him bumped and replaced by Andreas Antonopolous,  Max Keiser and a couple others then it would have been more balanced.

I'm definitely not for any of this type of regulation.  This type of regulation is probably more about controlling people vs. benefiting people.  I'm sure the "insiders" hide behind this wall of regulation.  Convenient for them and their profits.

That's one reason I left Finra and became only an RIA.

But, even still, tons of requirements and it depends on what type of company a Bitcoin company is.   If someone writes a magazine about Bitcoin for example they may not face much reg.  But someone like an exchange might be treated like a FINRA member.

This is really important.

Far as I understand, it would prohibit a ton of people that are both use bitcoin and work for an exchange to even talk about bitcoin without passing the speech through a regulator. And the AML and KYC are already covered in the exchanges, there's no need to go further.

It's a pity you weren't there to answer the questions, as you unlike many of those present, seem to have the experience and knowledge in this area.

My example refers to RIAs who do not have custody of client funds, I suppose I should have clarified that originally.

How convenient, then all the nasty business could take place there. Well - it seems to me even regulation is not able to tame the bad boys. But on a serious note: I get your point that regulation is heavy stuff, and is not making it easy for startups.

Fortunately we didn't need Pre-approval to discuss something in a bar.

Provide we met a dozen other criteria

I just try to imagine the chatter after a business dinner in the bar:

Person1: "Hi, did you read about the insider trading at XXX Corp?"
Person2: "Hold on a moment!" Walks quickly to the entrance, and calls the compliance officer of his firm.
Explains the question and discusses with the compliance officer what he can and cannot say. Comes back
and sheepishly says: "Sorry, I was advised by my compliance officer that I cannot give you any answer on these issues unless our review board has looked it over. Why don't you e-mail me the question, and I'll get back to you on monday? And I'm sorry about this, but I really have to leave now, we have mandatory tests tomorrow and I don't want any alchol to show up in my blood, then I might be disallowed form working with my clients, and might lose my job altogether. Bye!"

REGULATION!

They are all accurate.... The example is from what I know best which is FINRA regulation -- this covers hundreds of thousands of reps and relates to millions of customers -- every single professional at Fidelity, Charles Schwab, Merrill Lynch, Citi, JP Morgan, UBS, every discount firm, every independent at firms like LPL etc are all governed by these.

Some industries - like video games and the sale of paper are not as regulated.