@CryptoCommodity: Others have made the same comment you have regarding fiat vs. not. See http://forum.bitcoin.org/index.php?topic=6247. I agreed to change it in the next draft, but its far from a "fatal flaw" when in the same paragraph I clearly explain what I mean by that term. Your argument regarding bitcoins not being a security is not convincing because you are not engaged in legal analysis. Instead, you are saying, "does this feel like a security? Obviously not." That kind of thinking is relevant and and important but never dispositive. Instead, one must turn to the language of the statute itself, the relevant cases that have interpreted those statutes, and legislative history and other clues that help indicate what the legislatures purpose was. Another lawyer has written a post disagreeing with my conclusion about bitcoins being a security, but he used the same methods I did: methodical legal analysis. See http://www.lextechnologiae.com/2011/06/26/why-bitcoin-isnt-a-security-under-federal-securities-law/.
@Big Time Coin: If you had taken a look at my paper you would have seen that I thoroughly covered the Liberty Dollar "travesty." In fact, I looked at the laws and the case filings. I called the prosecutor and also spoke to Bernard von NotHaus. That case has _nothing_ to do with alternative currencies. It's about NotHaus and his associates defrauding people. More importantly, if _you_ had read the counterfeiting statutes that the Act refers to, you would see that they all only apply to metal money and have no application to Bitcoin. Thus, their repeal is irrelevant to Bitcoin.
MsBitcoin's response to your last paragraph is on point. Nothing in Ron Paul's act would be directly relevant to bitcoins except the repeal of legal tender laws. Even the tax section likely does not apply to bitcoins because that section is clearly aimed at _metal_ coins. The only general word in that list is "coin" and when reading statutes, general words are generally read to be limited by those in a list with it. Thus, the fact that bitcoin has the word "coin" in it is irrelevant.
Topic: Support U.S. HR 1098 Free Competition in Currency Act (Read 2297 times)
It will never get out of the committee, so it doesn't matter. Ron Paul isn't taken seriously by politicians (but he should be) and he is sadly retiring in 2012
You do understand that Bitcoins aren't actually coins......right?
My quick reading of this statute indicates that it would have almost no impact on bitcoin.
And now, back to studying for the NY Bar.
And now, back to studying for the NY Bar.
Reuben, I'm not at all impressed that you are a law student, and this is a Bitcoin discussion not a legal advice forum, but good luck studying for the bar. Perhaps instead of reading the statute, which can be thoroughly read in 1-2 minutes as it is so short, you can read the USC codes it repeals. I hope you read about the Liberty Dollar travesty of justice when researching your paper. It is directly on point.
For anyone interested,
http://en.wikipedia.org/wiki/Liberty_Dollar Check out the "legal issues" section for a preview of what a case against BitCoin major players will look like if some top cop decides to go after it.
BitCoin. The proposed federal law would prevent taxes on sale and transfer of coins. It would make it legal to issue a coin currency, which is currently not legal. It would also send a message to the Executive branch, namely the FBI, Secret Service, and U.S. Mint that they should not be building their big case against bitcoin. Surely the idea has landed on someone's desk by now, no?
I think you should be clear: using/possessing bitcoin right now is not a legal grey area, it is very clearly legal.
not necessarily true for merchants.
It's 100% true for merchants. Only it's troublesome with IRS report.
Yes I read your paper. IMO the fatal flaw in your paper is labeling Bitcoin a fiat currency.
From http://en.wikipedia.org/wiki/Fiat_money
Fiat money is money that has value only because of government regulation or law. The term derives from the Latin fiat, meaning "let it be done", as such money is established by government decree. Where fiat money is used as currency, the term fiat currency is used.
It is such a stretch to claim that Bitcoin could possibly qualify as a security.
From a post of mine in another thread.
"There is no way bitcoins are a security. Bitcoins are individual things. You could securitize bitcoins by creating a security that signifies ownership in a bitcoin (or bitcoins) and possibly trade that on a stock market but by definition a security is only a document ownership of some underlying thing."
What underlying entity would the holder of a Bitcoin have a right to?
I don't mean to come off too harsh. I know it is hard to find anything that closely resembles Bitcoins and therefore it is hard to find laws that could possibly be applied to Bitcoin in the future. The two closest things I have found are diamonds for a physical good and Zynga Poker Chips for a virtual good.
My point is that at this time is there are no laws or caselaw that apply to Bitcoins.
eGold was it's own monster as it issued its "e-currency" and did things like make notations on its clients accounts such as "child porn" and "cc fraud" showing that they had knowledge that their users were participating in illegal activity.
Bitcoin exchanges, which I think are what we are talking about here, can easily avoid this by 1. not asking where Bitcoins came from and 2. not asking where they are going. As far as the exchange is concerned it is not illegal to buy or sell Bitcoins. As long as the exchange complies with the cash transaction regulations in the jurisdiction they are based in and take the necessary steps to not do business with an entity that shows up on the AML/CFT blacklist they have very limited liability.
People still have an inherent right to privacy, at least in the US, and until they have been proven quilty of something I don't beleive those rights should be arbitrarily regulated away.
From http://en.wikipedia.org/wiki/Fiat_money
Fiat money is money that has value only because of government regulation or law. The term derives from the Latin fiat, meaning "let it be done", as such money is established by government decree. Where fiat money is used as currency, the term fiat currency is used.
It is such a stretch to claim that Bitcoin could possibly qualify as a security.
From a post of mine in another thread.
"There is no way bitcoins are a security. Bitcoins are individual things. You could securitize bitcoins by creating a security that signifies ownership in a bitcoin (or bitcoins) and possibly trade that on a stock market but by definition a security is only a document ownership of some underlying thing."
What underlying entity would the holder of a Bitcoin have a right to?
I don't mean to come off too harsh. I know it is hard to find anything that closely resembles Bitcoins and therefore it is hard to find laws that could possibly be applied to Bitcoin in the future. The two closest things I have found are diamonds for a physical good and Zynga Poker Chips for a virtual good.
My point is that at this time is there are no laws or caselaw that apply to Bitcoins.
eGold was it's own monster as it issued its "e-currency" and did things like make notations on its clients accounts such as "child porn" and "cc fraud" showing that they had knowledge that their users were participating in illegal activity.
Bitcoin exchanges, which I think are what we are talking about here, can easily avoid this by 1. not asking where Bitcoins came from and 2. not asking where they are going. As far as the exchange is concerned it is not illegal to buy or sell Bitcoins. As long as the exchange complies with the cash transaction regulations in the jurisdiction they are based in and take the necessary steps to not do business with an entity that shows up on the AML/CFT blacklist they have very limited liability.
People still have an inherent right to privacy, at least in the US, and until they have been proven quilty of something I don't beleive those rights should be arbitrarily regulated away.
@CryptoCommodity: I never said that Bitcoin was clearly illegal. There is a huge difference between saying that bitcoin is "clearly legal" is definitely wrong, as I did, and saying that bitcoin is definitely illegal. Earlier threads on here had relevant discussions relating to money transmitting and money laundering laws that likely apply. Unfortunately, I didn't get to discuss those in my paper (which has been accepted for publication). I am planning to getting around to it either in my next draft or another paper. But I did address, for example, the application of securities laws. Have you read my paper?
If it is not "clearly legal" can you cite any law or caselaw that would indicate that Bitcoin breaks any existing laws?
Hi Folks,
My quick reading of this statute indicates that it would have almost no impact on bitcoin. The counterfeiting statutes already have no application to bitcoin, as I explained in my paper (http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1817857). Similarly, taxation of physical coins as commodities is not really relevant to bitcoin. The other aspect -- legal tender -- is relevant to bitcoin but is less important than most would think, as @gmaxwell's link regarding legal tender status shows.
There are _tons_ of laws that place bitcoin in a legal gray area, many of them orders of magnitude more important than legal tender laws, such as money transmitting and money laundering rules, securities laws, and so on.
@Denicen: How can you flatly state something like "it is very clearly legal." Reading these forums and searching the web would indicate to you a number of ways that bitcoin is not "very clearly legal" or even "clearly legal."
And now, back to studying for the NY Bar.
Best,
Reuben
My quick reading of this statute indicates that it would have almost no impact on bitcoin. The counterfeiting statutes already have no application to bitcoin, as I explained in my paper (http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1817857). Similarly, taxation of physical coins as commodities is not really relevant to bitcoin. The other aspect -- legal tender -- is relevant to bitcoin but is less important than most would think, as @gmaxwell's link regarding legal tender status shows.
There are _tons_ of laws that place bitcoin in a legal gray area, many of them orders of magnitude more important than legal tender laws, such as money transmitting and money laundering rules, securities laws, and so on.
@Denicen: How can you flatly state something like "it is very clearly legal." Reading these forums and searching the web would indicate to you a number of ways that bitcoin is not "very clearly legal" or even "clearly legal."
And now, back to studying for the NY Bar.
Best,
Reuben
lol, wow..
George Carlin was right. Politics and voting only exist to give you the illusion of a choice. Whoever has the money runs the show. Period.
I think you should be clear: using/possessing bitcoin right now is not a legal grey area, it is very clearly legal.
not necessarily true for merchants.Correct.
Here is a source for the skeptical: http://www.treasury.gov/resource-center/faqs/Currency/Pages/legal-tender.aspx
As with many things in law there is a fine distinction. You can agree to contract for whatever terms you like and you are generally not forced to do business under terms you don't. What legal tender is dealing with (in the US, in other places it might be different) are debts already created.
An effort to force people to accept USD when they don't want it would have preverse effects like not being able to sell tickets to events (wtf! you must let me in, here is USD!!) or other stupid things like "here is an armored car of pennies, give me your car now, I don't car that you only wanted to trade it for another similar car! Legal tender!"
I think you should be clear: using/possessing bitcoin right now is not a legal grey area, it is very clearly legal.
not necessarily true for merchants.
Merchants are allowed to accept alternative currencies/other stuff in exchange for services/goods, but they HAVE to accept USD by law.
Where this law is written down? It doesn't make any sense to me. If I want to sell my computer and I put an ad on Craigslist saying that I'll only accept a trade for a car, that's illegal? Also, even if this is law, what's stopping me from selling hamburgers for .5 BTC or 50 USD ? I would accept both then, wouldn't I?
I think you should be clear: using/possessing bitcoin right now is not a legal grey area, it is very clearly legal.
not necessarily true for merchants.
Merchants are allowed to accept alternative currencies/other stuff in exchange for services/goods, but they HAVE to accept USD by law.
This isn't completely accurate. You only have to accept USD from someone who owes you a debt.
I think you should be clear: using/possessing bitcoin right now is not a legal grey area, it is very clearly legal.
not necessarily true for merchants.
Merchants are allowed to accept alternative currencies/other stuff in exchange for services/goods, but they HAVE to accept USD by law.
There is no source because the statement isn't based in fact.
Everything is legal until it isn't.
Could you possibly violate laws dealing in cash transactions for Bitcoins? Yes
Interestingly I have yet to see one exchange that correctly interprets US law regarding Currency Transaction Reports (CTRs) and/or understands their reporting requirements (or lack thereof).
Full text of the bill:
HR 1098 IH
112th CONGRESS
1st Session
H. R. 1098
To repeal the legal tender laws, to prohibit taxation on certain coins and bullion, and to repeal superfluous sections related to coinage.
IN THE HOUSE OF REPRESENTATIVES
March 15, 2011
Mr. PAUL introduced the following bill; which was referred to the Committee on Financial Services, and in addition to the Committees on Ways and Means and the Judiciary, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned
A BILL
To repeal the legal tender laws, to prohibit taxation on certain coins and bullion, and to repeal superfluous sections related to coinage.
Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ‘Free Competition in Currency Act of 2011’.
SEC. 2. REPEAL OF LEGAL TENDER LAWS.
(a) In General- Section 5103 of title 31, United States Code (relating to legal tender), is hereby repealed.
(b) Clerical Amendment- The table of sections for subchapter I of chapter 51 of title 31, United States Code, is amended by striking the item relating to section 5103 and inserting the following new item:
‘5103. [Repealed].’.
SEC. 3. NO TAX ON CERTAIN COINS AND BULLION.
(a) In General- Notwithstanding any other provision of law--
(1) no tax may be imposed on (or with respect to the sale, exchange, or other disposition of) any coin, medal, token, or gold, silver, platinum, palladium, or rhodium bullion, whether issued by a State, the United States, a foreign government, or any other person; and
(2) no State may assess any tax or fee on any currency, or any other monetary instrument, which is used in the transaction of interstate commerce or commerce with a foreign country, and which is subject to the enjoyment of legal tender status under article I, section 10 of the United States Constitution.
(b) Effective Date- This section shall take effect on December 31, 2011, but shall not apply to taxes or fees imposed before such date.
SEC. 4. REPEAL OF SUPERFLUOUS SECTIONS.
(a) In General- Title 18, United States Code, is amended by striking sections 486 (relating to uttering coins of gold, silver, or other metal) and 489 (making or possessing likeness of coins).
(b) Conforming Amendment to Table of Sections- The table of sections at the beginning of chapter 25 of title 18, United States Code, is amended by striking the items relating to the sections stricken by subsection (a).
(c) Special Rule Concerning Retroactive Effect- Any prosecution under the sections stricken by subsection (a) shall abate upon the taking effect of this section. Any previous conviction under those sections shall be null and void.
HR 1098 IH
112th CONGRESS
1st Session
H. R. 1098
To repeal the legal tender laws, to prohibit taxation on certain coins and bullion, and to repeal superfluous sections related to coinage.
IN THE HOUSE OF REPRESENTATIVES
March 15, 2011
Mr. PAUL introduced the following bill; which was referred to the Committee on Financial Services, and in addition to the Committees on Ways and Means and the Judiciary, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned
A BILL
To repeal the legal tender laws, to prohibit taxation on certain coins and bullion, and to repeal superfluous sections related to coinage.
Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ‘Free Competition in Currency Act of 2011’.
SEC. 2. REPEAL OF LEGAL TENDER LAWS.
(a) In General- Section 5103 of title 31, United States Code (relating to legal tender), is hereby repealed.
(b) Clerical Amendment- The table of sections for subchapter I of chapter 51 of title 31, United States Code, is amended by striking the item relating to section 5103 and inserting the following new item:
‘5103. [Repealed].’.
SEC. 3. NO TAX ON CERTAIN COINS AND BULLION.
(a) In General- Notwithstanding any other provision of law--
(1) no tax may be imposed on (or with respect to the sale, exchange, or other disposition of) any coin, medal, token, or gold, silver, platinum, palladium, or rhodium bullion, whether issued by a State, the United States, a foreign government, or any other person; and
(2) no State may assess any tax or fee on any currency, or any other monetary instrument, which is used in the transaction of interstate commerce or commerce with a foreign country, and which is subject to the enjoyment of legal tender status under article I, section 10 of the United States Constitution.
(b) Effective Date- This section shall take effect on December 31, 2011, but shall not apply to taxes or fees imposed before such date.
SEC. 4. REPEAL OF SUPERFLUOUS SECTIONS.
(a) In General- Title 18, United States Code, is amended by striking sections 486 (relating to uttering coins of gold, silver, or other metal) and 489 (making or possessing likeness of coins).
(b) Conforming Amendment to Table of Sections- The table of sections at the beginning of chapter 25 of title 18, United States Code, is amended by striking the items relating to the sections stricken by subsection (a).
(c) Special Rule Concerning Retroactive Effect- Any prosecution under the sections stricken by subsection (a) shall abate upon the taking effect of this section. Any previous conviction under those sections shall be null and void.
OP is right, heres the announcement from RP and the bill info - I thought it was just a metals bill at first, but its actually revoking legal tender laws among other things.
http://www.youtube.com/watch?gl=US&feature=player_embedded&v=4VrjSzERvcs
http://www.govtrack.us/congress/bill.xpd?bill=h112-1098
http://www.youtube.com/watch?gl=US&feature=player_embedded&v=4VrjSzERvcs
http://www.govtrack.us/congress/bill.xpd?bill=h112-1098
I think you should be clear: using/possessing bitcoin right now is not a legal grey area, it is very clearly legal.
not necessarily true for merchants.
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