Topic: The bitcoin act - legislation of bitcoin (Read 2038 times)

I am based in the US (I am taking the California Bar in July of this year). My knowledge of law is based on US law and other common law jurisdictions. I will be investigating and expanding into international topics as soon and as much as possible

Interesting. Bookmarked your site. Are you US based? Will you have a global or local focus ?

Just to jump in I am hosting btclag.org. I just finished law school and plan to create a practice around defending and promoting Bitcoin, personal liberty, freedom of speech and basic human rights issues

A business dealing with bitcoins need to adhere to the current finacial framework and legislation if it is to interfer with the existing system, what you suggest here is not mature and rational, although I see where you're coming from.

This 'whitening' of bitcoins will only divide the community.

I don't know if you guys read the paper I referred to earlier but from there is it covers this pertinent issue for the argument against AML philosophy:
The history of the block chain is transparent, but using it as a paper trail is obscured by the human element. People lie about and 'forget' where they got their bitcoins from because they don't keep records or can just flat out refuse to cooperate. The block chain doesn't make this process any easier when you can't tell which part of the transaction is the sending amount and which part is the change. These are the challenges that regulators and victims of fraud face.

As a victim to the Crypto X Change heist I realise that having a bitcoin trail that leads to a real world identity would be a great legal tool. I am realising that block chain analysis is not very likely going to hold up in court as evidence until this gap is closed.

Having said that, I am in the process of writing an article about the CXC heist and will be commencing legal proceedings against Ken in 3 days time - hoping to set a bit of a legal precedent here in Australia.

I think progress would come from getting clarity from the governments around the world on how they see Bitcoin. One suggestion I have is to submit a private ruling with the tax dept so that when you declare your earnings from bitcoin based businesses they have some warning of what to expect. Another - to write to financial regulators to ask if they intend to regulate or define Bitcoin. I must admit I haven't done these steps yet, I nearly submitted a private ruling but I never ended up posting it. I will do it soon though as tax time is coming.

Great ideas here. My original proposition wasn't of these proportions however, I was thinking more along the lines of learning about the current legal status of bitcoin in relation to the current existing framework.

Questions I would be interested in knowing the answers to are:

- What are bitcoins defined as in country x ?
- How are bitcoin trade taxed in country x ? Ie. normal VAT, or VAT only of the surcharge?
- What is the AML/KYC requirements a bitcoin business needs to be concerned about ?
- What licenses would be needed to run an exchange ?
- What license (if any) would be required to run a fixed rate exchange ?

As when it comes to sharing papers obtained from a lawyer, I think that idea is brilliant, as I love to share information, however, as much as I love the idea, I am not sure if all lawyers officers are thrilled about the idea.

How about another model, where every member simply paid 10 BTC to become a member + a yearly fee, then these funds would be used for actions that the members voted on in a democratic fashion. Say 100 people joined, that would be a substantional amount of money with the current rate, about 26.7K USD. These funds could also then be used to help someone in trouble cover lawyers costs. Not sure how that should be organized, but the possibility is there. Every serious bitcoin business owner would be able to pay 10 BTC.

Then information could be shared among paying members, and some information could be available for everyone. Perhaps lawyer documents could not always be shared for free, but then perhaps we could repeat the conclusions in our own words, and thus giving valuable advice to visitors.

Dadj,

Great mind think alike ! I bought bitcoinlegal.org, and posted this :
http://yoniassia.com/bitcoinlegal-org-the-open-legal-site-to-help-legalise-digital-finance/

So how do you suggest we progress ?

Ps - I don't think there should be shift in aml KYC, I think existing aml KYC conpanies can start "whitening" bitcoins, I agree its not trivial, but even a small country with 1M people each connecting full KYC to a bitcoin account holding each only 10 bitcoins, basically makes 90 percent of the bitcoin market "clean", in a p2p market all people need to care about is the person they are dealing wit, and since all the history is transparent it should be fairly simple to verify that person.

Hi Yoniassia

I set this website up not too long ago www.bitcoin-legal.org and am in the process of researching how bitcoin doesn't fit in the current regulatory framework.

I admire your enthusiasm for bringing Bitcoin compliant with the law - it is unworkable with current AML legislation.

I have been reading this paper recently https://docs.google.com/file/d/0B9ZiF3KeHWAwYWU5ODNlZTItNGFkZi00NDM1LThlNTktMTUzZjhmMjlhZDVi/edit?hl=en&pli=1. I think there needs to be a massive shift in people's attitudes towards AML KYC before we can hope to give clear legal definition to Bitcoin.

I agree with both statements, I think you can't regulate technology, you can only analyse how people use it.

if we want to see finance becoming digital I believe early users of this technology must be protected from future claims.

And this is what I suggested, just reporting export from fiat money to virtual currency and to import back to fiat, and therefore enable to report the fiat income, I tried putting what you said.

Virtual currency doesn't need regulation.
Legally report your fiat income when taking profits, and...

Leave us alone!

You cant regulate mathematics.

“Financial regulators can’t regulate consumer behaviour” brett king

As part of the emergence of bitcoin and digital finance, there are a lot of questions regarding the legality of bitcoin and its derivative projects.

One of the main hurdles in financial innovation has always been legistlation and regulation, while regulators have the to keep the best interest of it local citizens, the ussually block innovation due to the exisitng local legal insfrastructure, and the lack of a more agile global infrastructure.
I suggest forming a collaborative brainstorm wiki to create a legal act that people of all countries can try and pass. That will, in effect, formalize bitcoin as a legitimate and legal virtual currency, which business and people can transact with.

I suggest crafting a simple act, that any person can read, understand and promote, for example :
1. Any Person buying/selling virtual currencies is exempt from any future claims of taxes, money laundering or securities law violation, as long as the person reports its buying and selling activity either publicly or privately to a goverment website.
2. Any Company/Business dealing with virtual currencies is obliged to report its buying and selling activity either publicly or privately to a goverment website. Company/Business that report are exempt from future legitlation
3. As Goverment are studying legal aspects of Digital finance, companies who deal with virtual currencies are obligates to provide answers to general questions regarding their activity to help form and promote AML and consumer protection.
4. This legal act is global, and protects companies adhering to the reporting standards.

This will allow a country to build a framework to gather information and usage, and gradually shift its economy toward complete digital transparency. This type of law can draw international businesses which seek legal/regulatory certainty to the country that passes it. Once the volume become significant enough, the country can consider adding taxes on the selling/buying portion or specific virtual activity, so we could look at it as potential revenue.

If just one country claims passes the bitcoin act and by so making is legitimate, there will be a domino effect legalizing it around the world. Of course some countries might try to make it limit its scope and over regulate it, but since they can’t stop or control a decentralized free market they will simply pass a law that they can’t enforce, tey will simply shift business to other countries.

I believe there will always be a black market in bitcoin, just like in the existing economy there is a big http://en.wikipedia.org/wiki/Black_market, but creating simple rules to privately/publicly report activiry can create a white market for it as well. Since the total amount of bitcoin is limited to 21M bitcoin, every company and person who report their activity will in fact will whiten the bitcoin black market, and in fact it should be fairly simple to whiten the majority of bitcoins out there.

While I find the idea of free markets and no regulation romantic, I do not believe governments will (or can) allow their people to hold a majority of their assets in an anonymous digital world, and I truly believe creating competition between governments in which one makes the laws of digital finance more attractive, and drawing people and business around the world to open their business there is a great step towords digital finance.

I would love to get people on board to see how the bitcoin act can be further defined and pushed forward.

Would appreciate spreading the word, maybe then we can build a simple wiki to try and write a first draft, this was written on http://yoniassia.com/the-bitcoin-act/