The SEC Shows Why Bitcoin is Doomed. - page 3.

QuestionAuthority

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Quote from: DeathAndTaxes on January 01, 2014, 07:52:30 PM

Quote from: QuestionAuthority on January 01, 2014, 06:09:37 PM

If I'm reading this right, you are predicting the inevitable failure of Bitcoin as a mainstream financial tool. Start-ups can't afford the cost of entry and power-brokers with deep pockets will crush new legislation, yes?

Well the US isn't the entire world, the rest of the world doesn't really care how dysfunctional the US regulatory structure is. So either startups will route around this problem, they will grow based on non-US business until they can handle the regulatory cost, or they may survive in the state long enough to grow to handle any push back from the states. It certainly is an obstacle to growth, and innovation but progress already routes around the damaged parts of the system. Bitcoin will survive, however the US may simple lose its status as the "tech capital" when it comes to Bitcoin related enterprises.

I should point out I am not saying that is a forgone conclusion but the regulatory risk certainly doesn't help.

That concept "the rest of the world will save us" really doesn't seem to be working anymore. I think it's not working because most of the worlds governments/regulatory systems are as dysfunctional as the US system. I agree with your main point, Bitcoin will survive. Tech creations have a trendy, geeky, cool timeline. Bitcoin is very fashionable and edgy right now. Businesses that survive will need to base their business model of survival on real merits that are timeless because Bitcoin won't be cool and new forever. The US only has a partial hold on being the "tech capital" right now. The regulatory framework is killing more than just Bitcoin.

bovcan

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Quote from: BCB on January 01, 2014, 05:05:22 PM

Also, have you read the transcripts or watched the recent Federal Senate Hearings?

http://www.hsgac.senate.gov/hearings/beyond-silk-road-potential-risks-threats-and-promises-of-virtual-currencies
http://www.banking.senate.gov/public/index.cfm?FuseAction=Hearings.Hearing&Hearing_ID=955322cc-d648-4a00-a41f-c23be8ff4cad

Law Enforcement and Regulators clearly state that bitcoin is NOT illegal it is only the illegal use that they are concerned about.

Hint: Don't believe everything that politicians say in public.

BCB

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BCJ

Quote from: Peter R on January 01, 2014, 08:07:04 PM

Quote from: QuestionAuthority on January 01, 2014, 07:54:27 PM

Quote from: BCB on January 01, 2014, 07:46:35 PM

It is my understanding that bitpay is a "third party payment processor" which is EXEMPT from "money transmitter licensing"

Essentially Bitpay has a contract with their clients, the merchant and when a consumer sends bitcoin to bitpay and bitcoin converts that to cash and sends it to the merchant, the consumer is "legally" sending "other value that substitutes for currency" directly to the merchant. There for bitpay is not a "money transmitter."

But is it not possible for a drug dealer to sell drugs for btc then buy a couple of lamborghinis at a dealership for btc and sell them for dollars. In that scenario isn't BitPay enabling money laundering?

That's a good question. I'm certainly no legal expert, but my take is that it is no different than that same drug-dealer buying his Lamborghini in cash. In Canada (where I'm from) a drug-dealer could do this, but the car-dealership would need to report the transaction to FINTRAC (our version FinCEN). So regardless of whether the drug dealer purchases the car in cash or in bitcoin, the dealership knows who the buyer is and reports the transaction. BitPay is just facilitating the transaction between buyer and seller; they are outside the scope of any reporting requirements.

What you are discussing is called "Trade Based Money Laundering" and it is a bit problem. Auto dealer are required to file currency transaction report (CTR's) with FinCEN for the reason.

EDIT: http://www.ice.gov/cornerstone/money-laundering.htm

BCB

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BCJ

Quote from: DeathAndTaxes on January 01, 2014, 07:52:30 PM

Quote from: QuestionAuthority on January 01, 2014, 06:09:37 PM

If I'm reading this right, you are predicting the inevitable failure of Bitcoin as a mainstream financial tool. Start-ups can't afford the cost of entry and power-brokers with deep pockets will crush new legislation, yes?

Well the US isn't the entire world, the rest of the world doesn't really care how dysfunctional the US regulatory structure is. So I see two potential outcomes (and I should state this is my personal opinon doesn't reflect the views or intentions of my employer). One potential outcome is that startups abandon the US market. They operate when regulation while not non-existent is at least not an impossible burden. The ones which are successful gain the resources to handle the large fixed overhead that MT licenses creates.

The other scenario is startups in the US comply with federal requirements, and are able to grow faster than the response from states; in essence grow to survive.

It certainly is an obstacle to growth, and innovation but progress already routes around the damaged parts of the system. Bitcoin will survive, however the US may simple lose its status as the "tech capital" when it comes to Bitcoin related enterprises. I am not saying that is a forgone conclusion but the regulatory risk and uncertainty doesn't help.

Here is what we will see in 2014. Companies like circle.com with $9M invested, Coinbase.com with $25M invested and any of the other companies that receive significant investment moving quickly to spend a lot of that money to become licensed in all the US State.

I believe, but I'm don't know, that coinx.com has application in 30 or 40 states (since march 18th 2013) and have only received licenses in about 14 or 15 states so far.

And another issue with NO federal regulator is the there is ABSOLUTELY no list of all the money transmitters in every state that requires licensing so there is really no way to tell.

Peter R

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Quote from: QuestionAuthority on January 01, 2014, 07:54:27 PM

Quote from: BCB on January 01, 2014, 07:46:35 PM

It is my understanding that bitpay is a "third party payment processor" which is EXEMPT from "money transmitter licensing"

Essentially Bitpay has a contract with their clients, the merchant and when a consumer sends bitcoin to bitpay and bitcoin converts that to cash and sends it to the merchant, the consumer is "legally" sending "other value that substitutes for currency" directly to the merchant. There for bitpay is not a "money transmitter."

But is it not possible for a drug dealer to sell drugs for btc then buy a couple of lamborghinis at a dealership for btc and sell them for dollars. In that scenario isn't BitPay enabling money laundering?

That's a good question. I'm certainly no legal expert, but my take is that it is no different than that same drug-dealer buying his Lamborghini in cash. In Canada (where I'm from) a drug-dealer could do this, but the car-dealership would need to report the transaction to FINTRAC (our version FinCEN). So regardless of whether the drug dealer purchases the car in cash or in bitcoin, the dealership knows who the buyer is and reports the transaction. BitPay is just facilitating the transaction between buyer and seller; they are outside the scope of any reporting requirements.

BCB

vip

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BCJ

Quote from: QuestionAuthority on January 01, 2014, 07:54:27 PM

Quote from: BCB on January 01, 2014, 07:46:35 PM

It is my understanding that bitpay is a "third party payment processor" which is EXEMPT from "money transmitter licensing"

Essentially Bitpay has a contract with their clients, the merchant and when a consumer sends bitcoin to bitpay and bitcoin converts that to cash and sends it to the merchant, the consumer is "legally" sending "other value that substitutes for currency" directly to the merchant. There for bitpay is not a "money transmitter."

But is it not possible for a drug dealer to sell drugs for btc then buy a couple of lamborghinis at a dealership for btc and sell them for dollars. In that scenario isn't BitPay enabling money laundering?

A drug dealer would not be able to open an account with bitpay. (If that is what you are asking???)

QuestionAuthority

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You lead and I'll watch you walk away.

Quote from: BCB on January 01, 2014, 07:46:35 PM

It is my understanding that bitpay is a "third party payment processor" which is EXEMPT from "money transmitter licensing"

Essentially Bitpay has a contract with their clients, the merchant and when a consumer sends bitcoin to bitpay and bitcoin converts that to cash and sends it to the merchant, the consumer is "legally" sending "other value that substitutes for currency" directly to the merchant. There for bitpay is not a "money transmitter."

But is it not possible for a drug dealer to sell drugs for btc then buy a couple of lamborghinis at a dealership for btc and sell them for dollars. In that scenario isn't BitPay enabling money laundering?

DeathAndTaxes

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Gerald Davis

Quote from: QuestionAuthority on January 01, 2014, 06:09:37 PM

If I'm reading this right, you are predicting the inevitable failure of Bitcoin as a mainstream financial tool. Start-ups can't afford the cost of entry and power-brokers with deep pockets will crush new legislation, yes?

Well the US isn't the entire world, the rest of the world doesn't really care how dysfunctional the US regulatory structure is. So I see two potential outcomes (and I should state this is my personal opinon doesn't reflect the views or intentions of my employer). One potential outcome is that startups abandon the US market. They operate when regulation while not non-existent is at least not an impossible burden. The ones which are successful gain the resources to handle the large fixed overhead that MT licenses creates.

The other scenario is startups in the US comply with federal requirements, and are able to grow faster than the response from states; in essence grow to survive.

It certainly is an obstacle to growth, and innovation but progress already routes around the damaged parts of the system. Bitcoin will survive, however the US may simple lose its status as the "tech capital" when it comes to Bitcoin related enterprises. I am not saying that is a forgone conclusion but the regulatory risk and uncertainty doesn't help.

QuestionAuthority

legendary

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You lead and I'll watch you walk away.

Quote from: Peter R on January 01, 2014, 07:43:12 PM

Quote from: BCB on January 01, 2014, 07:38:07 PM

Bitcoin price will stabilize and adoption will grow to the same degree that we see businesses accepting bitcoin as payment.

Bitcoin as a payment protocol currently holds more value for merchants then for users, as the merchants are the one who are hit with the high charges (which they then pass on to the consumer)

Merchants also need to understand that if they use a company like bitpay.com they assume NO currency volatility risk. That is the biggest fear and the biggest misunderstanding right now.

EDIT: I have no association with bitpay.com

Thank you for all your intelligent and knowledgable posts today, BCB.

You just mentioned BitPay. May I ask how much (if any) legal/regulatory risk you see with their present business model?

I was just going to ask that. Are they in compliance and if so what actions did they take to become fully compliant?

BCB

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BCJ

It is my understanding that bitpay is a "third party payment processor" which is EXEMPT from "money transmitter licensing"

Essentially Bitpay has a contract with their clients, the merchant and when a consumer sends bitcoin to bitpay and bitcoin converts that to cash and sends it to the merchant, the consumer is "legally" sending "other value that substitutes for currency" directly to the merchant. There for bitpay is not a "money transmitter."

EDIT: Bitpay does perform extensive Know Your Customer(KYC) vetting on it's merchants to prevent being caught up in any fraudulent or illicit activity. This is a MUST for any legitimate virtual currency business. See e-gold ltd.

Peter R

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Quote from: BCB on January 01, 2014, 07:38:07 PM

Bitcoin price will stabilize and adoption will grow to the same degree that we see businesses accepting bitcoin as payment.

Bitcoin as a payment protocol currently holds more value for merchants then for users, as the merchants are the one who are hit with the high charges (which they then pass on to the consumer)

Merchants also need to understand that if they use a company like bitpay.com they assume NO currency volatility risk. That is the biggest fear and the biggest misunderstanding right now.

EDIT: I have no association with bitpay.com

Thank you for all your intelligent and knowledgable posts today, BCB.

You just mentioned BitPay. May I ask how much (if any) legal/regulatory risk you see with their present business model?

BCB

vip

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BCJ

Bitcoin price will stabilize and adoption will grow to the same degree that we see businesses accepting bitcoin as payment.

Bitcoin as a payment protocol currently holds more value for merchants then for users, as the merchants are the one who are hit with the high charges (which they then pass on to the consumer)

Merchants also need to understand that if they use a company like bitpay.com they assume NO currency volatility risk. That is the biggest fear and the biggest misunderstanding right now.

EDIT: I have no association with bitpay.com

QuestionAuthority

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You lead and I'll watch you walk away.

Quote from: smoothrunnings on January 01, 2014, 07:29:02 PM

Quote from: QuestionAuthority on January 01, 2014, 03:20:44 PM

I just read this Timothy Lavin Bloomberg story and wondered if it's been discussed yet. I can't seem to find anything on it. If it has please direct me to the thread. The comments at the bottom are as interesting as the article. He raises some interesting points considering all the recent action from government agencies lately (like Mike Caldwell's recent letter forcing him to close up shop). Will governments simply regulate Bitcoin to death like so many good ideas of the past? Will business competition cease to make Bitcoin a worthwhile alternative? Is this just another naysayer that is missing the "point" of Bitcoin? Is the "point" to provide an outlet for crime or does Bitcoin have a place alongside other payment systems and is simply waiting to claim its market share?

http://www.bloomberg.com/news/2013-08-08/did-the-sec-just-validate-bitcoin-no-.html

Wow a news article from August 8, of 2013 last year. I think you need to find something more up-to-date to entertain everyone. It's clear that in October/November of last year the price of bitcoin going up by more than 40% puts an end to the August 8th speculation story!

https://bitcointalksearch.org/topic/m.4259124

QuestionAuthority

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You lead and I'll watch you walk away.

Quote from: TheButterZone on January 01, 2014, 07:23:51 PM

Quote from: QuestionAuthority on January 01, 2014, 05:56:48 PM

We need someone to sell a pound of bread flour for btc and have the flour mill pay it's workers in btc.

http://www.bitcoinclassifieds.net/ad/5233_Bobs_Red_Mill_bread_mix_220oz_bags/

That's a start.

marcus_of_augustus

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Eadem mutata resurgo

Quote from: BCB on January 01, 2014, 07:02:38 PM

Quote from: CompNsci on January 01, 2014, 06:59:44 PM

Quote from: DeathAndTaxes on January 01, 2014, 06:04:35 PM

The current MSB/MT regulation is a massive economic boom for the GreenDots, PayPals, and Western Unions of the world. They will move massive sums of money in lobbying to kill any attempt that opens the flood gates for competitors.

Maybe this time will be different, it certainly is needed.

Classic regulatory capture. This does suggest why Bitcoin businesses should try and fight the regulators and exempt themselves whenever possible.

The whole notion that placing a transaction on the blockchain is somehow the equivalent of transmitting sovereign currencies from one place or time to another on behalf of another party seems rather a stretch legally.

Exactly.

And that is exactly what must be challenged.

Yes, I agree, the racket needs to be challenged ... but for that to happen you will need to put a strongman in the Whitehouse, one with a single passport and a brain.

smoothrunnings

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Quote from: QuestionAuthority on January 01, 2014, 03:20:44 PM

I just read this Timothy Lavin Bloomberg story and wondered if it's been discussed yet. I can't seem to find anything on it. If it has please direct me to the thread. The comments at the bottom are as interesting as the article. He raises some interesting points considering all the recent action from government agencies lately (like Mike Caldwell's recent letter forcing him to close up shop). Will governments simply regulate Bitcoin to death like so many good ideas of the past? Will business competition cease to make Bitcoin a worthwhile alternative? Is this just another naysayer that is missing the "point" of Bitcoin? Is the "point" to provide an outlet for crime or does Bitcoin have a place alongside other payment systems and is simply waiting to claim its market share?

http://www.bloomberg.com/news/2013-08-08/did-the-sec-just-validate-bitcoin-no-.html

Wow a news article from August 8, of 2013 last year. I think you need to find something more up-to-date to entertain everyone. It's clear that in October/November of last year the price of bitcoin going up by more than 40% puts an end to the August 8th speculation story!

TheButterZone

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RIP Mommy

Quote from: QuestionAuthority on January 01, 2014, 05:56:48 PM

We need someone to sell a pound of bread flour for btc and have the flour mill pay it's workers in btc.

http://www.bitcoinclassifieds.net/ad/5233_Bobs_Red_Mill_bread_mix_220oz_bags/

franky1

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can we all quit worrying about government.. writing on a piece of paper in a law book cannot make bitcoin self destruct. people talking in government conference rooms/offices cannot make bitcoin self distruct.

so the government cannot make a law or argue in parliament / washington /etc to make bitcoin useless or broken.

the last time the government went about and made something so common and accessible to average joe illegal, it caused 'issues', but never completely eradicated it.

want some proof.. the prohibition era meant to have wiped out the alcohol industry. yet there were many underground bars, moonshine distillery's and special members only clubs that still got people drunk every night of the year.

infact without government acceptance, the workers and customers had a great time, the alcohol was cheaper and no red tape or paperwork to obide by, no licences, no declarations of tax.

if governments ban bitcoins, then no one would make tax declarations, due to having to question how they received their FIAT income. thus it would drive bitcoins underground, withot paying tax and making it easier for people to do cash for coin transactions totally free from the rules

BCB

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BCJ

Quote from: CompNsci on January 01, 2014, 06:59:44 PM

Quote from: DeathAndTaxes on January 01, 2014, 06:04:35 PM

The current MSB/MT regulation is a massive economic boom for the GreenDots, PayPals, and Western Unions of the world. They will move massive sums of money in lobbying to kill any attempt that opens the flood gates for competitors.

Maybe this time will be different, it certainly is needed.

Classic regulatory capture. This does suggest why Bitcoin businesses should try and fight the regulators and exempt themselves whenever possible.

The whole notion that placing a transaction on the blockchain is somehow the equivalent of transmitting sovereign currencies from one place or time to another on behalf of another party seems rather a stretch legally.

Exactly.

And that is exactly what must be challenged.

CompNsci

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Quote from: DeathAndTaxes on January 01, 2014, 06:04:35 PM

The current MSB/MT regulation is a massive economic boom for the GreenDots, PayPals, and Western Unions of the world. They will move massive sums of money in lobbying to kill any attempt that opens the flood gates for competitors.

Maybe this time will be different, it certainly is needed.

Classic regulatory capture. This does suggest why Bitcoin businesses should try and fight the regulators and exempt themselves whenever possible.

The whole notion that placing a transaction on the blockchain is somehow the equivalent of transmitting sovereign currencies from one place or time to another on behalf of another party seems rather a stretch legally.

Topic: The SEC Shows Why Bitcoin is Doomed. - page 3. (Read 9186 times)