Topic: USA Subsection Needed? (POLL) - page 3. (Read 4031 times)

Not in the Case of Colorado & Washington and their overturning Federal marijuana prohibition last year...  if the Fed won't back down this will become new caselaw when the supreme court gets around to listening to it.  The Fed argues they have jurisdiction over marijuana because of interstate commerce.  This is the law of the land from Ashcroft Vs. Raich.


I disagree sir, else you would see people doing it.  We are all awaiting the SEC to make it's rules.  There are other types of funding like SCOR which is done within the boundaries of a state but you cannot crowd fund in the USA yet because the SEC won't let you.

"Unlike some of the other provisions of the JOBS Act, before crowdfunding is lawful the SEC must proposed and finalize additional rules. Despite a December 31, 2012 deadline, no rules have been proposed."

http://www.forbes.com/sites/deborahljacobs/2013/04/17/the-trouble-with-crowdfunding/

The rules for an individual business to do it are in place at the federal level.  Utah has a crowd funding law in place.  Last I checked Colorado was looking to do it too and Wyoming doesn't care as long as you register your shares, pay your taxes and no one complains.

What is not in place yet are the rules regarding companies that do this sort of thing on behalf of other companies.  Something like kickstarter for companies cannot yet come into existence because the SEC is in the pocket of big wallstreet firms that make their money raping IPOs.

Still you as an individual small business can do this on your own or with the help of a lawyer.  Just make sure to read the law and comply fully with it.  There are a lot of paperwork obligations and a lot of hoops to jump through, but it's still less than it used to be.
And it is in effect now.

Federal law trumps state law in all cases of interstate commerce including international commerce.
Still cash is in fact a commodity, it does meet the definition.  Cash is a special case of commodity that is subject to certain specific regulations that other commodities aren't. Cash is well defined and well understood and only subject to the regulations of cash and cash like instruments.
Bitcoin has been declared as "cash" which itself is a specific case of commodity and therefore only the regulations of cash properly apply to bitcoin.

When you swap USD for BTC the same laws apply as when you swap for USD for CAD.  That is to say you need to know the source of funds was a legitimate business activity.

When you swap BTC for USD the above applies as well.

When you accept a deposit of BTC you need to follow the same laws that you would accepting a deposit of CAD or USD.

If you accept BTC from people and allow them to withdraw or send then you need to comply with the same laws you would as either a money transmitter or a bank.

If you lend BTC it is the same as lending USD and you should comply with the same laws as you would as a lender, however here you bear the risk of loss without the chance to recoup if you fail to comply.  It is not a criminal act in and of itself.

This discussion could be extended to the peculiarities of every country though.  The fact is you need to know your customer so you can comply with your own local laws and potentially theirs.

You can't do that.  The law was signed by Obabma it's true, but there are no rules yet that allow ANYBODY to actually crowdsource funding.  The SEC has dragged their feet on the matter and the states have said nothing. Like most securities laws there are two completely different sets of rules (fed and state) and there is no state who allows crowdsourced funding... even the fed does not allow it *yet*.




That issue is up for debate at all levels.  In my home state it is a commodity, per the "unofficial" position of the securities division.  If somebody would pay to get the "official" position in any state I'm highly confident many would say the same.  

Unofficial interpretation from an actual regulator:

Not it is not a security.  That was sorta the point of FinCen saying it was cash.
Also Gold & Silver are considered a legal currency now in several states and is gaining traction every day.
They're all regulated as cash and cash like instruments.

A very valid question with some seemingly-extreme options but it needs to be asked.

My vote would be no surprise as I've voiced my opinion on the matter before.

Yes, because it is meets the definition of a commodity, and so writing contracts around it causes it to be regulated.  Commodities include things like wheat and gold bars and bitcoin meets the same definition.  I do not think anybody considers bitcoin "money" at this time but it is clearly a commodity AND a possible way to "transfer value".    http://www.sec.gov/about/laws/sa33.pdf

Value transfer systems are highly regulated as described here:
https://bitcointalksearch.org/topic/full-picture-on-us-msb-regs-state-and-federal-200443

And here:
http://cryptome.org/2012/05/fbi-bitcoin.pdf

Interesting post.  Can you provide a reference to a SEC document stating that transfer of virtual currencies between a bond issuer and bond buyers is regulated?  I understand the concept of exchanging virtual currency for USD and needing to register as a Money Transmitter, and that seems distinctly different from a bond issuer paying dividends in the form of btc.

But is bitcoin a security?
It doesnt look like a security. It has no company behind. Its nothing but a virtual item. What does bitcoin represent?

Any American can invest in any publicly offered security.  The process is very complex and it can easily cost millions of dollars to register a security.  Any foreign bank allowing Americans to invest in them is subject these laws.

I can see that having an active account in US soil is a liability, in this case.

But what can prevent an american citizen from investing in a BVI company? If there is no account or branches in the US?

If you are offering any of these services to Americans I think you must be licensed.  The issue here is the American "customer" not the location of the business.  In fact I think this is exactly what happened to Gox.  They are in Japan.  They tried to wire money to American's through Dwolla.  The money was seized during transit.

Can they get you if you are not licensed?  It depends where you are and if the government of your county cooperates with the USA.  It's against the law for the banks to handle the transactions, which is why the American Wells Fargo closed Mt Gox's account and is now chirping like a caged bird to the regulators.

What if the company is not in the US jurisdiction, but american citizens wire their money overseas??

While a handful of posters would prefer an option for 'ban Viceroy from the forums' I think my questions are important and I am guessing there are many who had no idea why these laws exist at all or who they are designed to protect.  Let me tell you a story.

In the late 1920's when liquor was illegal but pot was not, speakeasy's were all the rage.  In these crazy times of prohibition the underground liquor market thrived.  These were good times (I've read).  After years of having no regulation snake oil salesmen and other charlatans discovered Charles Ponzi.  Ponzi had been jailed in the beginning of the decade but the scheme was just starting to creep into the modern American vernacular.  

Throughout the twenties thousands of men, some with no ill intent, crafted investment schemes by which investors would become 'millionaires' overnight.  (For those who watch you'll recognize in Downton Abbey's third season they speak of the magical Mr Ponzi and his 'scheme' that could keep their castle afloat).  And you know what happened next?

In late 1929 the American stock market crashed and sent the country into the Great Depression, an event which would forever change the way we deal with poverty and investment and social services.

Prior to the 1930's there were no real 'securities' laws and the schemers could offer 'stocks' and 'bonds' to non-qualified investors.  After the crash the regulators stepped in to create a series of laws that would protect individuals from unscrupulous investments schemes.  The regulators operate under a set of rules created in 1933 which completely disallow any non-licensed securities 'broker' to sell or offer to sell any non-registered investment.

So what?

Well the impact is huge.  As a small business-person you are NOT ALLOWED to ask anyone in public for funding.  It's against the law.  I cannot say to anyone in this or any other forum something like: "hey I want to borrow bitcoins from you and I'll pay you back with interest".  To do that is ILLEGAL.  You may think it's not important, but this is exactly what the Securities and Exchange Commission regulates and believe me you do not want to cross them.  Beyond federal regulation we have state regulation.  

The short version is this:

Anyone starting or involved in a commercial enterprise that exchanges bitcoin for money or money for bitcoin is regulated under money transmitter requirements which the department of treasury regulates with their FINCEN unit who came out with guidance last month just before they seized Mt Gox's money as it entered the USA.

Anyone starting or involved in a a commercial enterprise that lends bitcoin to AMERICANS or borrows from them is regulated under securities laws at the state and federal level.  

Anyone who borrowed bitcoin to start a business has probably broken state and federal law as they likely did not create a PPM and only provide it to vetted 'accredited' investors.  

If you or anyone you know has done any of these things they SERIOUSLY NEED to talk to a securities lawyer IMMEDIATELY.  This is not a joke.

MT Gox was trying to (and I'm sure they still are) to become a money transmitter in every state and has spent more than $25,000,000 doing so.  Unfortunately, from my layman position, they appear to have broken the law as they traded in "commodities" and/or "items of monetary value" PRIOR to becoming licensed as a money transmitter in each state.

The American Public has a right to know and as a provider of service you have a duty to provide information related to this.  One simple option is to cut off the USA and if you are not an American you should PROBABLY do this RIGHT NOW.  Else you will be the next to have your funds seized.  Do not think for a second that the Mt Gox issue has ended, it has only just begun.  Liberty Reserve is a great example of what happens to foreigners who deal in America without the appropriate licenses.  

At this time I am unaware of any bitcoin "exchanges" or "lenders" who meet state requirements with the exception of Bitinstant who appears to have filed as a money transmitter in some 30 states and Mt Gox's claim that they are attempting to be fully compliant.  

I have no reason to believe that PERSONAL trading of bitcoin is in ANY way regulated.  Businesses, however, are CERTAINLY regulated if they exchange or buy and sell bitcoin.  A PERSON investing bitcoin into another entity is definitely regulated and has been for 80 years.  


Further analysis:

Source: https://bitcoinfoundation.org/blog/?p=152