Topic: USA Subsection Needed? (POLL) (Read 4094 times)

US Credit Card Company to Integrate USDC, SEC No-Action Letter Addresses ERC20 Token, Tax Bodies Address Crypto, US and State Enforcement Continues
Blog The Blockchain Monitor
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OECD, USA December 4 2020
In this issue:

• Credit Card Company to Integrate USDC Payments, 401(k) Advisor Integrates Bitcoin

• SEC Issues No-Action Letter on Digital Assets, Second Addresses ERC20 Token

• FinHub Role Expands, Foreign IPO and Lending Service Integrates Crypto

• Tax Bodies Address Cryptocurrencies, Exchanges React to Evolving Landscape

• US and State Enforcement Agencies Take Action Against Crypto Fraud Schemes

• Foreign Regulators Scrutinize Privacy Coins, Seize/Sell Criminal Crypto

 

Credit Card Company To Integrate USDC Payments, 401(k) Advisor Integrates Bitcoin

A major U.S. credit card company has announced plans to link its global payments network of over 60 million merchants to a cryptocurrency startup’s Ethereum-based U.S. Dollar Coin (USDC). Although the credit card company itself will not custody the digital asset, the two companies will begin working to help credit card issuers begin integrating software for USDC into their platforms to enable USDC payments. Those businesses will in turn be able to send international USDC payments to any business supported by the credit card company, convert USDC into the local national currency and spend the funds anywhere that accepts the company’s credit card. The companies also plan to release a new credit card in the future that lets businesses send and receive USDC payments directly from any business using the card.

Digital Asset Investment Management (DAiM), a California-based registered investment advisor, recently announced that it has launched the first ERISA-compliant employer-sponsored 401(k) plans that integrate bitcoin into plans’ asset allocation. DAiM will serve as advisor and fiduciary to companies looking to create model portfolios of varying risk profiles comprising traditional assets and allocations of up to 10 percent of bitcoin.

A Japanese banking giant has announced plans to launch a blockchain payment network in 2021. The company expects the network to be fully functional throughout Japan by summer 2022.

For more information, please refer to the following links:

Visa Partners With Ethereum Digital-Dollar Startup That Raised $271 Million
Digital Asset Investment Management (DAiM) launches first ERISA compliant employer-sponsored 401(k) plans with Bitcoin
Japan’s Banking Giant MUFG Plans to Launch Blockchain Payment Network in 2021
SEC Issues No-Action Letter on Digital Assets, Second Addresses ERC20 Token

The Division of Corporation Finance (CorpFin) of the U.S. Securities and Exchange Commission (SEC) issued its third no-action letter addressing digital assets, which is its second no-action letter addressing an ERC20 token. The no-action letter request involves “an online software application that people use to interact in virtual venues, play games … and offer and obtain virtual goods and services.” The “heart” of the platform is a virtual economy using digital credits, which cannot be transferred or used off the platform. The platform requested no-action relief to use an ERC20 token instead of the credits. The ERC20 token would have real value and can be transacted on and off the platform. CorpFin noted significant factors in granting the no-action relief, which include:

The company will not use proceeds from the sale of the digital asset to finance the upgrade from credits to the digital asset, which will be fully functional and operational immediately upon its launch and before any digital asset is sold.
The digital asset will be immediately usable for its intended purpose at the time it is sold.
Digital asset holders will be subject to know your customer/anti-money laundering checks when they establish open wallets and on an ongoing basis.
The digital asset will be made continuously available in unlimited quantities and at a fixed price.
The company will not promote or support listing or trading of the digital asset on any third-party trading platform.
Users who purchase the digital asset from the company will be required to affirm that they are acquiring the digital asset for consumptive use and not for speculative purposes.

There might be a more misguided segregation request in this forum somewhere, but I haven't seen it.

Even if we warn exchangers not to deal with Americans, they still will deal with them

I still don't understand the distinction.  Whether you're a US based exchange selling to Panamanians, a Panama based exchange selling to Americans, a US based exchange selling to Americans, or a Panamanian based exchange selling to Panamanians, the rules are essentially the same.  It may determine whether the SEC or the SMV is more or less likely to be the relevant enforcer, and you might make a practical judgment there about who you'd rather go up against (The SMV tends to be more relaxed, but they also can be pressured more politically if you've pissed off the wrong person, and they have greater investigative powers as they are a unified financial regulator.  The SEC has substantially greater resources, but they're also usually more responsive and organizationally easier to deal with, they're more independent politically, but also more reliant on inter-agency cooperation), but from the neutral standpoint of this board, neither is preferable to the other.

You are absolutely correct.  I should have specified "warn US Based exchanges not to deal with Americans".

If you're going to do that, will you also warn them not to deal with essentially every other country in the world?  With the exception of a few (China, the UAE, Brazil, and Nigeria come to mind), nearly every other country's securities laws are modeled significantly after the US system.

Edit:  Similarly, AML compliance (while less likely to track the US scheme) is also detailed and complex in nearly every country, the impact of FATF and related FSABs worldwide on national policies has been far reaching.  Singling out the US as if it's laws are somehow uniquely onerous is just idiotic and demonstrates complete ignorance about the international environment for investment and AML compliance regulation. 

FWIW I voted for:   Warn exchangers not to deal with Americans

And the first stock exchanges were in Europe, so we all learn from each other.  If you need to feel separate, stick a [USA] in your thread title or something distinctive.
Hiding all the USA stuff in its own little sub forum doesn't improve matters.

We can't help it if we're exceptional! 

But ultimately I think I agree with you, though for different reasons.  The securities laws of many jurisdictions are based on US law anyway, the world is our subsection, suck it nerds.

A law ghetto?

Law is a matter of geography everywhere.  Why exacerbate US exceptionalism?

The JOBS Act has/will provide some avenues, but for the most part they [will] either: a) provide avenues for accredited investors or b) still require registration, but reduce regulatory burdens on small issuances. 

It's particularly inaccurate now, with the beginning of the JOBS Act implementation, ya? 

Even so, we need a USA subsection.  How 'bout it admins?

Well yes, there are always exceptions and OPs statement would have been overly-broad and inaccurate even if he had said it exclusively about equity funding.  That said, what I was trying to point out was that when it comes to raising capital, equity financing by default creates a security, while debt financing does not (it can, it just doesn't do it by default).  Registration requirements for offerings and sales apply to all securities unless explicitly exempted, so it's probably fair to say "As a small business-person you are not allowed to ask anyone in public for equity funding" even though there are some very unique types of equity funding that don't create securities and there are some equity securities that are explicitly exempt, because as a general rule that's correct.  With debt financing, registration requirements are the exception rather than the rule, and so saying it about borrowing with interest is flat wrong, it's nether absolutely true nor even generally true, only sometimes true. 

There are exceptions to each of the ANYONE blanket statements made in the OP.
Some but not all business transactions fall within these regulatory governance parameters.
Most private business transactions are just that.

This is inaccurate.  Privately negotiated lending does not have to be registered per se in the US, even if the initial solicitation is public, so long as it doesn't otherwise qualify as a security under the '33 and '34 acts.  The catch-all in the '33 acts definition of "security," the investment contract, is not broad enough to cover private non-standardized lending (as broad as it is).

CFTC and SEC are federal US, not state.
Federal law is mostly silent on small lending.
An exception being the Dodd-Frank Wall Street Reform and Consumer Protect Act of 2010 which created the Consumer Financial Protection Bureau, but there's not much to it, mostly it is focused on helping consumers understand credit terms.
http://www.consumerfinance.gov/strategic-plan/#overview

State lending rules are a different matter entirely but generally if you are incorporated in a state, you get the rules of that state nationally.  Lending a commodity is generally not an issue, unless you are a large bank expecting to be governed by BASEL III and have reserve requirements.

Absolutely, because it may be a commodity you need to be careful writing contracts around it.  Offering to pay someone 1.1 btc for a 1 btc loan at some future date might be a problem in many states.

No, not really.  Commodities are not securities.

The regulatory authority is different as well, securities are SEC regulated, commodities (futures contracts) are regulated by CFTC.
Commodities are not regulated in this way, just the contracts on them.
You can buy wheat, you can buy gold, you can buy the actual stuff.  The SEC and CFTC care about the paper, not so much the actual stuff unless it fits the structure of a futures contract.

btceic you should look through this section of the forums.  There is great advice in this "legal" section that answers the kind of question you are asking.  Just click here:

https://bitcointalk.org/index.php?board=74.0

If you can't find what you need you may want to start a new thread. 

You can with coinbase

edit: Coinbase is registered as an MSB

My questions:
As a user do we have anything to worry about?
As a miner do we have anything to worry about?

Things that I do with bitcoin:
buy bitcoin, buy stuff with bitcoin, mine bitcoin
I purchased 10 "shares" of a group buy for KnC miners, they went "public" with an IPO on bitfunder, I was issued 1000 shares of the group buy.

Are any of these activities illegal?

Quite the opposite its created to steal our money and give it to the con men in office.

Can you name such exchanges?  Are there ANY exchanges that are licensed or is there any known legal way to convert btc to usd?  A miner can't even sell btc to his best friend for "cash" can he?

I would think you'd have no problems selling things like amazon gift cards or home depot gift cards but cash in the mail seems sketchy, right? and wires?

As long as you pay your taxes, yes. 

I would also avoid using one of the unlicensed exchanges to cash back into USD because of their non-compliance with various laws and regulations.

We want to run a BTC mine.

- mining without conversion to USD does not require FinCEN registration (right?)
- we will pay the revenues from mining to people just like a dividend ... does this require registration as MSB ? (this would mean that all companies that pay out dividends must register as MSB).

It's not the individual investor who usually gets caught, it's the guy pitching.  It is illegal to ask the public for funding with an unregistered offering.  This law is designed to protect the individual from unscrupulous con men.

I dont get it... so its illegal for a private citizen to give a loan to a business?

Lmao I have NEVER heard of anyone getting caught for that.

Damn straight

Other countries also have securities laws which may be as complicated as the American laws and also apply internationally. So is it not better to make a subsection about security legislation in general?

Luckily this law was changed April 5th.

I can give a rats ^%#^& about anything coming from an administration that traffics firearms to drug dealers and slaps the hands of major banks (HSBC) laundering money for the same thing.

So if the government doesn't explicitly condone the behavior through legislation, then it is assumed to be illegal? Does this sound like the ideology of a free country?


It is data and code. Nothing more.





There are already rules in place to prevent the selling of fake securities. It is called "fraud".

I didnt read the whole thing but It really doesn't matter.... the govenment isnt going to come after individuals selling and trading coins and if they do it is because their is serious money changing hands..as long as the government gets paid they are good, just pay your taxes. These guidelines are for institutions doing millions of dollars of revenue... Do you really think the government is gonna track you down and throw you in jail for borrowing or trading or selling coins between a bunch of nerds online.. look just buy and sell and use coins get people using them.. grow it big enough and it cant be stopped...dont worry about the government!
 

Excellent.  Glad you came, thanks!

Viceroy, thanks for the invite to this thread.  It seems like Nova has it nailed down here.

what mama dont know wont hurt her..

So then private companies need not worry?  I can accept bitcoins for my restaurant let's say, and currently am not in violation of any laws, correct?

Can anyone here explain to me the compliance aspects of the 2012 JOBs act? I realize they were requiring the SEC to write laws based on microfinance/microfunding however they obviously haven't done so.

This is an aspect I am VERY interested in because it is why I am wanting to seek BTC investment for my company. (My premise was that since BTCT/BF were "Virtual" exchanges, that it would be an out for me).

Yikes.


Thanks for the heads up.

Yes that is one assertion and that assertion is actually valid if the company is based in the USA.

Are you suggesting that most publicly traded bitcoin-centric companies are likely non-compliant could be easy SEC targets?

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