Federal judge: Bitcoin, “a currency,” can be regulated under American law(arstechnica.com)
arstechnica.com
Federal judge: Bitcoin, “a currency,” can be regulated under American law
http://arstechnica.com/tech-policy/2013/08/federal-judge-bitcoin-a-currency-can-be-regulated-under-american-law/
5 comments
It doesn't have to be a currency to have value. Defrauding people with baseball cards is illegal.
Baseball Cards is a good example. I think that different Federal, State and Local agencies should prosecute such things.
Meanwhile, the SEC has far bigger fish to fry, as it were.
Meanwhile, the SEC has far bigger fish to fry, as it were.
Saying it's not a currency is not the same as saying it has no value.
IIRC, most definitions provided by Federal Law designate that currency or money is by definition minted by sovereign governments.
IIRC, most definitions provided by Federal Law designate that currency or money is by definition minted by sovereign governments.
Um, duh? That one is literally right in the Constitution (between regulating Coinage and control of interstate commerce).
There were many private currencies in the 19th century that the government never claimed power over. Here's one example:
http://en.wikipedia.org/wiki/Christopher_Bechtler#The_Bechtl...
This move with regard to Bitcoin is merely Bank.Gov trying to protect its monopoly on the issuing of currency.
http://en.wikipedia.org/wiki/Christopher_Bechtler#The_Bechtl...
This move with regard to Bitcoin is merely Bank.Gov trying to protect its monopoly on the issuing of currency.
> There were many private currencies in the 19th century that the government never claimed power over.
The fact that Congress chooses, for a time, not to exercise a power within the scope of its enumerated powers in Art. I does not in any way change the fact that it is an enumerated power.
> This move with regard to Bitcoin is merely Bank.Gov trying to protect its monopoly on the issuing of currency.
No, this is about punishing fraud in selling investments, not about issuing currency.
The fact that Congress chooses, for a time, not to exercise a power within the scope of its enumerated powers in Art. I does not in any way change the fact that it is an enumerated power.
> This move with regard to Bitcoin is merely Bank.Gov trying to protect its monopoly on the issuing of currency.
No, this is about punishing fraud in selling investments, not about issuing currency.
> this is about punishing fraud in selling investments
Were that true, the principals of Goldman Sachs would be in jail.
Were that true, the principals of Goldman Sachs would be in jail.
> Were that true, the principals of Goldman Sachs would be in jail.
No, actually, that has nothing to do with what the issues in this case are.
No, actually, that has nothing to do with what the issues in this case are.
It certainly calls the intentions of the SEC into question.
> It certainly calls the intentions of the SEC into question.
If you want to make the argument that there is evidence (whether from their response to Goldman-Sachs or otherwise) that the SEC's interest in the case at issue here is not securities fraud, go ahead and make the argument.
Waving your hand in the direction of Goldman-Sachs, however, is not making that argument.
If you want to make the argument that there is evidence (whether from their response to Goldman-Sachs or otherwise) that the SEC's interest in the case at issue here is not securities fraud, go ahead and make the argument.
Waving your hand in the direction of Goldman-Sachs, however, is not making that argument.
That the SEC has a relatively small and new target in their sites while letting the larger and far older targets skate is all the argument I need.
That's not even remotely an argument that the current case isn't about securities fraud (much less that it is specifically about restraining Bitcoin.) I mean, the simplest explanation of those hostile to the SEC is that the SEC is concerned about securities fraud -- except when the graduated is big enough and politically connected enough , in which case they lose interest.
Some still exist: http://en.wikipedia.org/wiki/Ithaca_Hours
I don't know that the government has any illusions over the issuance of currency. I can spend and exchange my foreign currency in the US, correct? I can take my US dollars and transfer them and get foreign currency in another country as well.
What this says is that any commercial exchange is subject to government regulation.
What this says is that any commercial exchange is subject to government regulation.
The US government claiming power over the currency its banking corporation issues is one thing. I don't know why people just accept, without question, the claim that the government has regulating authority over a currency that it doesn't issue.
> The US government claiming power over the currency its banking corporation issues is one thing. I don't know why people just accept, without question, the claim that the government has regulating authority over a currency that it doesn't issue.
This case isn't about regulating authority over currency. Its about whether the fact that an investment was sold for bitcoins isntead of a fiat currency takes that investment out of the scope of the definition of "securities" subject to various provisions of the Exchange Act relating to securities fraud.
This case isn't about regulating authority over currency. Its about whether the fact that an investment was sold for bitcoins isntead of a fiat currency takes that investment out of the scope of the definition of "securities" subject to various provisions of the Exchange Act relating to securities fraud.
Because the Article I, Section 8 says that Congress has the power to:
"To coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures;"
"To coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures;"
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This isn't Congress doing the "regulating". It's the Executive Branch.
> This isn't Congress doing the "regulating".
Actually, it is Congress. Specifically, the Court ruled that the use of bitcoins for the transactions at issue does not (as the defendant attempted to argue) cause them to fall outside the scope of the Exchange Act of 1934.
Actually, it is Congress. Specifically, the Court ruled that the use of bitcoins for the transactions at issue does not (as the defendant attempted to argue) cause them to fall outside the scope of the Exchange Act of 1934.
It's the executive branch enforcing regulatory laws duly passed by Congress.
It strikes many, me included, as an overreach of executive power.
Then vote in Representatives who agree with you, instead of claiming that the government has no authority. They now have the authority, they were given it by the legislature, which is in the legislature's power to do. If you want the executive to not have the authority then you must have the legislature take it back. But simply claiming that the government doesn't have the authority just because you wish they would not have the authority, doesn't actually make it so.
When government loses consent of the governed, it no longer has authority to govern. That won't stop those that believe themselves fit to rule from ruling if they have the power to do so.
As I had to explain the difference between lunch and arbitrary use of government power, do I also have to explain the difference between government of consent and tyranny?
As I had to explain the difference between lunch and arbitrary use of government power, do I also have to explain the difference between government of consent and tyranny?
Another great example of how discussing politics on HN is frustrating. You started out with an observation that the executive branch had overreached. It was pointed out that they were delegated this power explicitly by the legislature. Now your argument changes, without acknowledging the correction or the error of your previous comment, and, as usual, it shifts to something too nebulous to discuss.
It's not your fault; this is just a really terrible venue for political discussions.
It's not your fault; this is just a really terrible venue for political discussions.
Or perhaps it's indicative of the many abuses of authority that emanate from government?
They are not claiming regulating authority over a currency. They are not saying it can't be exchanged or that they control its production. They are saying you can't say "It's Bitcoin, so I didn't cheat anyone out of anything."
You can't defraud someone in any currency in the US. Or launder money or perform illegal activities. I can't mug a tourist and take the money out of their wallet and then claim that because I didn't steal any US currency I'm not a thief.
You can't defraud someone in any currency in the US. Or launder money or perform illegal activities. I can't mug a tourist and take the money out of their wallet and then claim that because I didn't steal any US currency I'm not a thief.
>I can spend and exchange my foreign currency in the US, correct?
Yes, but as I understand it, foreign currency within the US is still regulated.
Yes, but as I understand it, foreign currency within the US is still regulated.
The key point is "claimed power over". Had those currencies become significant and used in interstate commerce the government may well have started enforcing their power to regulate it.
Any medium of exchange can theoretically be used as currency (e.g. cartons of cigarettes in prison, or cans of chewing tobacco on a submerged submarine on its third month of patrol).
Whether the government pays attention to it or not will depend on whether that type of currency starts to act as coinage or as a medium of interstate commerce, but just because the government doesn't deign to notice cowrie shells being used for trade doesn't mean they don't have the power to regulate it.
Any medium of exchange can theoretically be used as currency (e.g. cartons of cigarettes in prison, or cans of chewing tobacco on a submerged submarine on its third month of patrol).
Whether the government pays attention to it or not will depend on whether that type of currency starts to act as coinage or as a medium of interstate commerce, but just because the government doesn't deign to notice cowrie shells being used for trade doesn't mean they don't have the power to regulate it.
> Had those currencies become significant and used in interstate commerce
They were. The government's reaction to the popularity of the Bechtler coins was to open two mints in North Carolina, not to "regulate" Bechtler's coins.
They were. The government's reaction to the popularity of the Bechtler coins was to open two mints in North Carolina, not to "regulate" Bechtler's coins.
Which was still the government's choice. I chose a turkey flatbread sub at Subway yesterday. I might still choose meatball should I go next week.
I shouldn't need to to explain this to you, but there's a vast difference between what you choose for lunch and how a government exercises arbitrary power.
The point, I believe, is that the argument that the government has no legitimate power to regulate (non-government-issued-currency X) because in the past it chose not to regulate (non-government-issued-currency Y) in the same manner, despite several express Constitutional grants of power that speak to relevant powers of government is, well, completely bunk.
The government does not lose enumerated powers, or the ability to apply them in a particular manner, because it chose not to apply them in that manner at one time in the past in a similar circumstance.
You can, of course, make the argument that, power aside, the government should not use its enumerated powers in the way in question and should instead act as it did in the past case, but that takes more than waving your hand in the direction of the past case and asserting that it exists and therefore the restraint the government exercised then must be repeated, it takes actually making the case that that decision would be correct in the present circumstances.
The government does not lose enumerated powers, or the ability to apply them in a particular manner, because it chose not to apply them in that manner at one time in the past in a similar circumstance.
You can, of course, make the argument that, power aside, the government should not use its enumerated powers in the way in question and should instead act as it did in the past case, but that takes more than waving your hand in the direction of the past case and asserting that it exists and therefore the restraint the government exercised then must be repeated, it takes actually making the case that that decision would be correct in the present circumstances.
Once government claims and exercises powers, be they legitimate or not, it's pretty much impossible to get government to scale back. History is a good guide as to the eventual fate of governments and nations that allow arbritary power to expand without limits.
Generation to generation, the natural tendency of a relative minority is to seek and maintain influence over the many. This is reflected in the continued advance of the power of the State over the rights and liberties of its citizens. Unlike our own political vocabulary, The Greeks had terms for this particular dynamic: hoi polloi and hoi oligoi.
> You can, of course, make the argument that, power aside, the government should not use its enumerated powers in the way in question and should instead act as it did in the past case
My larger argument is more fundamental. If power is asserted over rights often enough, there will be few, if any, actual rights left.
Generation to generation, the natural tendency of a relative minority is to seek and maintain influence over the many. This is reflected in the continued advance of the power of the State over the rights and liberties of its citizens. Unlike our own political vocabulary, The Greeks had terms for this particular dynamic: hoi polloi and hoi oligoi.
> You can, of course, make the argument that, power aside, the government should not use its enumerated powers in the way in question and should instead act as it did in the past case
My larger argument is more fundamental. If power is asserted over rights often enough, there will be few, if any, actual rights left.
> My larger argument is more fundamental. If power is asserted over rights often enough, there will be few, if any, actual rights left.
Perhaps. But in this case you're not speaking of any actual 'right' that people had in the first place, so there's no right that would be eroded by SEC action here.
Perhaps. But in this case you're not speaking of any actual 'right' that people had in the first place, so there's no right that would be eroded by SEC action here.
To be honest, I find it hard to take your opinion seriously after you equated your choices for lunch with the exercise of government power.
Why? dragonwriter managed to immediately pick up on what I meant. Would my opinion have been more plausible if I used 13-letter words and quoted Steinbeck instead?
If that "larger argument" is your point, how does it relate to the present issue specifically? How is he ruling here -- that bitcoin is "money" as that term is relevant to the Exchange Act of 1934 and thus sales of investments for bitcoins are subject to the Act, an "assertion of power" that erodes rights?
The Constitutional provisions deal with the right of the Federal and State Governments to issue currency, not individuals or private organizations. Meanwhile, there has been a long history of minor private currencies in the US without legal interference.
I haven't read the decision yet, but the justification in the article is weak. If Bitcoin is a currency because it can be exchanged for dollars and other real currencies, anything I can sell on Ebay is a currency as well. I guess the SEC will crack down on fraudulent dealers on ebay now.
I haven't read the decision yet, but the justification in the article is weak. If Bitcoin is a currency because it can be exchanged for dollars and other real currencies, anything I can sell on Ebay is a currency as well. I guess the SEC will crack down on fraudulent dealers on ebay now.
Article I, Section 8 says that Congress may:
"To coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures;"
So the Constitution gives Congress not just the right to issue currency, but to regulate both its own currency and other currencies.
In any case, Shavers's argument was ridiculous to begin with. He claimed that his investments didn't fall under the umbrella of the SEC because Bitcoin isn't money. But the SEC regulates securities, not currency. A security is just a tradeable financial instrument. The subject of the security doesn't have to be, and often isn't, money. E.g. a share in a corporation is not backed by dollars, it's backed by an ownership stake in some legal entity.
"To coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures;"
So the Constitution gives Congress not just the right to issue currency, but to regulate both its own currency and other currencies.
In any case, Shavers's argument was ridiculous to begin with. He claimed that his investments didn't fall under the umbrella of the SEC because Bitcoin isn't money. But the SEC regulates securities, not currency. A security is just a tradeable financial instrument. The subject of the security doesn't have to be, and often isn't, money. E.g. a share in a corporation is not backed by dollars, it's backed by an ownership stake in some legal entity.
Article I, Section 8: Says nothing about "other currencies," only the value of its own coined money and of foreign coin. I don't see it.
To be clear, I'm devil's advocate arguing that this probably shouldn't be an SEC case, not that he hasn't committed a prosecutable fraud.
Securities always represent a legal obligation to something. A stock represents legal ownership of a legally recognized organization. If this guy wasn't making such binding obligations, as I suspect he wasn't, it isn't a securities issue - just fraud.
Because applied this broadly, the SEC would therefore regulate as Securities Dealers: Ebay, Baseball Card publishers, and Blizzard's World of Warcraft.
To be clear, I'm devil's advocate arguing that this probably shouldn't be an SEC case, not that he hasn't committed a prosecutable fraud.
Securities always represent a legal obligation to something. A stock represents legal ownership of a legally recognized organization. If this guy wasn't making such binding obligations, as I suspect he wasn't, it isn't a securities issue - just fraud.
Because applied this broadly, the SEC would therefore regulate as Securities Dealers: Ebay, Baseball Card publishers, and Blizzard's World of Warcraft.
The court ruling at issue [1] specifically addresses each of the legal elements of "security" and how they apply to the what Shaver is accused of doing.
[1] http://www.archive.org/download/gov.uscourts.txed.146063/gov...
[1] http://www.archive.org/download/gov.uscourts.txed.146063/gov...
Thanks. Still think this ruling is weird, but it sure is interesting.
I think the gap you're trying to carve out for bitcoin between U.S. money and "foreign coin" is a narrow and tenuous one.
You've got a good point that, depending on how Shavers's investment was structured, he might not have been issuing anything that could be called a security. But he was billing it as a "bitcoin hedge fund" so if there was some sort of tradable interest in the fund that would in fact be a security.
You've got a good point that, depending on how Shavers's investment was structured, he might not have been issuing anything that could be called a security. But he was billing it as a "bitcoin hedge fund" so if there was some sort of tradable interest in the fund that would in fact be a security.
I'll have to dig in to federal law again, but I'm pretty sure the law does carve it out that way. And it seems legally weird to me that I as an American citizen can mine "foreign coin" in the US. But I see where you're coming from.
Actually I think there is a bit of a tradition of the SEC prosecuting people for purporting to sell securities, even if they legally weren't. So I'd say that should be the basis of prosecution as opposed to "Bitcoin = Money."
I'm mostly just sore that the SEC hasn't bothered to prosecute MF Global principals, as that was outright, straightforward Securities Fraud.
Actually I think there is a bit of a tradition of the SEC prosecuting people for purporting to sell securities, even if they legally weren't. So I'd say that should be the basis of prosecution as opposed to "Bitcoin = Money."
I'm mostly just sore that the SEC hasn't bothered to prosecute MF Global principals, as that was outright, straightforward Securities Fraud.
Possibly you could simply consider BTC a "non-state" foreign currency?
Or you could just recognize that the Exchange Act is an exercise of Commerce Clause power and not Coinage Clause power, so, while whether bitcoin is "money" within the sense of the definition in the Exchange Act is an issue, it is an issue completely unrelated to whether it is "money" at all in the sense intended by the Coinage Clause, much less whether it is "foreign money" or some other kind.
> if Bitcoin is a currency because it can be exchanged for dollars
From the decision: "It is clear that Bitcoin can be used as money. It can be used to purchase goods or services, and as Shavers stated, used to pay for individual living expenses. The only limitation of Bitcoin is that it is limited to those places that accept it as currency. However, it can also be exchanged for conventional currencies, such as the U.S. dollar, Euro, Yen, and Yuan. Therefore, Bitcoin is a currency or form of money, and investors wishing to invest in BTCST provided an investment of money."
Exchangeability for other currencies isn't the only factor, the real factor is "it can be used as money", and further, that the defendant in the case agreed that it can be used as money.
> I guess the SEC will crack down on fraudulent dealers on ebay now.
If they were selling securities contracts (which is the issue here) on ebay , the SEC would already be cracking down on them.
Shaver tried to argue that the contracts he was selling were not securities contracts because they were being sold for bitcoins rather than dollars, among other arguments.
From the decision: "It is clear that Bitcoin can be used as money. It can be used to purchase goods or services, and as Shavers stated, used to pay for individual living expenses. The only limitation of Bitcoin is that it is limited to those places that accept it as currency. However, it can also be exchanged for conventional currencies, such as the U.S. dollar, Euro, Yen, and Yuan. Therefore, Bitcoin is a currency or form of money, and investors wishing to invest in BTCST provided an investment of money."
Exchangeability for other currencies isn't the only factor, the real factor is "it can be used as money", and further, that the defendant in the case agreed that it can be used as money.
> I guess the SEC will crack down on fraudulent dealers on ebay now.
If they were selling securities contracts (which is the issue here) on ebay , the SEC would already be cracking down on them.
Shaver tried to argue that the contracts he was selling were not securities contracts because they were being sold for bitcoins rather than dollars, among other arguments.
Read the decision. The defendant in the case tried to argue "Bitcoin isn't money, so Bitcoin investments aren't securities". The judge ruled "it walks like a duck and quacks like a duck, it's a duck" and said that the prosecution under securities law can go forward.
It's also not saying Bitcoin is official legal tender, just that for purposes of investment and securities law, it's a form of "money" and fraud involving Bitcoin investments can be prosecuted under existing securities law.
It's also not saying Bitcoin is official legal tender, just that for purposes of investment and securities law, it's a form of "money" and fraud involving Bitcoin investments can be prosecuted under existing securities law.
I talked about the Commerce clause, and Coinage, not currency, as IIRC the Constitution didn't speak to paper money per se.
Some people were (hypocritically) claiming that Bitcoin is not money and thus any regulations of money do not apply.
Both pro- and anti-bitcoin groups were rather split on whether it counted as money or not.
Well the government itself issues money that's worth something simply because they think it is, so considering bitcoin as "money" is at least not inconsistent with what the government is already doing in this sphere. :)
Actually fiat currencies have value because the government promises to accept them for tax purposes (and for various other purposes -- fees, fines, court settlements, etc.). The government does not "think" the money is worth something; the people think the law has meaning and is worth following, and so the law gives money its value. The relationship between money and law is a major reason (maybe the only reason) that currencies tend to be neatly partitioned along international borders.
It is my impression that earlier this year the IRS, in some non-binding way (a press release or something?) said that they suggested people treat bitcoin as a commodity for tax purposes, not a currency. I may be recalling incorrectly since I can't find anything saying that now, but whether it is a currency or a commodity is certainly something that has been frequently discussed.
The important part of this news seems to be that bitcoin is indeed going to be a currency. That currencies can be regulated is not news at all.
The important part of this news seems to be that bitcoin is indeed going to be a currency. That currencies can be regulated is not news at all.
This case is almost completely unrelated to Bitcoin's treatment under tax law; the court finding that Bitcoin is "money" for purpose of the Exchange Act and thus that transactions involving it meet that prong of the test for whether they are "securities" transactions subject to that Act does not say anything about their treatment under tax law.
In computing terms, the definition of a local variable in one scope doesn't tell you anything about a variable with the same name in a different scope.
In computing terms, the definition of a local variable in one scope doesn't tell you anything about a variable with the same name in a different scope.
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Wait, I don't understand - how does the US government have jurisdiction, practically speaking, over Bitcoin transactions occurring entirely outside of the US?
Or is that not what this says? Because to me, "can be regulated under American law" means what I wrote above.
Or is that not what this says? Because to me, "can be regulated under American law" means what I wrote above.
Bitcoin transactions are broadcast to the entire network, which includes people who are in the USA. At the very least, American laws apply to those people and can certainly affect foreign Bitcoin users.
Really though, what the judge is saying is that Bitcoin cannot be used to evade US laws where those laws apply. No surprises there.
Really though, what the judge is saying is that Bitcoin cannot be used to evade US laws where those laws apply. No surprises there.
That's not what it says.
It's not 'the US can regulate any interaction that involves bitcoins'.
The proper reading is 'even if an monetary interaction substituted bitcoins for dollars, if the US would have had jurisdiction, then the US still has jurisdication'.
It's not 'the US can regulate any interaction that involves bitcoins'.
The proper reading is 'even if an monetary interaction substituted bitcoins for dollars, if the US would have had jurisdiction, then the US still has jurisdication'.
The article is not great.
Basically, the guy who ran Bitcoin Savings and Trust decided as part of his defense to argue that he couldn't be prosecuted under federal securities law because what he was doing didn't meet the definition of "securities", since -- and this was the defendant's argument -- Bitcoin isn't money.
The judge basically took a look at this, said "it walks like a duck and quacks like a duck", and ruled that for purposes of this prosecution under securities law, yes, Bitcoin is money and Bitcoin investments are securities.
Basically, the guy who ran Bitcoin Savings and Trust decided as part of his defense to argue that he couldn't be prosecuted under federal securities law because what he was doing didn't meet the definition of "securities", since -- and this was the defendant's argument -- Bitcoin isn't money.
The judge basically took a look at this, said "it walks like a duck and quacks like a duck", and ruled that for purposes of this prosecution under securities law, yes, Bitcoin is money and Bitcoin investments are securities.
It means they'll pass or enforce laws that require citizens to pay taxes, exchanges to file paperwork & pay fees, etc. It means if you're caught not abiding by the law, then you will get punished.
Obviously they don't have natural jurisdiction over and above crypto-anarchy, unless they have the capacity to wage war against the protocol. They probably do. There will be workarounds. So it goes.
I believe the ponzi pirate PirateAt40 should be punished, not because Bitcoin falls under the jurisdiction of government as money, but rather because the pirate defrauded people. You can defraud people with beanie babies or baseball cards as well.
Obviously they don't have natural jurisdiction over and above crypto-anarchy, unless they have the capacity to wage war against the protocol. They probably do. There will be workarounds. So it goes.
I believe the ponzi pirate PirateAt40 should be punished, not because Bitcoin falls under the jurisdiction of government as money, but rather because the pirate defrauded people. You can defraud people with beanie babies or baseball cards as well.
Why would the government bother attacking the protocol? I am sure the NSA has the necessary resources, but there would be no point. Failing to pay taxes is jail time. Failing to pay fees as an exchange means your business is shuttered, and continuing after that means jail time. Maybe other countries will be more lenient but US Bitcoin users will be in trouble.
It is also very likely that any taxes or fees associated with Bitcoin will have to be paid in dollars. If there are no legal avenues for exchanging Bitcoin for dollars then it would be illegal to do business in Bitcoin at all. You may personally skirt the law on that, but your local supermarket will not, and neither will your apartment complex, your auto dealership, or any of the dozens of other businesses you deal with in your daily life.
It is also very likely that any taxes or fees associated with Bitcoin will have to be paid in dollars. If there are no legal avenues for exchanging Bitcoin for dollars then it would be illegal to do business in Bitcoin at all. You may personally skirt the law on that, but your local supermarket will not, and neither will your apartment complex, your auto dealership, or any of the dozens of other businesses you deal with in your daily life.
I guess people who want to avoid paying taxes will have to find other local businesses that do the same.
What matters to bitcoin users is whether the transaction goes through or not.
What matters to bitcoin users is whether the transaction goes through or not.
How many businesses do you know of that pay no taxes at all? Even mafia fronts pay some taxes (having your front shut down for failing to pay property taxes tends to work out poorly). There is also the matter of where those businesses will get their supplies -- eventually they are going to have to deal with someone who pays taxes.
What this boils down to is this: how much faith you have in the government's ability to enforce the law, particularly those laws related to money. I have quite a bit of faith in the government's ability to enforce the tax code; even people who cheat on their taxes are rarely bold enough to not bother to pay any taxes.
What this boils down to is this: how much faith you have in the government's ability to enforce the law, particularly those laws related to money. I have quite a bit of faith in the government's ability to enforce the tax code; even people who cheat on their taxes are rarely bold enough to not bother to pay any taxes.
They can enforce it within their powers. Confiscating bitcoins like they confiscate wages is not within their powers. They can jail you for evading taxes apparently. C'est la vie.
> Confiscating bitcoins like they confiscate wages is not within their powers.
The government confiscates wages by sending legally binding orders to people who they believe might owe you wages directing them to remit the owed wages to the remit them to the government instead.
They obviously can do the same thing with bitcoins. The only current difficulty with doing that with bitcoins now is that bitcoins are currently used for so few transactions for so few people that its not likely to be worth the governments effort to find out who is likely to owe you bitcoins to serve them with such orders. If bitcoin were to become widely used, that would change.
The government confiscates wages by sending legally binding orders to people who they believe might owe you wages directing them to remit the owed wages to the remit them to the government instead.
They obviously can do the same thing with bitcoins. The only current difficulty with doing that with bitcoins now is that bitcoins are currently used for so few transactions for so few people that its not likely to be worth the governments effort to find out who is likely to owe you bitcoins to serve them with such orders. If bitcoin were to become widely used, that would change.
> They obviously can do the same thing with bitcoins
How? They can't confiscate bitcoins without the private key. It's not like Bitcoin is run by a bank with an internal central ledger.
How? They can't confiscate bitcoins without the private key. It's not like Bitcoin is run by a bank with an internal central ledger.
> How?
I suggest you reread the sentence that precedes the one you quoted (and which is the one that "the same thing" refers to.) Because it answers your question.
I suggest you reread the sentence that precedes the one you quoted (and which is the one that "the same thing" refers to.) Because it answers your question.
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Good luck!
That is kind of like saying, "Good luck collecting taxes!" At some point you need to exit the Bitcoin system -- maybe you need your nation's currency, maybe you need a new computer, maybe you just need to buy your lunch, but regulations can and mostly certainly will be enforced at the exit points.
The Bitcoin community is so speculative right now. From the people who are interested in the technology and where it might go and what problems it solves to the people who want to be free from central banks to the people who are just trying to get rich. It sometimes feels like the Bitcoin community has forgotten what currency is for: spending. And if you spend it, someone can regulate it.
I'm sure people used to say the same thing about the dollar or bank notes, and exiting to the underlying asset like gold. It is possible to remain within the Bitcoin system. It may be difficult now, but it's getting easier every day.
As long as the government is collecting taxes, and as long as you cannot make tax payments with Bitcoin, you cannot remain within the Bitcoin system. Even if all your other transactions are done with Bitcoin, you'll eventually need to get some dollars to pay your taxes -- and then you'll be hit with regulations.
As for gold versus paper money, the above reasoning does not apply. Paper money is accepted for tax purposes (and would be far less popular if it was not).
As for gold versus paper money, the above reasoning does not apply. Paper money is accepted for tax purposes (and would be far less popular if it was not).
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At some point, you'll have to make a payment to someone who doesn't accept Bitcoin, which is the point of failure. While cash may be anonymous and Bitcoin may be anonymous (the second one is dangerous, in and of itself), you will have to make a conversion to real-world currency and that transaction can be as heavily regulated, including the requirement for non-anonymity.
And if you stick to Bitcoin transactions only, it would be very easy for authorities to declare tax-evasion, for starters, which opens up a whole different can of worms, as transactions are occurring in a non-regulated space.
On the whole, it seems like Bitcoin-enthusiasts would be far safer in a more regulated environment.
And if you stick to Bitcoin transactions only, it would be very easy for authorities to declare tax-evasion, for starters, which opens up a whole different can of worms, as transactions are occurring in a non-regulated space.
On the whole, it seems like Bitcoin-enthusiasts would be far safer in a more regulated environment.
> On the whole, it seems like Bitcoin-enthusiasts would be far safer in a more regulated environment.
Speaking as a longtime Bitcoin user, I'd disagree. My bitcoins were easier to trade before the government started taking Bitcoin seriously. They were also safer before the government declared the power to confiscate bitcoins.
Speaking as a longtime Bitcoin user, I'd disagree. My bitcoins were easier to trade before the government started taking Bitcoin seriously. They were also safer before the government declared the power to confiscate bitcoins.
money as we know it today had the same problem i guess...
You know, each year in April, many millions of Americans send a pile of paperwork to the government detailing their tax obligations. Often this paperwork is accompanied by a payment owed to the government. People also have money taken from their paychecks as tax payments.
Yes, regulations and laws are applied at the entry and exit points of the money system, and people who try to avoid those regulations run the risk of being arrested.
Yes, regulations and laws are applied at the entry and exit points of the money system, and people who try to avoid those regulations run the risk of being arrested.
Having banks involved has allowed the current regulations. By getting them to follow rules it gets everyone else to do the same.
Now, you can still get around it if you are small enough, but it is the same with nearly anything else.
Now, you can still get around it if you are small enough, but it is the same with nearly anything else.
I think you might be confusing "regulated" with "controlled". Setting aside the question of whether it should be regulated, of course it CAN be regulated. For example, if you're a corporation accepting bitcoins, in order to maintain corporate status, you have to keep good records of who you're receiving bitcoins with, and pay equivalent taxes, etc. etc.
The psychopaths that demand we accept their "protection" want to regulate the exchange of information at all costs.
Exchanging numbers is speech. The war on the 1st continues.
Exchanging numbers is speech. The war on the 1st continues.
I'd love to trade email addresses so that we can exchange numbers in the future! My favorites are 17, 3225, and another one that I don't want to exchange with just anyone.
Unrelatedly, there's a problem with calling things only numbers when they're much more than just numbers. If bitcoin were only numbers, nobody would buy them. People buy them because there's an expectation to store and liquidly transfer value.
The claim that the government can't regulate atoms won't stand up if the atoms you have are in an arrangement that fires bullets.
Unrelatedly, there's a problem with calling things only numbers when they're much more than just numbers. If bitcoin were only numbers, nobody would buy them. People buy them because there's an expectation to store and liquidly transfer value.
The claim that the government can't regulate atoms won't stand up if the atoms you have are in an arrangement that fires bullets.
> The claim that the government can't regulate atoms won't stand up if the atoms you have are in an arrangement that fires bullets.
Well, it might, given the 2nd Amendment. That's not to challenge the general principal you are arguing for, only the specific choice of analogy.
Well, it might, given the 2nd Amendment. That's not to challenge the general principal you are arguing for, only the specific choice of analogy.
Heh. I'm assuming this is some weird sort of parody. In which case: Well done, sir.
It's hard to tell. I'd like to see the whole brochure.
First off you have to understand that contracts are just information and don't apply to you. The state has created a legal 'person' with your birth certificate, but as long as you avoid creating joinder you are not bound to this admiralty law and are free from the sea of commerce.
Yeah, especially since I usually exchange numbers on little folded-over pieces of napkin, instead of with speech. Just easier to remember that way. (And the war on which 1st? Hopefully the 1st of January, because that day's always a mess. But August 1st I like because it's kind of the peak of summer.)
> Exchanging numbers is speech.
Fraud isn't protected speech. Even if you use speech in the course of comitting it. The issue here is securities fraud, not prohibiting the exchange of bitcoins.
Fraud isn't protected speech. Even if you use speech in the course of comitting it. The issue here is securities fraud, not prohibiting the exchange of bitcoins.
Exchanging bits of paper with writing on them (EDIT: Paper money if you're confused) is probably also speech then. Your argument seems a bit misguided there.
Remember the "Citizens United" decision? From wikipedia:"
Justice Kennedy's majority opinion found that the BCRA §203 prohibition of all independent expenditures by corporations and unions violated the First Amendment's protection of free speech. The majority wrote, "If the First Amendment has any force, it prohibits Congress from fining or jailing citizens, or associations of citizens, for simply engaging in political speech."
"
This. And I agree with Justice Kennedy.
If they decided that it wasn't a currency and had no value, the case against the Bitcoin Savings and Trust founder would go nowhere. This decision cuts both ways. Without recognizing it as having value, there'd be no fraud to charge and if you were defrauded, no remedy available.