Germany Sets Standard for Bitcoin Regulation(bitcoinmagazine.com)
bitcoinmagazine.com
Germany Sets Standard for Bitcoin Regulation
http://bitcoinmagazine.com/germany-sets-standard-for-bitcoin-regulation/
9 comments
Governments think of the financial system the way ATT or VZN think of their cellular networks. Nobody is going to let you plug in your new cellular device with just a pitch deck about how it works.
Also: to filter out ponzi schemes and the like.
Also: to filter out ponzi schemes and the like.
"Ponzi schemes" are like "pornodrugterrorists" - just a pseudo-reason to protect the monopoly in the eyes of the voters at their own expense. Maybe if people were allowed to decide whether they want to pay for "protecting" them from ponzi schemes, we would know how these problems could be solved most efficiently. However, the taxes are not paid, but extracted, so we cannot really find out what is the better way to protect ourselves.
Financial fraud duping people is extremely common. You can argue about whether people should protect themselves, but at the end of the day, these laws were demanded as a response to people getting robbed.
Is it a proof of government inefficiency at fighting fraud? Or a call for more regulation?
We would never know that until people are allowed to decide for themselves how they want to protect themselves. Right now we have two problems: 1) we are forced to allocate huge amounts of money for various "protection" of dubious quality, so we don't have much money left for extra protection that we ourselves may choose; 2) various business models that might explore alternative ways to protect people are either prohibited or kept away from existing monopoly markets protected by the state.
In short: while there are state guns, we cannot know if they do us any good. And I very much suspect that any person who constantly coerces you "for your own good" without a good proof is always an evil sadist. (Parents may force children to take a medicine because they can then demonstrate that it was actually helping. Like you may drag me by force from under a running bus and then tell me why you did it. But constant abuse without a proof and religious brainwashing is pure sadism.)
We would never know that until people are allowed to decide for themselves how they want to protect themselves. Right now we have two problems: 1) we are forced to allocate huge amounts of money for various "protection" of dubious quality, so we don't have much money left for extra protection that we ourselves may choose; 2) various business models that might explore alternative ways to protect people are either prohibited or kept away from existing monopoly markets protected by the state.
In short: while there are state guns, we cannot know if they do us any good. And I very much suspect that any person who constantly coerces you "for your own good" without a good proof is always an evil sadist. (Parents may force children to take a medicine because they can then demonstrate that it was actually helping. Like you may drag me by force from under a running bus and then tell me why you did it. But constant abuse without a proof and religious brainwashing is pure sadism.)
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In the 1920s, before you could google "[company name] + scam".
It would be so great if this was the case
Today, people will still put their money on companies that return a result from that query.
That is, most of the MLM companies
Today, people will still put their money on companies that return a result from that query.
That is, most of the MLM companies
The problem is not that government claims to protect A against B.
The problem is that they force C, D, E, F and many others to pay for it. If I don't think the government methods really help anyone, or at least me, I'm still forced to give a part of my income. Also: didn't you notice that almost any voluntary service or product costs the same for both rich and poor, while compulsory government services are somehow priced in a portion of your wealth? Don't you feel that you are being abused?
The problem is that they force C, D, E, F and many others to pay for it. If I don't think the government methods really help anyone, or at least me, I'm still forced to give a part of my income. Also: didn't you notice that almost any voluntary service or product costs the same for both rich and poor, while compulsory government services are somehow priced in a portion of your wealth? Don't you feel that you are being abused?
Abused because if you earn more you're required by society to contribute more? Seriously?
Get a grip. We all benefit from the collective services, and we give in proportion to our ability to do so. If all were asked to pay the same price then the poorest would have nothing left for food.
Get a grip. We all benefit from the collective services, and we give in proportion to our ability to do so. If all were asked to pay the same price then the poorest would have nothing left for food.
"We" do not "give" for "services". There is a privileged group of people who are entitled to not paying taxes at all, but instead extracting them with violent force (and servicing a huge paperwork that hides that violence.)
Policemen do not pay taxes from their salary (even if formally they do). They are net tax receivers. And they also get to hold a gun to your head when you do not give them money, or refuse to pay it from your employee's payroll, or something else (as I said, the paperwork is huge and complex to hide where exactly the gun is being pointed).
When you are being robbed and then given some bribe to make an illusion of a good done to you, it's not a "service", it's a bullshit of a catholic caliber.
As I mentioned many times again on HN, pro-government or pro-law rhetoric is no different from religious bullshit that one group of people uses on another group of people at the expense of someone else.
Compare:
"Without religion and church there's no morality" => "without government we'll have anarchic chaos"
"You must trust pope because he's set here by God" => "You must trust mr. president because there is society that elected him"
"If god does not exist, who created everything?" => "Without government how would we build roads and fly to the moon?"
"The Bible says what's good and what's bad" => "The constitution defines our rights."
"If you are against religion, you are against morality" => "If you are against government, you are against society".
Policemen do not pay taxes from their salary (even if formally they do). They are net tax receivers. And they also get to hold a gun to your head when you do not give them money, or refuse to pay it from your employee's payroll, or something else (as I said, the paperwork is huge and complex to hide where exactly the gun is being pointed).
When you are being robbed and then given some bribe to make an illusion of a good done to you, it's not a "service", it's a bullshit of a catholic caliber.
As I mentioned many times again on HN, pro-government or pro-law rhetoric is no different from religious bullshit that one group of people uses on another group of people at the expense of someone else.
Compare:
"Without religion and church there's no morality" => "without government we'll have anarchic chaos"
"You must trust pope because he's set here by God" => "You must trust mr. president because there is society that elected him"
"If god does not exist, who created everything?" => "Without government how would we build roads and fly to the moon?"
"The Bible says what's good and what's bad" => "The constitution defines our rights."
"If you are against religion, you are against morality" => "If you are against government, you are against society".
You're soooo cute when you're upset about the government.
The government is us. It's not an external parasite. The majority of us want it and see use in it. Sucks to be you I guess.
The government is us. It's not an external parasite. The majority of us want it and see use in it. Sucks to be you I guess.
They want people with assets with something to lose, an aspect of the AML logic.
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Forgive me if I'm just being ignorant on the matter (I'm not super familiar with Bitcoin), but wasn't one of the founding principles of Bitcoin the idea that it wasn't/wouldn't be regulated?
Ehhh... One of the founding principles was that it doesn't have a central issuing authority. The supply of bitcoin can't be controlled, which makes it immune to politically-convenient devaluation or debasement, unlike government-issued fiat currency. Or in laymen's terms: The fed can't just print more bitcoins.
Starting from the above, an extended game of Telephone resulted in some people thinking that Bitcoin can't be regulated at all. This is a silly belief.
Starting from the above, an extended game of Telephone resulted in some people thinking that Bitcoin can't be regulated at all. This is a silly belief.
Can you explain how can bitcoin be regulated? Regulation defined as the ability to control transactions.
The same way transactions in any other currency are controlled: by making laws that say what you must and cannot do and what penalties apply if you don't comply.
You can regulate things around bitcoin (ie exchanges), but you have no direct control of whether or not a wallet is able make transactions. You can't freeze a bitcoin address and associating an address to a real-world identity would be easily circumvented.
Indirect control of the form "you broke this law and go to jail" is perfectly sufficient. And it is in fact attempts to disassociate addresses and real world identities that are easily circumvented when you have the resources of a government.
> You can regulate things around bitcoin (ie exchanges), but you have no direct control of whether or not a wallet is able make transactions.
In this respect, this is no different than most things government regulates, including money-in-the-form-of-coins-and-scraps-of-paper.
In this respect, this is no different than most things government regulates, including money-in-the-form-of-coins-and-scraps-of-paper.
The difference is ease, physical currency is much harder to break apart and move around in large sums without eventually going through something the government regulates. If you kept your transactions entirely in bitcoin, I do not see how anyone could control what you do.
> Regulation defined as the ability to control transactions.
I'm not sure where would you get this definition. https://en.wikipedia.org/wiki/Regulation
> Regulation may refer to the following:
> A process of the promulgation, monitoring, and enforcement of rules, established by primary and/or delegated legislation.
> A written instrument containing rules having the force of law.
In this context they talk about monitoring and enforcing companies' use of bitcoins within legal system.
I'm not sure where would you get this definition. https://en.wikipedia.org/wiki/Regulation
> Regulation may refer to the following:
> A process of the promulgation, monitoring, and enforcement of rules, established by primary and/or delegated legislation.
> A written instrument containing rules having the force of law.
In this context they talk about monitoring and enforcing companies' use of bitcoins within legal system.
In this context they talk about monitoring and enforcing companies' use of bitcoins within legal system.
As `mrb said here, it is not very clear since it explicitly is dealing with bitcoin exchanges: https://news.ycombinator.com/item?id=6238754
As `mrb said here, it is not very clear since it explicitly is dealing with bitcoin exchanges: https://news.ycombinator.com/item?id=6238754
>The fed can't just print more bitcoins.
Mmm, they kinda can: they can deploy a large cluster, let's say 90% of capacity, hoard mined coins, then release them at once - booms, effect is not that different from printing.
Mmm, they kinda can: they can deploy a large cluster, let's say 90% of capacity, hoard mined coins, then release them at once - booms, effect is not that different from printing.
Once the person sells euros for bitcoins, he can spend these coins much more easily anywhere. He can:
1. Mix coins with others to make it impossible to trace where he spends them.
2. Pay someone for labour.
3. Buy any digital product or service online from anyone in the world.
4. Buy something delivered to his door via postal service.
5. Pay for small purchases like with cash.
6. Buy some assets in another country.
Each of these activities are really hard to monitor or affect.
Some activities are easier to regulate. If you are going to buy some AAPL shares or a house, you'd have to tell government something about yourself or the source of your income.
1. Mix coins with others to make it impossible to trace where he spends them.
2. Pay someone for labour.
3. Buy any digital product or service online from anyone in the world.
4. Buy something delivered to his door via postal service.
5. Pay for small purchases like with cash.
6. Buy some assets in another country.
Each of these activities are really hard to monitor or affect.
Some activities are easier to regulate. If you are going to buy some AAPL shares or a house, you'd have to tell government something about yourself or the source of your income.
When you want to establish a business that trades between bitcoins and typical fiat, you are going to be regulated (maybe even just being a business would enable a government to d̶e̶m̶a̶n̶d̶ accept bitcoins as an income tax payment if such a business didn't trade between currencies).
As an individual trading and accepting bitcoins for goods with other individuals, you would be out of the scope of regulation, and because of the nature of bitcoins, you could make it scale to business like levels.
As an individual trading and accepting bitcoins for goods with other individuals, you would be out of the scope of regulation, and because of the nature of bitcoins, you could make it scale to business like levels.
Nothing stops the state for demanding tax payments in normal money regardless of if the income is in normal money or not.
This do happen in real life quite often when people are not paid in cash.
This do happen in real life quite often when people are not paid in cash.
Maybe for business/organizations that declare what they made to the state in the first place. But how does the state demand for something of which they did not know took place between individuals? By going around pricing the market value of everyone's assets and demanding payment in they way they want or get thrown in prison? Or by going around to individuals singled out by incumbents?
They do this the same way they demand taxes on payments made only in cash today. Is it foolproof? No, but it doesn't have to be, just as taxes still ended up coming in somehow even when business ran mostly on cash and cheques.
In this case the blockchain is visible for all to see, including the governments, and they only have to resolve the true identity of someone once to be right for all time.
In this case the blockchain is visible for all to see, including the governments, and they only have to resolve the true identity of someone once to be right for all time.
For business it will be the same as it always has been: You are naturally under the regulation, effective or not, bitcoins or not, of government when you establish oneself as a business. They can use the blockchain to help, but let us not pretend that in itself is a panacea to taxation required for the gears to keep grinding on in the central banking/ governmental taxation systems (which even under loads pre bitcoin, were faltering).
But for individuals, one can create as many wallets as they wish, use as many laundering clients over tor, to remain out of reach. Which is exactly why governments have to set up honey pots to confiscate bitcoins on sites like the silk road (which end up not being effective deterrents and end up being outed as such by the community that relies/favors on reputable past trades). I suspect business/organizations can employ similar technologies to reduce their taxation and how much they declare.
But for individuals, one can create as many wallets as they wish, use as many laundering clients over tor, to remain out of reach. Which is exactly why governments have to set up honey pots to confiscate bitcoins on sites like the silk road (which end up not being effective deterrents and end up being outed as such by the community that relies/favors on reputable past trades). I suspect business/organizations can employ similar technologies to reduce their taxation and how much they declare.
When you want to establish a business that trades between bitcoins and typical fiat, you are going to be regulated.
Yes, that is what the state does.
As an individual trading and accepting bitcoins for goods with other individuals, you would be out of the scope of regulation, and because of the nature of bitcoins, you could make it scale to business like levels.
Yeah but your chances of running such a business and, say, not collecting the sales taxes for your area just went down a few notches. Bitcoin transactions are public, more public than, say, paper currency transactions.
And to answer the gp's original question, this does contradict the original intention of bitcoins. Failed or succesful, bitcoins are losing the specialness that was their original pull. Well, suck on it. The original intention was a la, la land phantasy, a fundamentally impossible Libertarian Party wet-dream.
Bitcoinist never figured out whether their cry was "they can't stop us", "they won't (try to) stop us" or "they shouldn't stop us". The result - the state clearly can stop bitcoin but so prefers to just control it.
I had imagined the whole thing would just collapse but I suppose it may just wind-up a fully regulated cash transfer system. But money still depends on the state.
Yes, that is what the state does.
As an individual trading and accepting bitcoins for goods with other individuals, you would be out of the scope of regulation, and because of the nature of bitcoins, you could make it scale to business like levels.
Yeah but your chances of running such a business and, say, not collecting the sales taxes for your area just went down a few notches. Bitcoin transactions are public, more public than, say, paper currency transactions.
And to answer the gp's original question, this does contradict the original intention of bitcoins. Failed or succesful, bitcoins are losing the specialness that was their original pull. Well, suck on it. The original intention was a la, la land phantasy, a fundamentally impossible Libertarian Party wet-dream.
Bitcoinist never figured out whether their cry was "they can't stop us", "they won't (try to) stop us" or "they shouldn't stop us". The result - the state clearly can stop bitcoin but so prefers to just control it.
I had imagined the whole thing would just collapse but I suppose it may just wind-up a fully regulated cash transfer system. But money still depends on the state.
Personally held bitcoins are not regulated in the same way that personally held cash is not regulated. That is to say, it is regulated... but (depending on how you acquire/spend your bitcoins or cash) it works on the honor system.
Think of waiters receiving cash tips.
Think of waiters receiving cash tips.
Paper money is private. Bitcoins are public (connecting wallets to people is a challenge but with whole Internet tapped, maybe not a huge challenge).
Hence the "(depending on how you acquire/spend your bitcoins or cash)". With bitcoin it is much harder to keep your identity unconnected from your wallet (particularly if you want to do anything with it), though it is possible.
If one considers that the vast majority of people don't go through the lengths to remain pseudonymous on the web, connecting identities to wallets will (eventually) be trivial for the mainstream. However, I find it the case that as of now, that is inversely proportional to the people that use bitcoin. Not to mention all the laundry services out there or that could be placed on the front end of services used through tor (and possibly meshnets in the future).
And just as with cash income, attempting to launder bitcoin income turns it from a fine for undeclared income to a prison term for money laundering/intentional tax evasion.
Note that the reporting on this story is not very clear. Those requirements listed (730,000 EUR minimum capital, etc) are only for Bitcoin exchanges. These regulations do not apply to, eg. businesses merely selling products/services for bitcoins.
>Inter alia the following conditions must be met:
-Initial capital of 730.000 Euros
-Management must be professionally qualified
-A detailed business plan must be submitted
-Capital adequacy standards must be met
-AML mechanisms must be implemented
-Reports must be submitted to BaFin regularly
Well...are there any bitcoin exchanges that meet those requirements in Germany?
-Initial capital of 730.000 Euros
-Management must be professionally qualified
-A detailed business plan must be submitted
-Capital adequacy standards must be met
-AML mechanisms must be implemented
-Reports must be submitted to BaFin regularly
Well...are there any bitcoin exchanges that meet those requirements in Germany?
bitcoin.de has some sort of cooperation with a German Bank:
https://blog.bitcoin.de/en/bitcoin-de-und-fidor-bank-ag-vere...
https://blog.bitcoin.de/en/bitcoin-de-und-fidor-bank-ag-vere...
As from the start of the cooperation, which will be
activated upon the registration with the German Federal
Financial Supervisory Authority, Bitcoin Deutschland GmbH
will become Fidor Bank AG’s so-called “tied agent” to
conduct the bitcoin trading for Fidor Bank AG on
bitcoin.de.
Thus far, government efforts to regulate ones and zeroes haven't met with great success.
Regulation is not about the ones and zeros but about the conversion of € to BTC and account keeping.
Both account keeping and converting one currency into another are well understood problems for regulators.
Both account keeping and converting one currency into another are well understood problems for regulators.
Regulation is about control, which is what Germany is now trying to do with Bitcoin. I suspect the regulators will fail with regard to control of Bitcoin in the long run.
"I suspect the regulators will fail with regard to control of Bitcoin in the long run."
How do you figure? Germany, like any other developed country, can simply go to the delta: merchants who want to stay in business. Want your business license? Better comply with currency laws.
How do you figure? Germany, like any other developed country, can simply go to the delta: merchants who want to stay in business. Want your business license? Better comply with currency laws.
The argument could be made that this move by Germany is actually a ploy to make Bitcoin look like a paperwork/legal nightmare and time-moneysuck so that merchants will stay away from it.
Bitcoin is too useful to be squashed by mere government regulation. If a few more countries employ these draconian measures, some cash-starved government will welcome Bitcoin in the future.
If regulators ("the body of Leviathan and the head of a social worker", to lift from Joseph Stromberg) were smart, they'd advocate easy exchange rules and impose a small tax on each transaction on the exchange.
Over the course of generations, I tend to have more faith in markets than in governments. That's why I think regulators will fail in their efforts in the long run.
Bitcoin is too useful to be squashed by mere government regulation. If a few more countries employ these draconian measures, some cash-starved government will welcome Bitcoin in the future.
If regulators ("the body of Leviathan and the head of a social worker", to lift from Joseph Stromberg) were smart, they'd advocate easy exchange rules and impose a small tax on each transaction on the exchange.
Over the course of generations, I tend to have more faith in markets than in governments. That's why I think regulators will fail in their efforts in the long run.
Is it also a ploy to keep people away from credit cards? Cash? Gift cards? It's an interesting novelty for now, with almost no legal strings attached. It's almost like paying for things with rubber bands--cool and interesting at first. But as soon as it's trying to play with the big boys (credit cards, gift cards, et. al), its use has to follow the rules, and suddenly it isn't so novel after all. That'd be my prediction.
I see the opposite. Regulations will create an even larger undermarket for Bitcoin than exists now. In the next decade, use of Bitcoin (or something similar) will have grown enough outside of regulation that the next generation of Bitcoin users won't even pay attention to the regulators anymore.
Then can regulate some of the end points, but they can't control the transactions themselves.
No one controls bitcoins. They control the EUR/Btc conversion. If you have all the BTC in the world but cannot buy food with them - because depending on where are in EU selling in other currency may be illegal.
So the state has a lot of tools.
So the state has a lot of tools.
> No one controls bitcoins.
That really annoys regulatory mindsets.
That really annoys regulatory mindsets.
After we had to bail out the banksters, there is not much love in Germany for unregulated financial entities, either established or with an unproven exchange medium.
Bafin does not seem to care if you use btc to trade with your friends, but once € are involved they make the rules. Don't know if that angers you, but I think they have a case.
Bafin does not seem to care if you use btc to trade with your friends, but once € are involved they make the rules. Don't know if that angers you, but I think they have a case.
Almost all traditional finance today is just ones and zeros, and its all quite successfully regulated.
Traditionally, they can point guns at the guys running the servers and tell them what to do (Liberty Reserve)
Not so easy with Bitcoin
Not so easy with Bitcoin
Bitcoin's ones and zeroes don't originate in a central bank.
Neither do the others. There are very many "central banks" out there, and the U.S. creates money out of thin air just as successfully as people mine Bitcoins out of thin air.
Unlike the creations of the central banks, there's an end to Bitcoin's creations. The value in this model is seen in Bitcoin's steadily rising and holding price.
If you believe that speculative bubbles constitute value, sure...
All monetary systems are speculative bubbles. Some just have the backing of a government to give support to the bubble. The last guy out of assignats probably felt a little foolish.
Hm interesting, I wonder if bringing such rules to the bitcoin currency trading, at least in Germany would somewhat legitimize it. Stricter requirements might dissuade some but on the flip side of the coin it may well bring even more serious players to the bitcoin market thus making it more substantial and well balanced. Just guessing though.
my 2c.
my 2c.
That's ridiculous. You shouldn't need millions to just trade bitcoins. Some of those requirements are arbitrary and needless hurdles like being "professionally qualified". And then some are just track people that use bitcoin and what they are doing with it.
Does this apply to all bitcoin companies like it said, or just exchanges?
Does this apply to all bitcoin companies like it said, or just exchanges?
What do you mean by "all bitcoin companies" ?
This regulation would apply just as normal financial service regulation - to companies that make bitcoin/money transfers on behalf of others, as a payment service provider (like paypal is regulated); that hold bitcoins on behalf of others (like any deposit-accepting bank is regulated) or those that buy/sell bitcoins from public (like currency exchanges are regulated).
This regulation would apply just as normal financial service regulation - to companies that make bitcoin/money transfers on behalf of others, as a payment service provider (like paypal is regulated); that hold bitcoins on behalf of others (like any deposit-accepting bank is regulated) or those that buy/sell bitcoins from public (like currency exchanges are regulated).
That's better, but still ridiculous.
To those who exchange BTC for fiat or operate cryptocoin banks or any company in the financial business dealing with BTC.
As a bar owner who accepts BTC for beer, you are fine. However, the German Gov't has already declared they are set out to discuss how to tax companies that accept BTC.
As a bar owner who accepts BTC for beer, you are fine. However, the German Gov't has already declared they are set out to discuss how to tax companies that accept BTC.
What about alternative coins? http://coinmarketcap.com/
The article mentions Litecoin and Ripple as well, so regulation would probably apply to them as well.
Well the regulations are a pain but at least bitcoin will be more readily available if it gets recognized.
The key to regulating companies is clearly to require them to write 30 pages of creative writing detached from the reality of how the business will operate a few months later.
How about a few page summary of the business with profiles of the team members, or pitch deck, without all the useless detail.