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US States Edge Toward Cryptocoin Regulation

timothy posted about 2 months ago | from the hey-these-still-smell-like-dollars dept.

Bitcoin 172

SonicSpike points out an article from the Pew Charitable Trusts' Research & Analysis department on the legislation and regulation schemes emerging in at least a few states in reaction to the increasing use of digital currencies like Bitcoin. A working group called the Conference of State Bank Supervisors’ Emerging Payments Task Force has been surveying the current landscape of state rules and approaches to digital currencies, a topic on which state laws are typically silent. In April, the task force presented a model consumer guidance to help states provide consumers with information about digital currencies. A number of states, including California, Massachusetts and Texas, have issued warnings to consumers that virtual currencies are not subject to “traditional regulation or monetary policy,” including insurance, bonding and other security measures, and that values can fluctuate dramatically. ... The article focuses on the high-population, big-economy states of New York, California and Texas, with a touch of Kansas -- but other states are sure to follow. Whether you live in the U.S. or not, are there government regulations that you think would actually make sense for digital currencies?

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How to regulate something that is unregulateable ? (2)

Taco Cowboy (5327) | about 2 months ago | (#47551295)

Crytocoins are designed to be de-centralized in order to not be controlled by any dominant party

I wonder how are they going to "regulate" something that is not supposed to be regulate-able ?

Re:How to regulate something that is unregulateabl (3, Insightful)

jaeztheangel (2644535) | about 2 months ago | (#47551333)

perhaps they will require a licence to accept payments using them?

Re:How to regulate something that is unregulateabl (0)

Anonymous Coward | about 2 months ago | (#47551751)

You're assuming the company is not a DAO.

No, dickheads (-1, Troll)

Anonymous Coward | about 2 months ago | (#47552449)

Regulating banking is a specific job of the federal government. It's in the constitution. Regulation, even done marginally, still provides a level of protection to all users of a financial instrument. In a case like this, where the financial instrument is fundamentally a Ponzi scheme that has some use, regulation is valuable to everyone using the system. Mt. Gox would have been prevented by any banking oversight, and should have been. Similarly, the paypal abuses would be avoided if they were subject to banking oversight. While the system is far from good, it's at least marginally adequate and shows clearly the value of banking oversight. Further, the lapses in oversight have shown how important oversight is.

Re:No, dickheads (1)

Cardoor (3488091) | about 2 months ago | (#47552709)

where is the Mod troll-categorization for 'Govt Shill'? jeez. if you're gonna spew cowardly lies, at least you can be polite about it.

Re:No, dickheads (1)

Anonymous Coward | about 2 months ago | (#47552933)

Because there is no "-1 I disagree" mod. That's what your words are for.

Solution for ya (0)

Anonymous Coward | about 2 months ago | (#47553045)

Don't do business via PayPal--use a real bank. And in the rare cases where you are stuck with PayPal never give PayPal your bank number and always use a real credit card.

Re:How to regulate something that is unregulateabl (4, Interesting)

Jane Q. Public (1010737) | about 2 months ago | (#47552787)

perhaps they will require a licence to accept payments using them?

Regulations? Licenses? Hmm. As it happens, we already have pertinent "regulations".

U.S. Constitution, Article 1, Section 10:

"No State shall ... make anything but gold and silver Coin a Tender in Payment of Debts"

Re:How to regulate something that is unregulateabl (2, Insightful)

disposable60 (735022) | about 2 months ago | (#47551359)

The key phrase is about what makes sense.
To a legislator bought by the banking and payday loan industries, there will be a sense of panic to at least be _seen_ to be doing _something_; so that will make sense.
To an ambitious prosecutor, there will appear an opportunity to bring the full weight of the criminal 'justice' system down on some poor schmuck who orders something legal-but-distasteful using MathMoney without paying sales tax or submitting the forms no one can figure out how to order let alone fill out (NJ handgun laws), so that will make sense.

In short, jumping up and down, waving flags and flares, daring regulators to come after you pretty much guarantees the most draconian possible response (designer recreational drugs) because 'think of the children!'

Re:How to regulate something that is unregulateabl (2, Insightful)

Anonymous Coward | about 2 months ago | (#47551789)

The irony is, in designing a de-centralized currency, I was thinking of the children.

Re:How to regulate something that is unregulateabl (2)

zildgulf (1116981) | about 2 months ago | (#47552373)

Nonono! You are thinking about the wrong children. In politics the only children that matter are the ones of the oligarchy. BitCoin would make other children middle class and independent of the ruling class' iron grip on their money.

Re:How to regulate something that is unregulateabl (2, Insightful)

gstoddart (321705) | about 2 months ago | (#47551369)

By treating it like currency and passing laws about what you can do it?

They make not be able to regulate the entire currency, but they can certainly pass laws regarding their own people and what they are required to do.

Did anybody really think that you could simply say you have a form of currency which isn't regulated and expect governments to just say "well, they've beaten us"?

That would be a neat trick.

Re:How to regulate something that is unregulateabl (1)

Anonymous Coward | about 2 months ago | (#47552085)

Ah, just like the laws to regulate what I can and can't buy.

So I guess I'll just be violating 2 laws instead of 1 on the Silk Road.

Re:How to regulate something that is unregulateabl (0)

Anonymous Coward | about 2 months ago | (#47551457)

Crytocoins are designed to be de-centralized in order to not be controlled by any dominant party

I wonder how are they going to "regulate" something that is not supposed to be regulate-able ?

These guys advise governments on how to regulate cryptos: http://razorcoin.com [razorcoin.com]

Re:How to regulate something that is unregulateabl (1)

Anonymous Coward | about 2 months ago | (#47551483)

The value of the coin is to be able to purchase something. That is where they will regulate it with the stores taking it as payment ( ones taking payment legally ). For crypto currancy to really get traction more stores need to accept it.. so either way you look at it there will be some regulation.

Re:How to regulate something that is unregulateabl (1)

paiute (550198) | about 2 months ago | (#47551523)

Anything can be regulated. Control is a separate issue.

Re:How to regulate something that is unregulateabl (3, Interesting)

penguinoid (724646) | about 2 months ago | (#47551537)

Crytocoins are designed to be de-centralized in order to not be controlled by any dominant party

I wonder how are they going to "regulate" something that is not supposed to be regulate-able ?

The NSA owns your computer, and the computer you want to trade bitcoins with*. They could enforce any regulations if they were willing to admit to this. Being a cryptocurrency rather than a physical one also means that they can vanish your money with the click of a button instead of having to personally visit you.

* Maybe I'm just paranoid, but there are so many hardware and software components, any of which could have backdoors or keyloggers installed. They could demand any domestic product secretly contain them from manufacture, and "inspect" any imports. Even easier with domestic software, or they could get a few of their agents helping to develop the software (I hear they have lots of talented folks).

Re:How to regulate something that is unregulateabl (1)

gstoddart (321705) | about 2 months ago | (#47551609)

Being a cryptocurrency rather than a physical one also means that they can vanish your money with the click of a button instead of having to personally visit you.

So, tell me again, how is this different from most money these days?

Anything you have on deposit is pretty much just electrons. The vast majority of 'real' money is pretty much just as virtual these days.

Re:How to regulate something that is unregulateabl (1)

SuricouRaven (1897204) | about 2 months ago | (#47551735)

Money has been virtual a lot longer than that. Even cash is virtual: The physical tokens are just representative of something more abstract. The last time money was physical was when it was on the gold standard - and even then very few people actually took up the promise backing it and swapped their notes for gold.

Re:How to regulate something that is unregulateabl (1)

lgw (121541) | about 2 months ago | (#47552681)

Gold notes were just as virtual as anything else. Physical gold coins, or barter for consumables, is the only way to avoid virtuality, and there were many practical reasons we went away from that. Nothing, of course, will prevent a government from debasing a currency - it's what they do, it's all they do.

Re:How to regulate something that is unregulateabl (0)

ADRA (37398) | about 2 months ago | (#47552063)

Because essentially all of that virtual money sitting in the banking system (unless you're exceedingly rich) has been very well insurred against losses, and has decades of technology and policies to help reduce 'people losing their entire life savings' or 'banks losing all their depositor's cash and now they're going belly up'. Bitcoin has literally no protections for prevention of all your value.

So if you lose your crypto key (dropped $1mil on the ground on the way to grandma's house - one reason BitCoin can't be equated to real cash) or if your bit coin repository gets robbed (akin to bank robbery but without the gov insurance), or the owners steal all your money (gov insured for certain levels), or the bank simply goes bust due to insolvancy (gov insured for certain levels) you have completely different levels of assurance that your wealth is 'safe'. If you deposit $1mil into the bank of fly-by-night, you only have so much protection for the ' being stupid with money' lever, but for people of more modest means where their money is essential to their livelihood, protections are in place to support them.

Re:How to regulate something that is unregulateabl (0)

Pino Grigio (2232472) | about 2 months ago | (#47551749)

No they aren't. There's nothing stopping a single entity mining all of the damned coins, or even a majority of them. It's simply a question of how many tflops you've got (with Bitcoin). So just how "de-centralised" is it in the first place?

Re:How to regulate something that is unregulateabl (1)

pla (258480) | about 2 months ago | (#47551827)

I wonder how are they going to "regulate" something that is not supposed to be regulate-able?

Simple - They will effectively exclude businesses in their own states from participating in the BitCoin economy.

This won't affect the vast majority of individuals, because they can't stop individuals from buying from vendors in another state; and it won't affect businesses in unregulated states - Well, I take that back - It will benefit businesses operating outside those states that try to regulate cryptocurrencies.

I fully expect, however, that this will end up at the USSC. As much as the asshats in DC have abused the "interstate commerce" clause, this issue actually falls under that particular umbrella.

Re: How to regulate something that is unregulateab (0)

Anonymous Coward | about 2 months ago | (#47552915)

No need to worry about interstate commerce, this is flatly under the money and values clause. Congress doesn't even need to try hard on it.

Re:How to regulate something that is unregulateabl (1)

jythie (914043) | about 2 months ago | (#47552151)

Cryptocurency is not magically exempt from regulation simply because people hope it is. How does one regulate anything? You make rules, when people are caught breaking the rules they get in trouble.

People focus too much on the idea of dragnets or detection, of technological solutions, and that that if there is no technology that can automatically scour something it somehow makes it unregulatable. Such currencies make automated tracking difficult, but people are still people and businesses are still businesses, and the ease of hiding things does not change this.

Re:How to regulate something that is unregulateabl (0)

Anonymous Coward | about 2 months ago | (#47552543)

Please zone out of the geek worldview realm. Currencies reflect power and on this planet very much so ruling power, not a technical high school challenge.
Let me illustrate:

Possible:
- when you do not upload to the proper authorities your money-transaction monthly/yearly log, generated by approved software,
- help create/redistribute/modify/sell/gift/etc software that transacts digital currency without proper auditing exports to predefined regulatory bodies,
- when you (and the regulatory bodies) read that email that your delivery arrived at your doorstep with your name on it, but the account you paid with isn't registered on your name/address.
-etc

You don't me to even start start on the things that will be technically possible very soon. Yes, bitcoin and the bunch are cute toys so far. I get it. But you can bet on US government regulating the hell out of it because random major retailers are starting to support it. Just in case digital currencies go from a passing though of the regular population sample, to something average people consider paying Christmas gifts with.

The future can go either way: at best, it will be your convenience, at worst, it will be their excuse.

What about my rights? (0)

Anonymous Coward | about 2 months ago | (#47551299)

What about my right to open a cryptocurrency bank without any licensing or regulation?

If this big government overreach continues I may have to abruptly close my bank, taking everyone's bitcoin with me before I reach goal.

Re:What about my rights? (4, Funny)

disposable60 (735022) | about 2 months ago | (#47551367)

I think you misspelled the british 'gaol.'

Re:What about my rights? (0)

Anonymous Coward | about 2 months ago | (#47551417)

Who says you have the right to open a bank? I'm not aware of any country that doesn't regulate banks (though counterexamples probably exist, and I didn't search). I've also never seen "opening a bank" listed on any respectable list of fundamental human rights.

Re:What about my rights? (1)

ganjadude (952775) | about 2 months ago | (#47551557)

the right to the pursuit of happiness?

Re:What about my rights? (1)

alexander_686 (957440) | about 2 months ago | (#47551825)

Well, there you go.

I will point to this Slashdot article: http://politics.slashdot.org/s... [slashdot.org]

Read the rules closely and you can figure out it bans opening a BitCoin bank in NY. Basically, if you take deposits it needs to 100% back by BitCoins, so no fractional reserve banking.

http://www.bloombergview.com/a... [bloombergview.com]

Note, I think BitCoins are an interesting experiment in currency but would make loosely money. BitCoin, with a fixed number of coins, is a hard currency. Using a hard currency makes fractional reserve banking hard to do, which makes banking hard to do, which impairs its ability to be money.

CryptoCurrencies should be produced professionally (1)

jaeztheangel (2644535) | about 2 months ago | (#47551319)

Without a doubt the most troubling aspect of the market is the fraud, scamming, lying and cheating that goes on from amateur dev teams that take a half-understood slice of code, rebrand it, and then pump it up in EXACTLY the same boilerroom scams that have plagued traditional fiat markets.

The fact we need people to share their skills safely, train users, and businesses how to use crypto-currencies properly, and also ensure that those who create 'new' altcoins - are held accountable for the currencies they create, and to the people who bought into them.

It's not enough to print monopoly money - we have to build businesses first so it's worth trading for a REAL good or service.

Nope (0)

Anonymous Coward | about 2 months ago | (#47551325)

Are there government regulations that you think would actually make sense for **anything**?

No.

Re:Nope (1)

penguinoid (724646) | about 2 months ago | (#47551397)

Are there government regulations that you think would actually make sense for **anything**?

No.

Yes.

If you don't like it, go start your own anarchist country.

Re:Nope (1)

ganjadude (952775) | about 2 months ago | (#47551567)

not wanting the government to regulate X != anarchy

Re:Nope (1)

Anonymous Coward | about 2 months ago | (#47551979)

No, but the OP expressly stated "anything", so penguinoid has found the rare case where anarchy isn't a strawman.

Re:Nope (1)

ganjadude (952775) | about 2 months ago | (#47552381)

true, i took the ** to note hyperbole but perhaps i shouldnt have made that leap

Re:Nope (0)

Anonymous Coward | about 2 months ago | (#47552029)

not wanting the government to regulate X != anarchy

It is when X = Everything.

Standard Reporting is OK (1)

TrustingFool (3768143) | about 2 months ago | (#47551345)

Insurance and other "protections" are available through other forms of payment. Digital currency is valued at whatever two parties agree it to be. Standard reporting to the IRS on total amount received, total world-wide holdings and accumulated gains should be applicable.

Re:Standard Reporting is OK (1)

geekoid (135745) | about 2 months ago | (#47551371)

" Digital currency is valued at whatever two parties agree it to be."
False, and very naive.
You need to bu other things, currency involve a lot of people. Two parties alone should never be allowed to dictate value of a currency.
Currency need to be able to do interstate actions, Reusable, etc.

Re:Standard Reporting is OK (1)

TrustingFool (3768143) | about 2 months ago | (#47551435)

Once you accept payment by a currency, YOU have accepted the risks inherent with same. The Venezuelan Bolivar has an official inflation rate of 60%. What you accept as payment may not have the same value by someone you want to pay. It is the same with digital currency. I'll pay you for an hour's worth of your time for 10 BitCoins. You may make that deal knowing you are taking advantage of me as your time is not worth that much. However, you just agreed with me (the other party) on a mutually accepted value. What you can or cannot do with those BitCoins and their future value should have been factored into your decision at the time of the initial transaction.

Blah blah... (0)

Anonymous Coward | about 2 months ago | (#47551351)

The entire point of crypto-currency is to not have centralization or regulation. Many users know the risk going in, and some ignorantly do not. I've liked the idea of having trustworthy people contributing ideas towards the improvement of each respective currency, but any government related establishment is not one of them. The devs have done a good job over at Dogecoin making some improvements with each new wallet build.

The big hurdle right now is accessibility and getting more merchants involved so conversion to fiat isn't necessary.

Re:Blah blah... (0)

Anonymous Coward | about 2 months ago | (#47551717)

The entire point of crypto-currency is to not have centralization. Many users know the risk...

FTFY

Not subject to "monetary policy" (0)

Anonymous Coward | about 2 months ago | (#47551353)

In other words with cryptocurrency the government cannot print new notes to devalue your savings. You have been warned!

Re:Not subject to "monetary policy" (0)

Anonymous Coward | about 2 months ago | (#47552069)

In other words with cryptocurrency the government cannot print new notes to devalue your savings. You have been warned!

With Cryto-Currency the issuers of the currency can issue more at anytime. That the issuer isn't a government is no protection from devaluation though dilution. In fact, in my mind, having a government manage a currency is less likely to be a problem for holders.

Re:Not subject to "monetary policy" (1)

Archangel Michael (180766) | about 2 months ago | (#47552571)

With Most Crypto Currency, there is a finite amount of coins that are possible, not infinite. Once the diminishing returns on Mining Happen (happening now) it becomes harder and harder to create new coins, and thus the inflationary pressures actually turn into deflationary. This gives a very distinctive advantage to working hard and earning coins, savings, and long term outlook. However, this doesn't play well with our disposable goods economy.

Equality (2)

penguinoid (724646) | about 2 months ago | (#47551381)

The laws should be identical to the extent possible, between different forms of currency.

Re:Equality (1)

CrimsonAvenger (580665) | about 2 months ago | (#47551549)

The laws should be identical to the extent possible, between different forms of currency.

So, your average C-Store should be required by law to accept Japanese Yen or the Sudanese Pound?

That aside, doesn't the Federal Government get to decide what's money and what's not? Didn't think it was the business of State governments to be regulating money....

Re:Equality (0)

Anonymous Coward | about 2 months ago | (#47551681)

The laws should be identical to the extent possible, between different forms of currency.

So, your average C-Store should be required by law to accept Japanese Yen or the Sudanese Pound?

That aside, doesn't the Federal Government get to decide what's money and what's not? Didn't think it was the business of State governments to be regulating money....

The States are prohibited from making anything other than gold or silver legal tender.

But the sates can probably regulate cryptocurencies however they'd like as long as it's not by making them legal tender (so they could prohibit their use, require a license to exchange them for dollars, or levy a tax on their use as examples).

Re:Equality (2)

penguinoid (724646) | about 2 months ago | (#47551907)

The laws should be identical to the extent possible, between different forms of currency.

So, your average C-Store should be required by law to accept Japanese Yen or the Sudanese Pound?

I don't really think it's the government's business to tell merchants what they must accept in exchange for their goods. For example, they shouldn't be forced to accept the $10,000 US dollar bill, even if it is legal tender, nor whatever flavor of credit card. I'm sure the merchants can figure out for themselves what to accept in payment if they want to have customers.

That aside, doesn't the Federal Government get to decide what's money and what's not? Didn't think it was the business of State governments to be regulating money....

They may think so, but it is people who decide what is money and what is not. People have burnt money as fuel in the past, when it was cheaper than coal or wood.

Re:Equality (1)

alexander_686 (957440) | about 2 months ago | (#47551995)

We are not talking about regulating money per se, but about business regulating how business handle and use money.

State governments have a long, long history of bank regulation and oversight. This has faded as most banks have switched to a federal charter instead of a state charter. But they still have considerable oversight. What is maximum interest that can be charged, what methods of collections can occur when a person is overdue on their loans, etc. While most Liberations would oppose usurer laws, most would favor regulations on how contract law should be enforced.

Re:Equality (0)

Anonymous Coward | about 2 months ago | (#47552301)

The laws should be identical to the extent possible, between different forms of currency.

So, your average C-Store should be required by law to accept Japanese Yen or the Sudanese Pound?

Sure, while the store is located in Japan or Sudan, respectively.

Re:Equality (0)

Anonymous Coward | about 2 months ago | (#47552919)

I think what he said is the opposite of that. Which is, in the US, the Yen is not 'legal tender' so debt holders cannot be compelled to take it, (this is why each note/coin states that it is "legal tender for all debts public and private," which means that if you owe me money and you then pay me in dollars, I cannot, in the US, say that I want you to use a credit card to pay me. This action would be illegal. That doesn't mean that I cannot require a credit card for purchase, as this is not paying off a debt.

Anyway, in the same sense that debt holder is not compelled by law to accept Yen as tender for a debt, they would not be required to take a cryptocoin. This does not mean that a bank could not decide that it is worth it to them to accept Yen or cryptocoin, many banks will gladly exchange various currencies, but they are not compelled by law to do so.

Likewise, a street vendor in southern Texas could take Pesos if he wanted to, but he is not required to, and Starbucks could take BitCoins if they want, but they aren't required to.

Regulationzzzzzzzzz... (-1)

Anonymous Coward | about 2 months ago | (#47551383)

Bitcoin cannot be regulated. Only the exchange from fiat toilet paper money to bitcoin can be regulated. Bitcoin cannot be inflated and realistically cannot be taxed unless all citizens give up their private keys to thieving taxmen.

Given that banks suck out 30% of GDP for shifting money about along with starting wars, killing children and laundering drug cartel billions, while bitcoin sucks 0% out of the economy thereby giving merchants a 30% arbitrage for accepting bitcoin over fiat which will lead to the destruction of banking, central banking, and the Nation State itself, do we really need to worry that much about these 'regulations?

Re:Regulationzzzzzzzzz... (0)

Anonymous Coward | about 2 months ago | (#47551437)

Yeah, the fine folks on Silk Road would never be involved in money laundering, drug trade, or funding violence....

Re:Regulationzzzzzzzzz... (1)

ganjadude (952775) | about 2 months ago | (#47551591)

right, because thats the ONLY thing bitcoin is used for....

Re:Regulationzzzzzzzzz... (2)

SuricouRaven (1897204) | about 2 months ago | (#47551801)

It's a currency designed to be difficult to regulate. Of course the first adoptors are going to be those to whome conventional finance is unavailable. Those on the fringes of the law, or in outright violation of it. Not just drugs and violence though - The Pirate Bay accepts bitcoin donations, and there are a number of internet gambling sites accepting payment in it to draw the business of those living in states where internet gambling is prohibited.

People don't just adopt a new techology, much less a new finance paradigm, without a good reason. The big hope of the bitcoin community is that the paranoids and outcasts may be the first to adopt, but they will then form the core around which a new legitimate economy can cluster. That does seem to be happening, as an increasing number of legitimate companies start accepting bitcoin as a promotional measure. It gets them press coverage.

Re:Regulationzzzzzzzzz... (1)

jythie (914043) | about 2 months ago | (#47552273)

You are thinking criminals, not outcasts. For the people who are actually outside the financial system by situation BTC does not help them. It is a great toy for middle class technically inclined people who have the resources to maintain both BTC and local currency, people who can access banks but then make the lifestyle choice not to, but it is too unstable, too limited, and too expensive for actual outcasts and outsiders to find utility in.

Re:Regulationzzzzzzzzz... (1)

PRMan (959735) | about 2 months ago | (#47552377)

Actually, many marijuana dispensaries, fireworks businesses, gun businesses, casino owners, etc. can all be legal businesses that banks will close your account immediately if they find out what you are doing. Bitcoin could be very helpful for these types of accounts.

Re:Regulationzzzzzzzzz... (1)

jythie (914043) | about 2 months ago | (#47552427)

That is a good point. Adult businesses face a similar problem when it comes to payment processors.

Re:Regulationzzzzzzzzz... (1)

SuricouRaven (1897204) | about 2 months ago | (#47552513)

And the politically undesireable - Wikileaks had trouble with payment processors too.

Marijuana dispensaries are different. (1)

alexander_686 (957440) | about 2 months ago | (#47552995)

Fireworks businesses, gun businesses, casino owners are all legal business – mind you heavily regulated.

Marijuana is illegal under federal laws even if it legal under state. A bank dealing with a marijuana dispensary runs the risk of violating laws on money laundering, which can be very bad for banks. So banks simply won't deal with them.

A place to start: http://www.npr.org/blogs/money... [npr.org]

Re:Regulationzzzzzzzzz... (1)

jythie (914043) | about 2 months ago | (#47552257)

Of course it can be taxed. The IRS does not troll through your bank accounts and purchases to produce a list of what you owe, they pretty much use an honor system of self reporting where people tell them how much they made and how much they owe. One can hide their assets with BTC, but one can do that with USD too, but one still gets in trouble if they get audited. In the case of taxes, BTC or USD makes no difference in terms of 'can it be taxed', only how it is taxed.

Can we just recognize it as currency and be done? (3, Informative)

QilessQi (2044624) | about 2 months ago | (#47551407)

I imagine that the sorts of things we'd want to regulate about "digital currencies" are the same things we'd want to regulate about any foreign or domestic currency; e.g.:

- You can't use it to pay for illegal goods or services
- You can't receive it in payment for illegal goods or services
- You can't use it to hide other transactions related to illegal goods or services (i.e., money laundering)

So... can we just formally decree that cryptocoins meet the definition of a "currency", and be done with it? Otherwise I'm afraid that we'll be creating another legal (and patent) swamp where "...with Bitcoins" will become the new "...on the Internet".

Re:Can we just recognize it as currency and be don (1)

Joe Gillian (3683399) | about 2 months ago | (#47551497)

The IRS won't regulate it as a currency for a very good reason - doing so would mean they'd have to tax income from Bitcoin the same way they have to tax cash income. With cash income, there's a paper trail - the IRS can look at pay stubs from your employer and look at bank statements to determine whether or not you are paying enough in taxes.

Bitcoin is different. There's no paper trail, at least not one with names and social security numbers attached to it. They'd have a hard time proving anything in terms of how many bitcoins a person has made in a year or where the bitcoins are coming from. As long as the bitcoin remains in the system (ie; isn't exchanged for money, which the IRS can trace) there's really no way for them to do anything about it.

Re:Can we just recognize it as currency and be don (0)

Anonymous Coward | about 2 months ago | (#47551647)

Bitcoin is different. There's no paper trail, at least not one with names and social security numbers attached to it.

True, but the blockchain contains all transactions. Sure, it all maps to wallet addresses, but a state could simply legislate that all wallet addresses must be declared. Enforcement might be tougher, but the requirement could be made.

Re:Can we just recognize it as currency and be don (2)

SuricouRaven (1897204) | about 2 months ago | (#47551829)

Enforcement would be very difficult. A forensic accountant could pierce the trail together given enough time, yes - but the cost of paying someone to spend days going through the blockchain and trying to prove each of these addresses belongs to a certain individual would be far greater than the cost of subpoenaing a suspect's bank account and getting instant proof of illicit income. The higher the cost of enforcement, the fewer cases the government can bring, and the less risky the crime becomes - potentially reaching the level of copyright infringement, where tens of millions completly ignore the law because they know their chance of getting caught is miniscule.

Re:Can we just recognize it as currency and be don (1)

jythie (914043) | about 2 months ago | (#47552343)

Though keep in mind, part of the burden of the audit is on the individual or business the IRS is looking at. They do not need to trace everything, but one does need to be able to account for the things they claim on their income tax form. One can hide a certain amount as part of disposable income, but if one can not make things like rent or utilities without utilizing the additional income then the IRS can say 'show us how you are paying for your lifestyle'.

Re:Can we just recognize it as currency and be don (1)

UnknownSoldier (67820) | about 2 months ago | (#47552133)

The IRS has ZERO jurisdiction over digital "currency."

They don't get to tax me on WoW gold or any other currency that is made out of thin air, aka, bits. BitCoin is no different. Just because something is popular doesn't mean they have authority.

Re:Can we just recognize it as currency and be don (2)

jratcliffe (208809) | about 2 months ago | (#47552293)

Um, yes, they do. If you do work, and get paid for it, whether in US$, Japanese Yen, gold ingots, BitCoin, WoW gold, Tickle-Me-Elmos, or whatever, that's income, and it's taxable.

Re:Can we just recognize it as currency and be don (1)

ArcadeMan (2766669) | about 2 months ago | (#47552529)

Last year I tried to pay my taxes on my WoW gold, but the IRS characters were on another server.

Re:Can we just recognize it as currency and be don (2)

SpankiMonki (3493987) | about 2 months ago | (#47552511)

The IRS has ZERO jurisdiction over digital "currency."

Yeah? Well the IRS disagrees with you. [irs.gov]

Re:Can we just recognize it as currency and be don (1)

Richard_at_work (517087) | about 2 months ago | (#47551969)

Uh, you do realise all those things you mention about cash having a paper trail has nothing inherently to do with the cash and everything to do with the regulations surrounding the financial system - they would all equally apply to bitcoins the moment the government says so. If your employer pays you in bitcoins, that would appear on your payslips, and your bitcoin exchange transactions would be subject to scrutiny just as bank account transactions are...

Re:Can we just recognize it as currency and be don (2)

QilessQi (2044624) | about 2 months ago | (#47551999)

With cash income, there's a paper trail - the IRS can look at pay stubs from your employer and look at bank statements to determine whether or not you are paying enough in taxes.

Actually, I think you mean, "with employer-declared or bank-mediated income, there's a paper trail." If I pay someone in small green pieces of paper to mow my lawn, and they keep it under their mattress until they need it, then there's no paper trail at all.

Re:Can we just recognize it as currency and be don (1)

jythie (914043) | about 2 months ago | (#47552315)

Looking at the 'paper trail' is not automated, it involves a human sitting down and examining an individual or business. It is a little harder to audit BTC, but no harder then companies that work primarily in cash which are taxed just like anything else.

Re:Can we just recognize it as currency and be don (1)

nine-times (778537) | about 2 months ago | (#47551675)

Does it really qualify as a currency yet? I don't know. How do we define what makes a currency?

And don't misunderstand me. I'm not trying to claim that bitcoins aren't worth anything. But Garbage Pail Kids trading cards are probably still worth something. There may be someone in the world who would accept them as payment for goods and services. Does that make them a currency?

Does a currency need to be backed by some kind of country? Is there an expectation of stability of price? Do you need an area of economic activity where the currency is ubiquitously accepted as a form of payment? Maybe you know the answers to these questions. I don't. There are probably a lot of people in Congress who don't.

Re:Can we just recognize it as currency and be don (1)

QilessQi (2044624) | about 2 months ago | (#47552049)

Does it really qualify as a currency yet? I don't know. How do we define what makes a currency?

That's been the debate about Bitcoin all along. The best answer is probably this: http://en.wikipedia.org/wiki/I... [wikipedia.org]

Re:Can we just recognize it as currency and be don (1)

alexander_686 (957440) | about 2 months ago | (#47553277)

How do we define what makes a currency?

Money is generally defined as
        Medium of exchange
        Store of value
        Unit of account
Anything that can be used as money is money. As such, money is flexible. If you think tulips, receipts (bank drafts, post-dated checks, warehouse receipts, tobacco , tulips, Dot Com stocks, cows, garbage pail kids, are money , it is. If you change your mind it does away. Currency tends to be "harder" – harder to create and destroy and tend to be tightly controled by a central bank. Read up on Money Supply and the difference between M0, M1, M2, etc. The further you go out the less something is like currency.

Does a currency need to be backed by some kind of country?

Technically no. Private currency has a long and rich history. However, since 1880 it has be on the decline. I can't think of any major currencies that are not backed by a government today.

Is there an expectation of stability of price?

Yes, but you don't always get what you want. Money (and thus currency) is supposed to be a low risk / low reward asset. Currency has low risk (see inflation) and has either 0% reward or more commonly a negative rate of return. (if not from inflation, then convince charges to hold and transfer funds. A advantage of BitCoin is that they will reduce the charges.) See countries with high inflation rates. Venezuela is my current favorite example. Argentina comes in a close second. FYI, the human brain from an organic aspect can handle inflation better than deflation.

Do you need an area of economic activity where the currency is ubiquitously accepted as a form of payment?

Mostly yes. It must be a unit exchange, barter, ability to pay taxes and loans, etc. If not it tends to gimp the money, leading to inefficiencies, eroding its value. For examples, you can look at some communist countries that have issued dual currency, one that is convertible into foreign currencies and one that is not. Food stamps that can only be used to buy food and the resulting black market in baby formula.

Extra-double illegal because it's digital!!! (1)

TiggertheMad (556308) | about 2 months ago | (#47551709)

- You can't use it to pay for illegal goods or services - You can't receive it in payment for illegal goods or services - You can't use it to hide other transactions related to illegal goods or services (i.e., money laundering)

You are missing the point, you list a bunch of stuff that is already illegal. Why do we need additional regulation for this currency, when it is already established that the said activities are already prohibited with regular, cold cash? And what is the point of passing laws governing this currency, when you cannot realistically enforce them? Are you just hoping to pile on extra penalties when I order a hit on someone, and pay for it using digital currency? How will that make the world a better or safer place?

Re:Extra-double illegal because it's digital!!! (1)

QilessQi (2044624) | about 2 months ago | (#47551923)

We are arguing exactly the same thing. I pointed out the three regulations that we most likely care about, and then I said:

So... can we just formally decree that cryptocoins meet the definition of a "currency", and be done with it? Otherwise I'm afraid that we'll be creating another legal (and patent) swamp where "...with Bitcoins" will become the new "...on the Internet".

Re:Extra-double illegal because it's digital!!! (1)

TiggertheMad (556308) | about 2 months ago | (#47552367)

yay, We both win teh argumentz!!

Re:Extra-double illegal because it's digital!!! (1)

alexander_686 (957440) | about 2 months ago | (#47553313)

But we don't have to declare anything - it is already illegal. You can't trade in illegal goods. Period. If a good is illegal on one side of the trade, it does not matter what is on the other side. The government does not have to create a list of thing where it is. A criminal can’t say –"ha – but I used blue whales while trading cocaine – and blue whales are not on the probation list of tradable goods – ergo I can sell all the cocaine that I want".

Re:Extra-double illegal because it's digital!!! (1)

jythie (914043) | about 2 months ago | (#47552369)

It depends on what exactly the laws are. Right now BTC is in a bit of a grey area, it is unclear which laws apply to it and which do not. Chances are the bulk of the 'regulation' will simply be saying what BTC counts as and thus which pre-existing laws apply to it. So making it explicit as opposed to something 'new' and thus both citizens and law enforcement have a clear guide about how to apply existing rules to something new.

Re:Can we just recognize it as currency and be don (2)

DerekLyons (302214) | about 2 months ago | (#47552201)

So... can we just formally decree that cryptocoins meet the definition of a "currency", and be done with it?

I certainly hope not, because ultimately they're completely unlike other foreign or domestic currencies in that they have nothing backing their worth*. They're much more like coupons, casino tokens, or tasting tokens at a beer festival than real money. They're a medium of exchange not a store of value. The flaw in the logic behind cryptocurrencies is that their inventors and proponents fail to recognize this.
 
* Generally the economy of the issuing country.

Re:Can we just recognize it as currency and be don (1)

QilessQi (2044624) | about 2 months ago | (#47552847)

This is always the crux of the Great Bitcoin Debate. What counts as backing the worth of something?

A non-trivial amount of Bitcoins are "owned" by somewhere roughly between 500,000 and 1,200,000 people, depending on how you calculate the number (https://bitscan.com/bitnews/item/how-many-people-really-own-bitcoins-and-why-does-it-matter). They come from numerous countries across the globe. Any one of those countries could collapse, and in theory the BTC holders would remain solvent -- this is touted by the BTC community as one of its big pluses.

In contrast, let's look at some countries with their own currencies, which all have fewer "users" than BTC:

Tuvalu (http://en.wikipedia.org/wiki/Tuvalu):
- Population ~11,000.
- Native currency: Tuvaluan_dollar (http://en.wikipedia.org/wiki/Tuvaluan_dollar).
- GDP: ~37 million USD.

Barbados (http://en.wikipedia.org/wiki/Barbados)
- Population: ~278,000
- Native currency: Barbadian dollar (http://en.wikipedia.org/wiki/Barbadian_dollar)
- GDP: ~7 billion USD.

Maldives (http://en.wikipedia.org/wiki/Maldives):
- Population ~394,000.
- Native currency: Maldivian rufiyaa (http://en.wikipedia.org/wiki/Maldivian_rufiyaa)
- GDP: ~2.2 billion USD

I don't know how stable the Tuvaluan, Barbadian, and Maldivian economies are, but I'm pretty sure that the combined military might of these countries is no match for the military might of the countries whose citizens hold the majority of BTC's current equivalent of 7.7 billion USD.

(I don't own Bitcoins, BTW... I just think it's fun to watch this stuff unfold.)

Regulating how? (1)

conscarcdr (1429747) | about 2 months ago | (#47551433)

Suppose consumption tax are going to be charged the way it does to Bitcoin transactions. With the eventual deflation of the currency, wouldn't that make the state cash reserve infinitely richer, relative to private persons?

Regulators gonna regulate (0)

Anonymous Coward | about 2 months ago | (#47551485)

Doesn't matter to them whether anybody else is helped with it: It's all about their own job security. In that light the whole AML/KYC BS is a stroke of genius. Some money presumably stinks and of course you need state officials to "protect" people from that stink, and therefore from the ability to decide what to do with their own money. Brilliant, no?

Why would people regulate it more than barter? (1)

thieh (3654731) | about 2 months ago | (#47551517)

Does that mean we can start paying taxes in Bitcoin now?

Re:Why would people regulate it more than barter? (1)

ADRA (37398) | about 2 months ago | (#47551845)

As much as you can pay your taxes in pesos, yes!

Re:Why would people regulate it more than barter? (0)

Anonymous Coward | about 2 months ago | (#47552149)

Does that mean we can start paying taxes in Bitcoin now?

No. Nor can you use Bitcoin to avoid paying taxes by trying to hid income be receiving it in BTC. There are two things you cannot avoid in life, at least not forever, they are death and taxes. BTC doesn't change this.

The scammer's dream. (3, Insightful)

Animats (122034) | about 2 months ago | (#47551715)

Over half the Bitcoin exchanges have gone bust. Entire Bitcoin "stock exchanges" disappeared with the money. Bitcoin "investments" promising substantial returns each month were, of course, Ponzi schemes.

Bitcoin is a scam magnet. Irrevocable, remote, anonymous money transfers are the scammer's dream. (Yes, there are people talking about cryptographic escrow schemes so you can buy something with Bitcoins and have some recourse if it doesn't show up. So far, that hasn't reached usability.)

That's why Bitcoin needs regulation. If you're going to hold other people's money, you have to be regulated. Deal with it.

Re:The scammer's dream. (0)

Anonymous Coward | about 2 months ago | (#47551775)

You seem to be under the impression that regulation will magically make scamming go away. This seems a little misguided, looking at the historical evidence. Just look at banking, one of the most heavily regulated industries on earth. And they still "need" bailouts with depressing regularity.

The sociopath's dream. (0, Troll)

Anonymous Coward | about 2 months ago | (#47552431)

Over half the Bitcoin exchanges have gone bust. Entire Bitcoin "stock exchanges" disappeared with the money. Bitcoin "investments" promising substantial returns each month were, of course, Ponzi schemes.

Bitcoin is a scam magnet. Irrevocable, remote, anonymous money transfers are the scammer's dream. (Yes, there are people talking about cryptographic escrow schemes so you can buy something with Bitcoins and have some recourse if it doesn't show up. So far, that hasn't reached usability.)

That's why Bitcoin needs regulation. If you're going to hold other people's money, you have to be regulated. Deal with it.

Up until recently, when someone like you would support laws like these and say "deal with it" it would make me very angry, like you're just dismissing me because your beliefs are more popular.

Today, I'm overjoyed to hear "deal with it". It reminds me of the time I dealt with your corporate bailouts by investing in something bailout-proof, and makes me wonder what might happen next. Just don't be upset when you aren't a part of the deal.

Re:The scammer's dream. (0)

Anonymous Coward | about 2 months ago | (#47552595)

And who do you propose to do the regulating? EU? USA? Russia?

Re:The scammer's dream. (1)

haggus71 (1051238) | about 2 months ago | (#47553043)

It should be regulated...internationally. It's supposed to be an alternate international currency to remain anonymous when making transactions. There should be some way to regulate the currency, without every Tom, Dickless and Hairy jumping in to try and get their cut.

Bitcoin (-1)

Anonymous Coward | about 2 months ago | (#47551785)

The fact is that these fucks don't know how Bitcoin is run, and have no way of stopping ANYONE from doing JACK SHIT, in the cryptosphere. It belongs to people, and when those people are robbed of any legitimate non-gamed means of transacting, they will create currencies of their own to transact in. What I find appalling is that any of you could be so dumb as to assume that the government has a right to tax anything it wants to. There are no federal or state expenditures that have been incurred in the process of setting up, maintaining, or expanding the Bitcoin network, and cryptosphere at large. Therefore it is the sole province of THE PARTICIPANTS! Besides, no government on Earth seems to be able to stop the pirating of digital goods. As such, I find the very concept of a state or federal government "successfully" (95%+ compliance) regulating Bitcoin or other crypto to be LAUGHABLE, and beneath the need for further consideration...

-Oz

I don't accept BitCoin or PayPal (0)

Anonymous Coward | about 2 months ago | (#47551981)

I still don't accept BitCoin as a payment, for anything.

You want my goods or services, gimme US dollars.

And I don't accept PayPal either because has the nerve to ask me for a my bank account number to confirm who I am--I don't think so. I gave them a credit card, it cleared, and every time I use a credit card that has to be authorized as well. That's all the verification they need.

You can buy anything (0)

Anonymous Coward | about 2 months ago | (#47552321)

with any currency - i discovered dogecoin here
http://www.ultimatexbmc.com/
which led me to here
https://btc-e.com/exchange/ltc_usd
which led me to slashdot
which led me to thinking - I need to know more about virtual currencies :)
Good idea if you ask me - but poor execution, just my 2 cents.

Re:You can buy anything (1)

ArcadeMan (2766669) | about 2 months ago | (#47552537)

Here's a few more currencies, if you look at my sig.

Good luck (1)

DaMattster (977781) | about 2 months ago | (#47552667)

The fact that it is decentralized means that it can neither be regulated nor banned. I'd rather our politicians did something useful for once but a useful politician is kind of an oxymoron.
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