http://siliconangle.com/blog/2013/06/24/bitcoin-foundation-under-attack-in-california/
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Going after one of the most beloved and viable currencies in the world?
I'm sure that'll end well.
Going after one of the most beloved and viable currencies in the world?The California Department of Financial Institutions, which regulates banks and credit unions in the state, has apparently ordered the Bitcoin Foundation to cease all operations within California, accusing it of "engaging in the business of money transmission without a license or proper authorization."
There has been a change of policy.
I am not seeing it. There is no physical currency. It is technically nothing more than a digital good, which these people then either sell for cash, which is legal, or trade for goods or services, which is also legal.
FinCEN regulation
On 18 March 2013, the Financial Crimes Enforcement Network (or FinCEN), a bureau of the United States Department of the Treasury, issued a report regarding centralized and decentralized "virtual currencies" and their legal status within "money services business" (MSB) and Bank Secrecy Act regulations.[40] It classified digital currencies and other digital payment systems such as Bitcoin as "virtual currencies" because they are not legal tender under any sovereign jurisdiction. FinCEN cleared American users of Bitcoin of legal obligations by saying, "A user of virtual currency is not an MSB under FinCEN's regulations and therefore is not subject to MSB registration, reporting, and recordkeeping regulations." However, it held that American entities who generate "virtual currency" such as bitcoins are money transmitters or MSBs if they sell their generated currency for national currency: "...a person that creates units of convertible virtual currency and sells those units to another person for real currency or its equivalent is engaged in transmission to another location and is a money transmitter." This specifically extends to "miners" of the Bitcoin currency who may have to register as MSBs and abide by the legal requirements of being a money transmitter if they sell their generated bitcoins for national currency and are within the United States.[38]
Additionally, FinCEN claimed regulation over American entities that manage bitcoins in a payment processor setting or as an exchanger: "In addition, a person is an exchanger and a money transmitter if the person accepts such de-centralized convertible virtual currency from one person and transmits it to another person as part of the acceptance and transfer of currency, funds, or other value that substitutes for currency."[39][40]
In summary, FinCEN's decision would require Bitcoin exchanges where bitcoins are traded for traditional currencies to disclose large transactions and suspicious activity, comply with money laundering regulations, and collect information about their customers as traditional financial institutions are required to do.[52][53]
Patrick Murck of the Bitcoin Foundation criticized FinCEN's report as an "overreach" and claimed that FinCEN "cannot rely on this guidance in any enforcement action"
If that is the case, then anyone who sells something on second life is a money transmitter now too, because it is literally the exact same basic function. A digital thing being exchanged for money.Originally Posted by dekciW
This is a quote from wiki about bitcoins. I was reading something about this a while back and decided not to get into bitcoins because of it. I am assuming this is what is happening here. Important stuff is in bold...Also I am a Californian and I'm pretty sure this is bigger then just California.
No, its not. You'll burn 4x the energy than you'll ever make anymore. Graphics mining of bitcoin is dead, unless you don't pay for power.
Not really. Something on Second Life being sold has a function, a utility in the game. The sole function of BitCoins is for purchasing goods or services or exchanging the digital currency for the currency of a state. Unlike other digital goods, it has no utility function or aesthetic value, all it is good for is purchasing stuff.
It really is a black market currency and that's what this is about is clamping down on digital black market currencies. The Linden (Second Life dollars) Is not a black market currency and it is taxable.Originally Posted by avesdude
No, its not. You'll burn 4x the energy than you'll ever make anymore. Graphics mining of bitcoin is dead, unless you don't pay for power.
On topic: it is a black-market only currency. All other transactions effectively peg it to its value against the dollar. Yes you can buy consumer goods, but it will never stand on its own as a currency because its value comes from the exchange rate on mt gox.
Can't blame California for trying to clamp down on an untaxable black market currency.
Not to mention that LL will send you a 1033 form in the mail after you sell a certain amount of goods (I believe the 500 dollar mark is the federal requirement)Originally Posted by nubbinator
Not really. Something on Second Life being sold has a function, a utility in the game. The sole function of BitCoins is for purchasing goods or services or exchanging the digital currency for the currency of a state. Unlike other digital goods, it has no utility function or aesthetic value, all it is good for is purchasing stuff.
And before you dive even further into trying to distinguish it from digital goods or services (which it is not), keep in mind that it is actively referred to by Bitcoin miners and those who made Bitcoins as a digital currency. It was designed specifically to be used as money. While you could argue that it is closer to stocks than it is to currency, even that argument falls flat since stocks are tied to the market performance of a company.
600 I believe, but nothing is stopping people from selling these items outside of the game, nothing other than terms of use, and we all know how well THAT stops people.Originally Posted by Darkpriest667
It really is a black market currency and that's what this is about is clamping down on digital black market currencies. The Linden (Second Life dollars) Is not a black market currency and it is taxable.
Not to mention that LL will send you a 1033 form in the mail after you sell a certain amount of goods (I believe the 500 dollar mark is the federal requirement)
I actually find the logic/legality questioning.Originally Posted by Masta Squidge
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If that is the case, then anyone who sells something on second life is a money transmitter now too, because it is literally the exact same basic function. A digital thing being exchanged for money.Originally Posted by dekciW
This is a quote from wiki about bitcoins. I was reading something about this a while back and decided not to get into bitcoins because of it. I am assuming this is what is happening here. Important stuff is in bold...Also I am a Californian and I'm pretty sure this is bigger then just California.
Yes.Originally Posted by Darkpriest667
I'm from America, have the same opinion. You gonna tell me to Back off?
OK.... now for On Topic commentary about fiat, private, and commodity based currencies. Let's just take the basic principle. What is Money? Economically defined it is - something that serves as a medium of exchange, a unit of accounting, and a store of value.
Bitcoin, barely, can fit all of these categories.
What is currency?
A generally accepted form of money, including coins and paper notes, which is issued by a government and circulated within an economy. Used as a medium of exchange for goods and services, currency is the basis for trade.
Frankly bitcoin does not meet this guideline. It is not issued by a government or circulated within any major economy (although an argument CAN be made that it is circulated in the black market pretty regularly.) Now, Bitcoin could try operating as a private currency (several places including Hong Kong have private currencies), but it would have to operate under the regulations of department of treasury and the department of finance. After reading the state of California's position. SIGH.. I actually have to agree with their position.
Bitcoin is "engaging in the business of money transmission without a license or proper authorization"
I highlighted that part of your argument because it is a very significant part. The sole function of Bitcoins is to exchange them for goods, services, or another currency. There is no other utility function or aesthetic value to them at all. Their sole purpose is to be used as a currency.Originally Posted by Masta Squidge
So, because you say it is a thing, then it becomes different from another functionally identical thing.
Got it.
It is a piece of software which has been given value. At the end of the day the only thing different about these lines of code is that it exists purely to sell for something else. One could argue that I play second life purely to create something to sell for something else, be it other in game items, or real currency. In which case, there is still no difference.
The person gains an item of use, no matter what that use it, in exchange for goods or services. The use of a bitcoin is to trade. It is a digital product with a use and a value that is defined by demand. The value of money is not demand based. As you pointed out though, stocks are. And stocks are not considered to be a money transfer. Stocks are considered to be a product which is bought and sold, whos sole purpose is to lose, hold, or gain value. They are not treated as currency, nor should bitcoins. The difference between stocks and bitcoins is only that one typically does not trade a stock for an iPod.
I would personally consider bitcoins and the like to be nothing more than "stock in the digital realm".
For the record I understand what you are saying, I am simply presenting my defense of the case.
Take a look around any tech forum and people are gobbling them up like crazy.