Bitcoin News

Forbes contributor and Bitcoin Foundation (@BTCFoundation) board member Jon Matonis (@JonMatonis) considers the impact a government ban on Bitcoin would have on the fledgling currency.  Excerpts:

“The demand for an item, in this case digital cash with user-defined levels of privacy, does not simply evaporate in the face of a jurisdictional ban.”
-
“Ironically, the ban would create something like the Streisand effect for Bitcoin generating an awareness for entire new demographic groups and new classes of society.”
-
“[Bitcoin is] a bet that career mobility and independent contractor businesses will eventually outstrip the growth of the corporate wage-slave population.”
-
“[The government’s] best response to Bitcoin is irrelevancy, or failing that, extreme gold-like market manipulation for as long as possible. The end game for the State is perpetuating the fiat myth — their fiat myth not the populace’s cryptographic Bitcoin myth. They have always known that faith in money is a mass illusion, however they never considered that they wouldn’t be in charge of the illusion.”

 - http://onforb.es/112nF0u
 - http://bitcointalk.org/index.php?topic=139516.0 (Further discussion of this article)

All News - Daily E-mail Subscription - Twitter: @BitcoinNews

Forbes contributor Jon Matonis (@JonMatonis) describes a generally overlooked vulnerability for Bitcoin — the possibility that key disclosure laws could be used against an individual.  Excerpts:

“Key disclosure laws [exist in the U.K.,] Australia and South Africa which compel individuals to surrender cryptographic keys to law enforcement without regard for the usual common law protection against self-incrimination.”
-
“Key disclosure laws may become the most important government tool in asset seizures and the war on money laundering. When charged with a criminal offense, that refers to the ability of the government to demand that you surrender your private encryption keys that decrypt your data. If your data is currency such as access control to various amounts of bitcoin on the block chain, then you have surrendered your financial transaction history and potentially the value itself.” 
-
“Bitcoin not only disrupts payments and monetary sovereignty, it also disrupts the legal enforcement of anti-money laundering laws, asset seizure, and capital controls. It is very likely that a key disclosure case will make it to the U.S. Supreme Court.”
-
“Another legal strategy to complicate matters could be to split the passphrase with another person and claim that you are never in possession of the entire real passphrase.”

- http://onforb.es/Qjj3Pe
- http://bitcointalk.org/index.php?topic=109105.0 (Further discussion of the article)

All News - Daily E-mail Subscription - Twitter: @BitcoinNews 

Adam Thierer (@AdamThierer), contributor at Forbes, writes an article describing ways the Internet does not require a formal legal system to function.  Excerpts:

“Informal, bottom-up efforts to coordinate security responses offer several advantages over top-down government solutions, such as administrative regulatory or punishing liability regimes.”
“Markets are more nimble than mandates when it comes to promptly patching security vulnerabilities.”
“International cooperation between state-based legal systems is limited, complicated, and costly. By contrast, under today’s informal, voluntary approach to online security, international coordination and cooperation is quite strong.”
“What these efforts prove is that not every complex social problem requires a convoluted legal regime or heavy-handed regulatory response. We can achieve Internet order without layering on more and more law and regulation.”

- http://onforb.es/MhxNjd

All News - Twitter: @BitcoinNews

Forbes columnist Jon Matonis (@JonMatonis) describes essentially how Bitcoin and its community are managing through setbacks that would otherwise devolve into law enforcement actions, lawsuits, and government regulation.  Excerpts:

“Bitcoin entities and their customers currently operate under their own brand of lex mercatoria to enforce accountability.”
“We are actually in the midst of such a case right now as the leading Bitcoinica parties attempt to sort out the claims process to the best of their abilities with limited account records. There is no court. There is no judge. Bitcoin is not defined as legal property.”
“It is clear that a sort of ‘digital’ lex mercatoria is emerging — one that recognizes the complete voluntarist nature of the bitcoin protocol in commerce. We don’t have to imagine The Enterprise of ‘Law: Justice Without the State’ because we are living through it now.”
“The beatings will continue until security improves.”

- http://onforb.es/KXoDHS

All News

A French court is being asked to answer the question “What Is Bitcoin?”.   The leading Bitcoin currency exchange, Mt. Gox, has been without service from one of its banking partners in France for months now as the result of the bank’s interpretation of how French law relates to Bitcoin.  A post on Bitcoin Money contains a summary of the situation:

“The exchange’s CEO wrote a post on the BitcoinTalk forum describing how the definition of electronic money in France’s law uses specific terms such as “fixed value” and “central issuance” and involves the promise of “exchange back to fiat” — none of which are applicable to Bitcoin”.
“If the French court deems that Bitcoin does not meet the definition of electronic money then the exchange would likely be able to continue receiving service from the bank.  In the meantime, the exchange’s service to its customers in the SEPA Euro zone is through international wires handled from another bank or through a payment intermediary, Paxum”.
“Other Bitcoin currency exchanges that support SEPA Euro zone customers include TradeHill, Intersango, Bitcoin7, Bitcoin-Central.net as well as other niche exchanges”.

- http://bitcointalk.org/index.php?topic=41317.0 (Forum post)
- http://www.bitcoinmoney.com/post/9805694567 (Summary)

All News

A post on Bitcoin Money blog describes how FinCEN’s recently published Final Rule regarding prepaid access (stored value) may impact Bitcoin.  Some excerpts:

“Sellers of prepaid access must collect personal information from customers, maintain transaction records, file suspicious activity reports and comply with other requirements of money service businesses (MSB)”.
“There is no way to limit where bitcoins can be spent and the value is easily transferred from one person to another so bitcoin will not likely be considered exempt from the AML regulations”.
“The bigger impact of following AML compliance may not necessarily be the cost of compliance itself but instead the likely result — to effectively de-anonymize Bitcoin”.
“Ironically, these new regulations may drive even faster Bitcoin adoption […]”.

- http://www.bitcoinmoney.com/post/8412471372
- http://www.gpo.gov/fdsys/pkg/FR-2011-07-29/pdf/2011-19116.pdf

All News

John William Nelson (@nelsonjohnw) writes on where law and technology intersect in the blog Lex Technologia.  His post helps to answer the question as to whether or not securities laws in the U.S. apply to Bitcoin:

“No entity or assets back up Bitcoin value. Bitcoin value is entirely virtual—a Bitcoin is only worth what another person thinks its worth. This is different than currency issued by countries”.
”Bitcoin is backed by no entity, no commodity, no organization. Bitcoin value is not based on government regulation or law mandating its use in a country”.
“Bitcoin investors should absolutely worry about securities laws. The securities definitions outlined above might not apply to Bitcoins themselves, but they are flexible enough to apply to Bitcoin exchanges that convert a Bitcoin to real-world currencies”.
“Securities law is broad enough to potentially capture any enterprise where investment for profit is involved”.

All News

Hosts Denise Howell (@DHowell) and Evan Brown talk “virtual money”, starting at about 20:45 into the video.

“It’s another example of how it may have legal issues on a number of fronts — the legal parameters are fuzzy but yet who cares?  There’s an Internet and people want to be doing this. I’m sure that if it’s squelched out of existence in countries or states who decide to regulate strongly against it and impose penalties it will simply spring up in places where those penalties are swept aside”.

- http://www.youtube.com/watch?v=R6J3ET_achU#t=1251s
- http://twit.tv/twil114 (with link to mp3)

All News