Calling Bitcoin a currency, and therefore allowing that it can be regulated, is an important factor in whether the government can care about it at all.
If they decided that it wasn't a currency and had no value, the case against the Bitcoin Savings and Trust founder would go nowhere. This decision cuts both ways. Without recognizing it as having value, there'd be no fraud to charge and if you were defrauded, no remedy available.
The Constitutional provisions deal with the right of the Federal and State Governments to issue currency, not individuals or private organizations. Meanwhile, there has been a long history of minor private currencies in the US without legal interference.
I haven't read the decision yet, but the justification in the article is weak. If Bitcoin is a currency because it can be exchanged for dollars and other real currencies, anything I can sell on Ebay is a currency as well. I guess the SEC will crack down on fraudulent dealers on ebay now.
It is my impression that earlier this year the IRS, in some non-binding way (a press release or something?) said that they suggested people treat bitcoin as a commodity for tax purposes, not a currency. I may be recalling incorrectly since I can't find anything saying that now, but whether it is a currency or a commodity is certainly something that has been frequently discussed.
The important part of this news seems to be that bitcoin is indeed going to be a currency. That currencies can be regulated is not news at all.
Wait, I don't understand - how does the US government have jurisdiction, practically speaking, over Bitcoin transactions occurring entirely outside of the US?
Or is that not what this says? Because to me, "can be regulated under American law" means what I wrote above.
Bitcoin transactions are broadcast to the entire network, which includes people who are in the USA. At the very least, American laws apply to those people and can certainly affect foreign Bitcoin users.
Really though, what the judge is saying is that Bitcoin cannot be used to evade US laws where those laws apply. No surprises there.
It's not 'the US can regulate any interaction that involves bitcoins'.
The proper reading is 'even if an monetary interaction substituted bitcoins for dollars, if the US would have had jurisdiction, then the US still has jurisdication'.
Basically, the guy who ran Bitcoin Savings and Trust decided as part of his defense to argue that he couldn't be prosecuted under federal securities law because what he was doing didn't meet the definition of "securities", since -- and this was the defendant's argument -- Bitcoin isn't money.
The judge basically took a look at this, said "it walks like a duck and quacks like a duck", and ruled that for purposes of this prosecution under securities law, yes, Bitcoin is money and Bitcoin investments are securities.
It means they'll pass or enforce laws that require citizens to pay taxes, exchanges to file paperwork & pay fees, etc. It means if you're caught not abiding by the law, then you will get punished.
Obviously they don't have natural jurisdiction over and above crypto-anarchy, unless they have the capacity to wage war against the protocol. They probably do. There will be workarounds. So it goes.
I believe the ponzi pirate PirateAt40 should be punished, not because Bitcoin falls under the jurisdiction of government as money, but rather because the pirate defrauded people. You can defraud people with beanie babies or baseball cards as well.
That is kind of like saying, "Good luck collecting taxes!" At some point you need to exit the Bitcoin system -- maybe you need your nation's currency, maybe you need a new computer, maybe you just need to buy your lunch, but regulations can and mostly certainly will be enforced at the exit points.
At some point, you'll have to make a payment to someone who doesn't accept Bitcoin, which is the point of failure. While cash may be anonymous and Bitcoin may be anonymous (the second one is dangerous, in and of itself), you will have to make a conversion to real-world currency and that transaction can be as heavily regulated, including the requirement for non-anonymity.
And if you stick to Bitcoin transactions only, it would be very easy for authorities to declare tax-evasion, for starters, which opens up a whole different can of worms, as transactions are occurring in a non-regulated space.
On the whole, it seems like Bitcoin-enthusiasts would be far safer in a more regulated environment.
I think you might be confusing "regulated" with "controlled". Setting aside the question of whether it should be regulated, of course it CAN be regulated. For example, if you're a corporation accepting bitcoins, in order to maintain corporate status, you have to keep good records of who you're receiving bitcoins with, and pay equivalent taxes, etc. etc.
I'd love to trade email addresses so that we can exchange numbers in the future! My favorites are 17, 3225, and another one that I don't want to exchange with just anyone.
Unrelatedly, there's a problem with calling things only numbers when they're much more than just numbers. If bitcoin were only numbers, nobody would buy them. People buy them because there's an expectation to store and liquidly transfer value.
The claim that the government can't regulate atoms won't stand up if the atoms you have are in an arrangement that fires bullets.
Fraud isn't protected speech. Even if you use speech in the course of comitting it. The issue here is securities fraud, not prohibiting the exchange of bitcoins.
Exchanging bits of paper with writing on them (EDIT: Paper money if you're confused) is probably also speech then. Your argument seems a bit misguided there.
[+] [-] daraul|12 years ago|reply
If they decided that it wasn't a currency and had no value, the case against the Bitcoin Savings and Trust founder would go nowhere. This decision cuts both ways. Without recognizing it as having value, there'd be no fraud to charge and if you were defrauded, no remedy available.
[+] [-] Dylan16807|12 years ago|reply
[+] [-] julespitt|12 years ago|reply
IIRC, most definitions provided by Federal Law designate that currency or money is by definition minted by sovereign governments.
[+] [-] mpyne|12 years ago|reply
[+] [-] ferdo|12 years ago|reply
http://en.wikipedia.org/wiki/Christopher_Bechtler#The_Bechtl...
This move with regard to Bitcoin is merely Bank.Gov trying to protect its monopoly on the issuing of currency.
[+] [-] julespitt|12 years ago|reply
I haven't read the decision yet, but the justification in the article is weak. If Bitcoin is a currency because it can be exchanged for dollars and other real currencies, anything I can sell on Ebay is a currency as well. I guess the SEC will crack down on fraudulent dealers on ebay now.
[+] [-] wmf|12 years ago|reply
[+] [-] jlgreco|12 years ago|reply
The important part of this news seems to be that bitcoin is indeed going to be a currency. That currencies can be regulated is not news at all.
[+] [-] unknown|12 years ago|reply
[deleted]
[+] [-] diminoten|12 years ago|reply
Or is that not what this says? Because to me, "can be regulated under American law" means what I wrote above.
[+] [-] betterunix|12 years ago|reply
Really though, what the judge is saying is that Bitcoin cannot be used to evade US laws where those laws apply. No surprises there.
[+] [-] Dylan16807|12 years ago|reply
It's not 'the US can regulate any interaction that involves bitcoins'.
The proper reading is 'even if an monetary interaction substituted bitcoins for dollars, if the US would have had jurisdiction, then the US still has jurisdication'.
[+] [-] ubernostrum|12 years ago|reply
Basically, the guy who ran Bitcoin Savings and Trust decided as part of his defense to argue that he couldn't be prosecuted under federal securities law because what he was doing didn't meet the definition of "securities", since -- and this was the defendant's argument -- Bitcoin isn't money.
The judge basically took a look at this, said "it walks like a duck and quacks like a duck", and ruled that for purposes of this prosecution under securities law, yes, Bitcoin is money and Bitcoin investments are securities.
[+] [-] jaekwon|12 years ago|reply
Obviously they don't have natural jurisdiction over and above crypto-anarchy, unless they have the capacity to wage war against the protocol. They probably do. There will be workarounds. So it goes.
I believe the ponzi pirate PirateAt40 should be punished, not because Bitcoin falls under the jurisdiction of government as money, but rather because the pirate defrauded people. You can defraud people with beanie babies or baseball cards as well.
[+] [-] lmartel|12 years ago|reply
[+] [-] betterunix|12 years ago|reply
[+] [-] drivingmenuts|12 years ago|reply
And if you stick to Bitcoin transactions only, it would be very easy for authorities to declare tax-evasion, for starters, which opens up a whole different can of worms, as transactions are occurring in a non-regulated space.
On the whole, it seems like Bitcoin-enthusiasts would be far safer in a more regulated environment.
[+] [-] dnautics|12 years ago|reply
[+] [-] jakeogh|12 years ago|reply
Exchanging numbers is speech. The war on the 1st continues.
[+] [-] ante_annum|12 years ago|reply
Unrelatedly, there's a problem with calling things only numbers when they're much more than just numbers. If bitcoin were only numbers, nobody would buy them. People buy them because there's an expectation to store and liquidly transfer value.
The claim that the government can't regulate atoms won't stand up if the atoms you have are in an arrangement that fires bullets.
[+] [-] chasing|12 years ago|reply
[+] [-] dragonwriter|12 years ago|reply
Fraud isn't protected speech. Even if you use speech in the course of comitting it. The issue here is securities fraud, not prohibiting the exchange of bitcoins.
[+] [-] RyanZAG|12 years ago|reply