A Bitcoin service suspended by state of Virginia
bitcointalk.orgGovernments are terrified of Bitcoin and are trying to destroy the value by eliminating providers of liquidity. No buyers, no value. As to some of the comments stating that they have not been "suspended by the state" - that is a disingenuous argument that only a lawyer could love. The state sent them a letter accusing them of violating laws that carry the organizational equivalent of the death penalty, and possible jail time for the founders. It was intended to threaten and intimidate them into suspending operations, and it worked.
It's disappointing that this is the highest-ranked comment on the thread.
The government of Virgina is not terrified of Bitcoin. As a state, Virginia does not have the power to issue monetary currency. What Virginia cares about is that money transmitters--of any currency--which send money into or take money out of the state are subject to regulations to protect the citizens and residents of that state.
A legal suspension is a very different thing from a voluntary shutdown. One is the state's use of legal force--the other is the business choosing not to challenge a form letter before any legal proceedings have even begun. A form letter, legally speaking, is like a boxer saying he's going to destroy his opponent--before the match has even been arranged.
Alternative interpretation: governments couldn't give a rat's ass about Bitcoin, but care deeply about financial institutions (at least, those too small to purchase legislators) actually following the rules.
This company is transmitting money, Virginia requires companies that transmit money to be licensed, this company is not licensed, seems pretty straightforward to me.
One can argue about the merits of the regulation in question, but since regulations like this long predate Bitcoin, it's clearly not any sort of reaction to Bitcoin or any other virtual currency.
Wrong. This company does not sell Bitcoins - they buy them (the state's "initial investigation" - which likely consisted of reading a complaint filed anonymously by a competitor - had this entirely wrong). They are only "transmitting money" in the same way that people who buy things from Amazon or eBay are when they buy products. By your definition, I guess I need to become a licensed MSB next time I buy a replacement power supply on eBay.
If Bitcoins are considered currency, then it is subject to all of the same laws that would apply to any other currency. Money transmitter laws are currency agnostic--they apply equally to transmitters of pesos as they do to transmitters of dollars.
OTOH, if Bitcoin is not a currency, then it would not be subject to these laws--but in such case it would be unlikely for Bitcoin to ever become more than an extremely niche means of exchange.
> If Bitcoins are considered currency, then it is subject to all of the same laws that would apply to any other currency. Money transmitter laws are currency agnostic--they apply equally to transmitters of pesos as they do to transmitters of dollars.
The main reason many Bitcoin-related business are potentially covered by money transmitter (and related) rules is because of how they handle traditional currencies like US dollars in connection with their Bitcoin-related business.
> They are only "transmitting money" in the same way that people who buy things from Amazon or eBay are when they buy products.
Per the FinCEN guidance on virtual currencies [1], " An administrator or exchanger that [...] buys or sells convertible virtual currency for any reason is a money transmitter under FinCEN's regulations, unless a limitation to or exemption from the definition applies to the person."
So, no, the situation isn't the same in the eyes of the federal regulator, and its not really surprising that state regulators whose scope of authority is set by the federal rules view things the same way as the federal regulators.
[1] http://fincen.gov/statutes_regs/guidance/html/FIN-2013-G001....
If I buy Euros, am I not transmitting money? There's a difference between Bitcoin and power supplies, namely that the former is money and the latter is not. The law applies to currency.
Bitcoin advocates can't seem to make up their mind as to whether Bitcoin actually qualifies as "money". It's money right up to the point where the law starts talking about "money", then magically it's just some arbitrary good that's not actually a currency at all.
Law may say what it wants. The reality is people trade things for things. Some other people define certain things as special and force you to comply based on their definitions. No one outside the legislative structures gives a rat's ass about those definitions. When you and me trade something for something, we don't care about someone's definitions, we only care about the value that we get in result. And your friends also don't care. Only people who have power to force you to comply use that power to play with words and mess with your mind.
That's a fantasy. Here in reality, if you're operating a commercial enterprise, the way you operate depends greatly on what kind of item you sell. For example:
1. Hard liquor not for consumption on site: illegal to sell in Virginia, only the state can.
2. Firearms: highly regulated.
3. Food: must meet health department regulations.
4. Computer parts: fairly open, must still meet basic business licensing requirements, collect sales tax, etc.
You can talk about how things ought to be all you want, but all that matters here is how things are, and how things are appears to be that this Bitcoin operation falls under a certain category of law with which they are not compliant. The law is not written with Bitcoin in mind at all, so conspiracy theories about governments specifically targeting Bitcoin do not appear to have any basis.
I agree there's no conspiracy against Bitcoin. I agree that in the view of particular people Bitcoin is money and they want it to be regulated according to their agenda.
What I don't agree is when people use made up definitions with straight face within a rational argument. It's not that you are wrong, it's that arguments like yours implicitly justify certain things as objective (e.g. differences between money and not-money).
In other words, Bitcoin services are being regulated not because Bitcoin is (or not) money, but because there are people with guns who want to control certain things in certain ways and use made-up definitions to justify their actions. When you use their definitions you just add up to global confusion and hide their lies.
And I'm not saying how things ought to be, I'm not suggesting what's good or bad. I'm saying that without honest clear terms we cannot easily decide for ourselves what's good or bad. Maybe it's good for someone to be controlled by people with guns. I just want to point out that there are guns and many people are afraid of them.
Bitcoin is clearly money. The people who made it consider it to be, the people who use it consider it to be, and the people who want to regulate it consider it to be. This is no more made up than any other human terminology.
How is this really any different from Western Union?
I don't even understand the comparison. They were buying (not selling) Bitcoins directly from sellers. Western Union is specifically engaged in the business of enabling people to send money to others.
They were taking money from customers, in exchange for which the customer received some sort of token of value, which could be used as a medium for exchange or reconverted to USD later.
It's not a token or store of value. Bitcoins only have value to the extent that others will buy them. There is not a person on the planet that has a contractual obligation to exchange or buy Bitcoins for anything.
Bullshit.
Things with easily accessible, live-updated exchange rates have value. We're not talking about baseball cards here.
We're not talking about baseball cards here.
You're right, we are literally talking about the buying and selling of random numbers. However, once again, Bitcoins have zero inherent value. There is no person or organization that has any obligation to buy or otherwise exchange them. They only have value to the extent that others will buy them.
I'm just going to invoke No True Scotsman at this point.
Good point. Assuming ad absurdum that all exchanges (fiat/BTC) will be forbidden, does bartering via a 3'rd party - in this case BTC subjects to the same regulations ?
For example: instead of "I exchange 3 bananas for 3 apples" to "I exchange 3 bananas for 3 btc which I can exchange for 3 apples".
I'm not quite sure I grasp the idea of bartering via a 3rd party, but it sounds a lot like a credit card processor or similar, which are certainly regulated.
Our existing established currencies (USD, EUR, etc) were born out as an easier way of bartering (i.e. don't have to carry the the weight) or in form of exchangeable IOUs (I'll pay you back when I'll harvest).
I was just wandering if BTC could take the role that the shells used as money by our ancestors.
To add on top of that, for bartering there is no sales tax, etc.
BTC is certainly intended to take on that role. Whether it can is the big question.
Note that barter isn't actually exempt from taxes at all. Transactions are taxed at the market value of the barter. People generally ignore this, but they only get away with it because the transactions are tiny. If e.g. Exxon started selling oil by barter, the IRS would take its share.
but care deeply about financial institutions (at least, those too small to purchase legislators) actually following the rules
Might want to ask Elizabeth Warren about that one.
I don't understand what you're getting at, can you elaborate?
You did include "too small to buy legislators" so that takes away a good deal of the irony.
This is a pretty bad headline. First off, there should be a article in there, like "A Bitcoin service". Secondly, the service appears to have been shutdown to protect the owners/operators of the site from further legal action. They are not being forced to close. The state thinks they need a license and they think they don't. Instead of risking jail time on the possibility they don't need a license, they are taking the cautious route and shutting down until the legal issues are resolved.
"They are not being forced to close."
"Instead of risking jail time (...)"
I see some contradiction in here. If you feel a threat of violence upon you, isn't it very definition of "being forced"?
The operators of the site believe that they are in the right. If they were 100% confident of this they could continue to operate. They are not 100% confident so they are shutting down to make sure what they are doing isn't illegal. They are not being threatened with violence by the state anymore than any other law abiding citizen. They have simply been informed that what they are doing may be illegal and are adjusting accordingly.
The fact that all citizens are afraid of state violence does not mean we can redefine word "voluntarism". You abide the law non-voluntarily. You abide terms of service in McDonalds voluntarily because you can always choose from millions of alternatives + you can have a peaceful dialog in case of a dispute. Neither McDonalds manager, nor you are willing to fight each other on fists or in court. It's in your mutual interests to figure out problems through discussion.
You don't discuss with the state. You can have your input, but you are totally dependent on existing powers that allow you some freedom and some voice. That's why you have no problem arguing with private companies and having them listen to you, but everyone avoids state courts as much as possible (in majority of cases courts are used as a threat, not as a real dispute resolution mechanism).
> They are not being forced to close.
They were told they "must" close by the state. I'm not sure how anyone can construe that as voluntary.
They were told they must stop if they are not exempt. The companies position is that they are exempt. They have chosen not to gamble that the commonwealth will rule in their favor during the appeal; however, that is their choice and they could have continued to operate.
A smaller entity being threatened by a larger entity is a form of force.
Do you think you pay taxes "voluntarily" also?
Yes, because you can always relinquish your citizenship and leave the country if you don't want to pay taxes. It should be noted that all "voluntary" market transactions occur pursuant to the implicit threat of force. When I buy something, I reserve the right to invoke the state's use of force if the product is say defective, while the seller reserves the right to invoke the state's use of force if my payment is say counterfeit currency. Per your definition, there are no voluntary transactions in any country with even the most basic government. Which is certainly a self-consistent definition, though it's arguably not that useful unless you believe that full-fledged anarchy is feasible.
Not to be harsh, but your argument is all over the place.
Well in fairness, that's the exact way the argument is usually seen deployed by those opposing state regulation of anything who eventually end up hyperventilating about jackbooted thugs forcing you to register your car at the DMV.
> who eventually end up hyperventilating about jackbooted thugs forcing you to register your car at the DMV.
It's a poor argument that can be derailed by what you think another might say.
"Yes, because you can always relinquish your citizenship and leave the country if you don't want to pay taxes."
Thank you for this comment, I thought I was the only one on HN with that opinion.
> there should be a article in there, like "A Bitcoin service"
Newspaper headlines have evolved own special grammar rules, designed to save space. According to Wikipedia [1], "Articles are usually omitted."
Also, it's a little ironic that this comment, nitpicking the headline's choice of articles, itself uses articles incorrectly (it should say "there should be _an_ article in there.")
>Effective the May 31st, 2013 Tangible Cryptography has suspended new purchases of Bitcoins through our service FastCash4Bitcoins. We take this step in response to a notice received, the same day from the Commonwealth of Virginia, that a complaint has been made that our company is operating as an unlicensed money transmitter.
Note that they're basically acting as the middle-man, not storing anything - I'm not really sure how the terms work in this situation. They seem to think it doesn't apply, maybe they're right.
It sounds like they did this voluntarily, and they go on to explain there have been no freezes, and all transactions have been completed. Probably a good choice (IANAL of course) while they mount a defense, which it sounds like they plan to do.
> It sounds like they did this voluntarily
No, they were forced by the state.
When faced with options that include "shut down" and "go to prison", I don't know if that counts as voluntary anymore.
It sounds like they are voluntarily suspending service until this is sorted out. Virginia has given them 30 days to explain why they think this doesn't apply to them.
"Voluntarily"? They feel the risk of their property being seized and owners brought to court.
It would be "voluntarily" if their customers did not like their affairs and they risked losing customers. And customers are never going to put a gun to your head. They just go away.
It sounds more like they are already at risk of this. Voluntarily suspending operation until things are sorted out, is more of a show of good faith that they are willing to play ball and sort things out.| They feel the risk of their property being | seized and owners brought to court.> Voluntarily suspending operation
Something is voluntary only if there's no threat of force behind it.
Voluntary: acting or done without compulsion or obligation.
This does not make situation any more "voluntary" then.
"The commission has formally stated that unless exempt from licensing we must stop further activity until such time as we apply for and obtain a Money Transmitter license."
Assuming that OP was simply buying bitcoin (and nothing else...i.e. not automatically selling on an exchange on the backend or something...), then this could be a big shot to Bitcoin.
Unlike other recent headlines (around i.e. Mt. Gox, etc.), it seems like the question here is whether or not bitcoin constitutes "stored value" under VA law[1]. If so, this would render anyone who buys and sells bitcoin a Money Transmitter Business.
That said, I doubt FinCEN would consider Bitcoin "stored value" based on their definition [2] and recent "guidelines".
Stored value laws were created for things like prepaid cards (I believe...[3]), which were cracked down on because of their role in money laundering.
[1] http://leg1.state.va.us/cgi-bin/legp504.exe?000+cod+6.2-1900 [2] http://www.fincen.gov/financial_institutions/msb/definitions... [3] http://www.gpo.gov/fdsys/pkg/FR-2011-07-29/pdf/2011-19116.pd...
one unlicensed money transmitter is being suspended, not all bitcoin services and not the entire state of VA.
The state of VA is making the argument that bitcoin services are money transmitters, so it seems like they'll go after everyone in the state.
Services that change money into bitcoins, or vice versa.
If you accept bitcoins for your dog-walking service, there doesn't seem to be any new regulation.
Say a Craigslist service exclusively for bitcoin. Would the glorious state of Virginia have a problem with this?
An eBay auction exclusively for btc? Where service wets beak with $$ only, or also/with btc micro payments? A problem?
An eBay auction exclusively for EUR? Yes.
I just really liked this quote in the comments because it made me chuckle -
"You don't get into positions of power of life and death over proles by being ignorant, only acting as if you are, which is genius-level sociopathy. If you REALLY try it sometime, you may just become the President of the United States, and have the power to slaughter babies in the Rose Garden in front of the world's press, and not suffer any real punishment whatsoever."
Welcome to Canada, where bitcoin exchanges are not subject to FinTrac Money Transmitters regulations. Yet...
Bitcoin supporters on HN:
One thread: Bitcoin is the future of money
Other thread: Bitcoin is not money, so why apply money rules?
It either is or isn't.
You see the same thing a lot with disruptive startups -- where they are hailed as the radical new future of a particular industry and it is argued that they should not be compelled to obey the regulations of the industry they seek to enter and disrupt (and, often, a substantial part of their operations rely on them being allowed to ignore those regulations or having the regulations rewritten to support them.) See, e.g., Airbnb and its issues with many cities regulations of short-term renting.
Exactly. AirBnB and Uber (Stockholm) come to mind too.
How they can ban bitcoin use in an state?