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Showing posts with label bitcoin exchanges. Show all posts
Showing posts with label bitcoin exchanges. Show all posts

Friday, June 9, 2017

In helping to try to legitimize Bitcoin and remove its criminal stigma, pro-Bitcoin advocates ask Congress to go after unregulated exchanges

Perhaps in an attempt to appease the government and help legitimize Bitcoin and other cryptocurrencies as being a viable asset in the financial system, a number of pro-Bitcoin advocates spoke before Congress at a hearing on June 8 in which they pleaded with the government's regulatory arm to go after unlicensed and unregulated cryptocurrency exchanges since they were the ones most likely to help facilitate illegal activity using Bitcoin and others.

Bitcoin and blockchain experts are urging US lawmakers to ramp up pressure on unlicensed offshore exchanges. 
Coming yesterday during a hearing held by a subcommittee within the US House of Representatives, the calls followed a notable string of ransomware attacks that have seen consumer data held hostage in exchange for bitcoin payments. The situation has also seen politicians taking a renewed interest in the more negative aspects of cryptocurrency technology in response. 
Yet, the core problem, panelists told the committee members, is not in bitcoin purchases, it's that when criminals do use bitcoin or other cryptocurrencies for illicit purposes, they often go through exchanges hosted outside the US. 
In statements, panelists sought to portray these businesses as unlicensed, unregulated and unwilling to abide by basic anti-money laundering and know-your-customer regulations, rules that digital currency exchanges in the US and Western Europe must abide by. 
"Nearly 100% of ransomware campaigns cash out through platforms such as these. It's a huge problem," said Kathryn Haun, a former Assistant US Attorney and now a lecturer at Stanford University. "Not surprisingly, the bad actors are not using the Coinbases of the world." - Coindesk
The fact of the matter is, Bitcoin and other cryptocurrencies are no longer 'under the radar' mediums of exchange, but viable forms of currency that are accepted and traded as both money, and as securities in markets all across the globe.  But it is events such as the Ransomware attack, and the stigma of it being used in money laundering that are bringing Bitcoin advocates to realize that a modicum of regulation by central authorities may help eliminate the fears that one day government's will come in with their power and try to criminalize or eliminate cryptocurrencies entirely.

Sunday, April 23, 2017

International law firm seeks to define Bitcoin as property rather than as a currency

A month ago, an international law firm that specializes in blockchain technologies and crypto-currencies submitted a white paper in which they advocated that Bitcoin should be officially recognized as property and protected by the property laws of sovereign countries.

Using a California legal precedent on property as their foundation for U.S. determination, the firm believes Bitcoin transactions should be conducted the same as one would do with property, where contractual agreements between two parties utilize permissions and escrow while allowing the Bitcoin owner to retain ownership until the terms of the contract are complete.

Image result for bitcoin is property

Image use courtesy of Michael Carney/pondodaily
As Bitcoin is adopted by more users every day, the need to determine how it can integrate into mainstream society becomes even more pressing. One major question continues to be how traditional laws apply to Bitcoin and its use. 
Many of those determinations could have major implications for Bitcoin and its holders, and few will play a bigger role in the United States than property laws, which could ultimately govern ownership over the digital currency. 
A new white paper, “Treatment of Bitcoin Under U.S. Property Law,” seeks to analyze how the worlds of digital currency and property law should intersect. The report was assembled by Perkins Coie, an international law firm that specializes in blockchain technology and digital currency and has been active in the space since 2013. While detailed and clearly well-researched, the paper’s foremost conclusion is straightforward and transparent. 
“We conclude that property interests should exist in bitcoin under such law, and that multiple sources of persuasive authority provide additional support for that conclusion,” the paper’s authors, J. Dax Hansen and Joshua L. Boehm, wrote. 
The paper begins with an overview of Bitcoin’s technological attributes and what those mean for how property law can apply to it. Using California state law as a benchmark and Bitcoin transactions as an example, the authors make their case. 
“Parties may ... enter into contractual arrangements in which one party entrusts partial or complete control of such private key(s) to a third party while still maintaining formal title to the bitcoin value represented in applicable [unspent transaction outputs],” the paper reads. “These kinds of contractual arrangements are commonplace in custodial, trust, and escrow settings, which have generated well-developed legal principles that should generally translate to bitcoin custodial contexts.” 
The paper dissects academic articles from some of the country’s foremost law professors, who also, for the most part, support the idea that intangible property rights should apply to Bitcoin: 
“Property law scholars who have encountered the bitcoin ownership issues in the context of broader, more theoretical undertakings have reached (or assumed) the same general conclusion ... that is, interests in bitcoin should be protected by property law.” - Bitcoin Magazine
Perhaps the most important question in this concept of labeling Bitcoin and other crypto-currencies as property in the eyes of the legal system is that it would have a profound effect on Bitcoin exchanges who have in the past simply mixed all customer accounts and currencies into a 'pool' rather than keeping them segregated and untouchable without the permission of the account holder.  In fact, it was this re-hypothication scheme that led to the insolvenciea of exchanges like MT. Gox, who used financial and security regulations rather than property law to end up selling more Bitcoins to customers than they had available in their own account.

The United States court system has already made initial rulings that label Bitcoin as property, mostly for taxation purposes rather than for legal protections.  But until the world comes to a consensus on what exactly Bitcoin and other crypto-currencies function as... property, securities, currency, etc... then for the most part crypto-currencies will remain on the fringe and in the realm of a select few who recognize their potential and application.