Category Archives: regulator

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Bitcoin Foundation – Response To State Of California's Warning

Bitcoin Foundation – Response To State Of California’s Warning:

Bitcoin Foundation (@BTCFoundation)’s attorneys respond to the May 2013 warning letter sent by California’s Department of Financial Institutions.  Excerpts:

“The Bitcoin Foundation does not engage in any of these regulated activities.  Furthermore, even if it did engage in these activities, it does not have any business operations in California that would subject it to the Department of Financial Institution’s (“DFI”) jurisdiction.”

“The Bitcoin Foundation does not have business operations in California that would subject it to the DFI’s jurisdiction. […] The Bitcoin Foundation provides no direct money services to any California consumers.”

“The Bitcoin Foundation is not in the business of selling bitcoin to consumers and does not otherwise operate a bitcoin exchange.”

“Bitcoins are not written or signed notes or drafts, and therefore, are not payment instruments regulated by the California Money Transmitter Act.”

“There is no issuer of bitcoin that would be subject to licensure as a money transmitter under California law.”

“The fact that bitcoin does not fit within the definition of payment instruments or stored value does not mean it is automatically regulated by the money transmission prong.”

“The same rationale that applied to the sale of a peso should prevail under the California statute with regard to the sale of a bitcoin.”

“The Bitcoin Foundation requests that your office issue an opinion that […] the sale of a bitcoin is not regulated under the California Money Transmitter Act.”

 – http://bit.ly/12CZMRf
 – http://bitcointalk.org/index.php?topic=241314.0 (Further discussion)
 – http://bitcointalk.org/index.php?topic=248620.0 (Specifically for this response)

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CoinDesk – State of California's "Spray And Pray" Hits Bitcoin Foundation

CoinDesk – State of California’s “Spray And Pray” Hits Bitcoin Foundation:

Reporter Danny Bradbury (@DannyBradbury) of CoinDesk.com (@CoinDesk) describes the cease and desist (C&D) order given by the State of California’s financial regulator, Department of Financial Institutions (@CaliforniaDFI), to the Bitcoin Foundation (@BTCFoundation).  Excerpts:

“The letter said that the Bitcoin Foundation may be a money transmission business (MTB), and threatened it with fines and jail time.”

“The letter, signed by Paul Clayton, senior counsel at the Department of Financial Institutions (California’s financial regulator), gave the Foundation 20 days to respond, although it was only received last week. The Foundation is drafting its response with legal firm Perkins Coie this week.”

“The language in the letter (which didn’t directly accuse the Foundation, but suggested it ‘might be’ an MTB), indicated that the letter might be a fishing expedition said [Bitcoin Foundation General Counsel Patrick Murck]. The use of cease and desist letters is an easy way to cast the net, he argued.”

“This ‘spray and pray’ approach to regulating businesses could dampen the prospects for bitcoin-based businesses in the long run, warned Murck.”

 – http://bit.ly/1ccDgjE
 – http://bit.ly/14rPvGt (Cease and desist order)
 – http://bitcointalk.org/index.php?topic=241626.0 (Further discussion of this article)

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CoinDesk – State of California's "Spray And Pray" Hits Bitcoin Foundation

CoinDesk – State of California’s “Spray And Pray” Hits Bitcoin Foundation:

Reporter Danny Bradbury (@DannyBradbury) of CoinDesk.com (@CoinDesk) describes the cease and desist (C&D) order given by the State of California’s financial regulator, Department of Financial Institutions (@CaliforniaDFI), to the Bitcoin Foundation (@BTCFoundation).  Excerpts:

“The letter said that the Bitcoin Foundation may be a money transmission business (MTB), and threatened it with fines and jail time.”

“The letter, signed by Paul Clayton, senior counsel at the Department of Financial Institutions (California’s financial regulator), gave the Foundation 20 days to respond, although it was only received last week. The Foundation is drafting its response with legal firm Perkins Coie this week.”

“The language in the letter (which didn’t directly accuse the Foundation, but suggested it ‘might be’ an MTB), indicated that the letter might be a fishing expedition said [Bitcoin Foundation General Counsel Patrick Murck]. The use of cease and desist letters is an easy way to cast the net, he argued.”

“This ‘spray and pray’ approach to regulating businesses could dampen the prospects for bitcoin-based businesses in the long run, warned Murck.”

 – http://bit.ly/1ccDgjE
 – http://bit.ly/14rPvGt (Cease and desist order)
 – http://bitcointalk.org/index.php?topic=241626.0 (Further discussion of this article)

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Jerry Brito – Mr. Bitcoin goes to Washington

Jerry Brito – Mr. Bitcoin goes to Washington:

Jerry Brito (@JerryBrito)’s post on The Technology Liberation Front blog describes today’s “Virtual Economy” conference in which he was a panel moderator.  Excerpts:

“On my panel were representatives from the Bitcoin Foundation, the Tor Project, and the DOJ, and we had a lively discussion about how these technologies can potentially be used by criminals and what these open source communities might be able to do to mitigate that risk.”

“I was therefore interested in the keynote remarks delivered by Jennifer Shasky Calvery, the Director of the Treasury Department’s Financial Crimes Enforcement Network.  [In particular, she addressed the fact that since there have been several enforcement actions against virtual currency exchangers and providers, the traditional banking sector has been wary of doing business with companies in the virtual currency space.”

“It would be a shame if [banks] felt they couldn’t do business with an innovative new kind of start-up simply because that start-up has not been (and may never be) adequately defined by a regulator.”

“Hopefully FinCEN will revisit its guidance now that the conversation has begun, and as other regulators consider new rules, they will hopefully engage the Bitcoin community early in order to avoid ambiguity and uncertainty.”

 – http://techliberation.com/2013/06/13/mr-bitcoin-goes-to-washington
 – http://conta.cc/ZaPQPT (Details of the The Virtual Economy conference)
 – http://bitcointalk.org/index.php?topic=233823.0 (Further discussion of the article)

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