back to article Watchdog: Y'know what Bitcoin really needs? A REGULATOR!

A US financial regulator has said it's figuring out if crypto-currency Bitcoin falls under its remit. Top bods at the Commodity Futures Trading Commission (CFTC) are discussing whether the cyber-cash should actually be covered by its rules, as Bitcoin gains in popularity. "[Bitcoin] is for sure something we need to explore," …

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Holmes

Because ...

... it's not taxable, you mean?

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Meh

Re: Because ...

Regulation defeats the object of what it was set up for.

Regulation=Demise of bitcoin

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Well it is taxable

It is a common myth that, in USA, that transactions conducted in anything other than USD are not taxable. For instance bartering eggs for apples or services is taxable.

Any income is taxable and that would include BC income too.

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Anonymous Coward

Re: Because ...... it's not taxable, you mean?

Exactly!

Because they do such a good job already of regulating High Frequency Trading (HFT)!

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Could result in some amusing deliveries to their tax offices.

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FAIL

Re: Because ...... it's not taxable, you mean?

Guess you missed this bit from the article:

Any leveraged deals that were not settled within two days would fall under the commission's jurisdiction.

Which means by definition they don't regulate HFT.

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Mushroom

Nazis everywhere

This is why we can't have nice things.

Go back to your inflating fiat currencies, f*ggots!

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Re: Nazis everywhere

As opposed to bitcoins that are tied to the cost of what? GPUs?

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FAIL

The hilarious part will be after they pass laws taxing and regulating the exchange of Bitcoin, when they realize that there's no way to actually enforce the laws or track the exchanges!

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That's when they'll just outlaw Bitcoin entirely, which is slightly more enforceable.

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Of course there's no piracy or child porn any more, is there?

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exactly. The only way they can rule it out is by making possession of a Bitcoin wallet punishable by similar terms as the above. That and blocking at the ISP level to prevent wallets syncing.

They will go after the places that exchange to regular currency's but these are based outside of the US. Sure they can ask favors from host countries to close this down but then the exchanges will just do what the gambling sites did and set up shop in Belize, The Antilles et all.

Even if they do all the above that only affects people converting into other currency's as a currency in itself it will remain unaffected.

This is standard issue financial FUD "don't worry we are totally looking into it, once we figured out this new fangled internet thing the kids are on about"

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The only way they can rule it out is by making possession of a Bitcoin wallet punishable by similar terms as the above.

As I said, slightly more enforceable (emphasis added since people seem to have missed it last time). Trying to tax and/or track Bitcoins is flat out impossible, but they can outlaw them entirely and throw you in jail if you get caught with a Bitcoin wallet, which is a big if.

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Pint

First they ignore you, then they ridicule you, then they fight you, then you win.

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Anonymous Coward

indeed !

re "First they ignore you, then they ridicule you, then they fight you, then you win."

sounds like UKIP in the UK.

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Re: indeed !

Sounds like a line from a Robbie Williams track!

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FAIL

For the benefit of the under 15s out there

The OP's quote is from Ghandi.

The English should remember him - skinny bloke, caused some trouble in that empire thing you used to have.

Americans should probably look him up 'cause he fits well with your political rhetoric if not the reality. Both might want to reflect on his words,

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Mushroom

US Treasury said ????

"The US Treasury said in March that any firms that deal in the virtual money would be considered "money services businesses" just like any other, requiring them to provide information to the government and implement policies to stop money laundering".

That amazing. The last time I saw the US Treasury, it was just a big building, and it certainly didn't say anything. Brilliant ! And "Chilton" - who the hell is that ? "Top bods" ? Who wrote this peice of garbage better hope they never meet my 6th grade English teacher - my knunkles still hurt from that ruler she used with Jedi-like precision.

As for regulation, if Prez O'Bummer and his Democrat commie buddies had their way, everything would be taxed at 100%. They see a dollar in your pocket as their dollar, and they will not rest until they take it. If BitCoin becomes more than a fad, O'Bummer will take it down, just like Pirate Bay.

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WTF?

Re: US Treasury said ????

Its comments like these that make the rest of the world look at Americans and just go "Wow, they really are THAT Batshit Crazy!".

As an Australian I find it positively hilarious when Republican Americans call the Democrats communists - the most left wing party in the US is still FAR to the right of Australia's most right wing party. And when you look at that comparison compared to Europe, it really does make you Americans look even more insane.

Seriously, havent you guys heard of the centre of the political spectrum? I guess what the rest of the world thinks of as centralist policies wouldnt even register on your political scale (its too far off to the left!)...

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Re: US Treasury said ????

"my knunkles still hurt from that ruler she used with Jedi-like precision."

...when you used a word like "knunkles", say?

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Re: US Treasury said ????

>>Who wrote this peice of garbage better hope they never meet my 6th grade English teacher - my knunkles still hurt

How about don't criticise someone's English if you write words like "peice" and "knunkles"

>>Prez O'Bummer

Oh yes, that makes us take you more seriously.

>>They see a dollar in your pocket as their dollar, and they will not rest until they take it.

Like it or dislike it, that dollar in your pocket belongs to the government, how else can they tromp around the world ensuring you pay about £0.45 for a litre while we in the UK pay £1.30 (about $9 a gallon), it lets you create WMD's to put other parts of the world in fear, about the same amount of money is spent on pensions (paid for by taxes), again the same amount is spent on medical benefits - you may not like this but one of the reasons it's so expensive is that the health industry is privatised, that's just asking for you to be ripped off.

Don't forget that the huge national debt created (mainly) by previous government policy means interest payments of over $200,000,000,000 a year.

What's your solution? stop paying pensions? don't pay off your debts? happy to pay $9 a gallon? can't afford the medication - die then?

The US is living on borrowed money to give you a level of comfort that you wouldn't otherwise be able to get, enjoy it while you can, not paying your taxes will just make it implode faster - so please do.

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Re: US Treasury said ????

"Seriously, havent you guys heard of the centre of the political spectrum? I guess what the rest of the world thinks of as centralist policies wouldnt even register on your political scale (its too far off to the left!)..."

Nope, we have effectively a single party system, with both "Republicans" and "Democrats" favoring large, expensive, intrusive government, and just bitching over the details (Democrats want to intrude in people's home lives to disallow unhealthy habits, Repbulicans want to intrude in people's home lives to disallow "imorral" behavior, while in reality... well, both want to intrude after all.) They both blame the failing of this system on the "other" party. Most people here in the US will INSIST this is not true, and that these two identical parties are COMPLETELY different from each other however. And if you try to ask what the difference is, they WILL insist democrats are "left wing" and republicans "right wing" when in fact it's not true at all. The media here is quite complicit in this; a third party can have 20% or more rating in initial polls, but the media will then first fail to cover this candidate, then have *new* polls that are "Which candidate do you favor, the democrat or the republican?" with no third party choice and indeed not even a choice of "other". Then they will tout THESE polls to show disinterest in third-party candidates (without mentioning that third party was NOT a choice.) This, plus no proportional representation system as some countries have, means the same mediocre party getting in office decade after decade. They really don't represent the country's views well at all, a lot of people basically hold their nose when they pick a candidate and tend to not really like the candidates they have to choose from.

Interestingly, Nevada allows (for state elections) a choice of "none of the above", and "none of the above" has gotten over 30% of the vote. Of course someone still wins, but instead of getting 50.1% of the vote and being able to pretend a majority likes him, the winner gets like 35%.

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"derivative products relating to Bitcoin fall squarely in our jurisdiction,"

Have they explained how Bitcoin falls within the jurisdiction of the USA?

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It does to the extent that Americans trade using it, just like they would cover Americans trading in Euros or Zimbabwe Dollars.

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Exchanges operating in America, or with American owners could certainly fall under their jurisdiction.

\But between them trying to extend this because Americans use foreign exchanges, and a few media hungry senators wanting to do something about terrorist/drug smuggling/child porn dealing interwebtubes - there will probably be trouble.

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Actually that's one of the few points which is well covered in the Constitution

Section. 10.

No State shall enter into any Treaty, Alliance, or Confederation; grant Letters of Marque and Reprisal; coin Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts; pass any Bill of Attainder, ex post facto Law, or Law impairing the Obligation of Contracts, or grant any Title of Nobility.

Section. 8.

The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States; but all Duties, Imposts and Excises shall be uniform throughout the United States;

To borrow Money on the credit of the United States;

To regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes;

To establish an uniform Rule of Naturalization, and uniform Laws on the subject of Bankruptcies throughout the United States;

To coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures;

To provide for the Punishment of counterfeiting the Securities and current Coin of the United States;

So in this very, very rare instance, they are quite within it boundaries. Now that might stop at our borders, but given how much international trade passes through our borders, it is not without consequence. Also, we can enter into treaty agreements with other countries which surely have similar abilities to regulate coinage within their boundaries.

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No!

Everything the government touches turns to crap.

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The problem is that the US can only regulate transactions that happen in the US.

And with bitcoin, the whole point is that the transactions are virtual, and anonymous. If users choose to make it this way, its not possible to know who is exchanging currency and where they are located.

So the Feds can legislate all they like, its not going to have much effect.

Bitcoin is being driven by the failure of state currencies - the issuers of fiat paper can never resist the temptation to finance their overspending by printing ever more currency, until its worthless. They are the biggest factor driving bitcoin.

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Stop

But its not you as a user/spender they'll be looking at. If a US based business accepts BTC they'll be easy enough to regulate. Slightly different if they only accept BTC, admittedly

Think of it like cash. They've no real power over you when you're physically exchanging cash, instead they regulate the businesses accepting that cash. BTC would be no different in that respect. With cash they do have the ability to change the currency entirely, rendering your stash useless, but there's little for them to gain from changing an entire nations currency.

The only way for a legal business to stay unregulated would be to never change BTC into USD, or to find a way to launder it. Either route would likely be in violation of tax and other rules, so it wouldn't be a legal business anymore. Ergo the only way, as a business, to stay legal and avoid BTC regulation would be to not accept BTC, or to cease trading in the US.

Not that I'm saying that BTC is bad, just that it won't be nearly as hard to regulate as you think. When the madman can see your accounts, it can be hard to keep things hidden. Even if you do manage, it takes one other business to include you in their paperwork and you could be opened up to some extra scrutiny.

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>The problem is that the US can only regulate transactions that happen in the US.

Not if their attitude to online gambling is anything to go by.

They will happily snatch operators of bitcoin exchanges, programmers that ever worked on bitcoin and anyone who enabled americans to use bitcoin passing through their territory.

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I think you miss their point.

If the US legislation says that BC is to be treated like any other currency then it will have to be under US law. That means anybody using BC would have to play by the legislated rules or they'd be breaking federal law.

We all know that BC makes it hard to trace, but that does not make it legal. If you're deliberately using BC to hide your transactions, then you'd be up for money laundering/tax evasion/whatever.

Of course they can't stop people in UK dealing with people in Australia, but they can control transactions within US and across US borders.

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Anonymous Coward

stranger than that, the US authorities seems to claim authority over people who have nothing whatsoever to do with the US, if there's the slightest trace of a US subsidiary in an organisation, they'll stick their noses in and try to claim jurisdiction. Unless things go wrong of course, at which point it's not their concern.

Until a US citizen wants to sue the overseas entity that is, using a US court - which has no jurisdiction whatsoever: given the regulators wash their hands of things, any sensible legal system would say if regulators don't have responsibility then courts do not have authority either. Only a foolish government would not link the two.

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But they have also arrested foreign programmers, living and working outside America on foreign owned gambling websites who simply visited America - because the gambling site had American customers who were breaking US law.

If I was Mr Nakamoto I wouldn't be planing on changing planes in America anytime soon - especially if some senator decides that bitcoin is being used to fund terrorists, child porn or whatever the bogeyman of the month is.

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@Ben Tasker

It's got nothing to do with changing one form of cash into another. Check my post above. The issue is whether or not it can be used as legal tender to settle debts for goods or services. So even if a business never changes bitcoin into US dollars, so long as they are within the boundaries of the US, or part of a company incorporated (under any of the varied methods of doing so with as widely varied names) is operating within the US, that business is subject to US regulation as specifically allowed by the Constitution.

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Re: money laundering/tax evasion

and once you move into those categories you move into different legal territory than we are accustomed to thinking about: instead of being presumed innocent you must prove your innocence, at least for tax purposes.

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Re: @Tom

My point about changing into cash was that the only way you could plausibly keep the taxman from knowing would be to never exchange your BTC for fiat. The second you have more money available than seems possible, questions get asked.

It would, of course, be evasion though. You're quite right in saying it isn't USD centric though.

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Anonymous Coward

The key word is "Virtual"....

Folks this Bitcoin landgrab is actually being pushed by New York State, who are the world leaders in ... bending the law, taxing & regulating the very piss out of life, stealing peoples inalienable rights and property, absolute corruption, thievery, nanny state politics, larceny and prosecutorial overreach.

If NY State was not actually part of the USA, some would consider its government to be state sponsored terrorism.

Hopefully, Bitcoin does not have any physical presence in the USA. If so, better move offshore immediately.

No one escapes the Inquisition.......

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They're not the Inquisition

The Inquisition's chief weapon is surprise.

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Trollface

Re: They're not the Inquisition

Surprise and fear...

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WTF?

Virtual vs fiat

Can someone please explain to me what the fundamental difference is between a fiat currency and a virtual currency with no intrinsic value whatsoever?

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Re: Virtual vs fiat

well a fiat currency is Italian and waves it's arms a lot...

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Re: Virtual vs fiat

The government says that fiat currency has value, whereas with Bitcoin, it's up to the users to decide the value. To some degree.

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Re: Virtual vs fiat

"The government says that fiat currency has value"

The government says nothing of the sort. Users decide the value in both cases.

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Re: Virtual vs fiat

Both have no intrinsic value whatsoever.

The differences between fiat currency and virtual currencies such as Bitcoin:

- Fiat is by government decree, and its use is required by law. Virtual currencies are 100% voluntary.

- Fiat practically always inflates and loses value. Bitcoin, by design is similar to gold in that its supply is finite and cannot be created. Similar to how a standard deck of cards is fixed at 52, the maximum bitcoin supply is fixed at 21 million. Any deviation from this is not considered part of the system.

- At some point, the supply of Bitcoins will actually shrink: If someone dies and takes their Bitcoin password with them, those Bitcoins are gone forever. This would imply a higher value for the remaining Bitcoins, which is another reason to want to own them.

- As it is today, Bitcoin is not a currency, rather a junior currency prospect. People who buy Bitcoins should expect massive volatility and very high risk, but also the possibility of massive capital gains. At some point, if Bitcoin proves successful, the volatility will die down and it will become widely accepted as a medium of exchange, but at a much higher price than today.

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Rarity does not make value

There are 21M bitcoin. I have these 3 painted stones that I promise to never make more of. Yes, ONLY three. They must therefore be worth 7M BC each due to their rarity value.

Apart from a bit of novelty (eg. some geeks feeling the nerdy desire to own a few BC), value is only worth what people think they can trade for the currency.

I'm willing to sell you my horse for $1000 because I know more or less how many sheep I can buy for that, and that most people agree more or less on the value.

Currencies only really got their value from being underpinned by something tangible and the need to trade. In the past it was gold etc, now it is a slice of GDP.

Ultimately if people want to buy stuff from USA, then USD go up. If nobody ever wanted to buy anything from USA then USD would tank. There is no Bitcoin-land from which to buy products. It is a slice of nothing.

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Re: Virtual vs fiat

You can pay tax in fiat currency, and fiat currency is legal tender meaning that you must accept it in settlement of a debt.

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Re: Rarity does not make value

You're absolutely correct that rarity does not automatically mean value.

You're completely wrong that the USD represents a slice of GDP, or a slice of anything for that matter. The USD stopped representing anything 42 years ago.

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Anonymous Coward

Re: Rarity does not make value

Those would be the same nerdy geeks that sold their thousands of 'worthless' bitcoins they'd mined in the early days at $250 each, and are now rich and retired in their 20's?

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Re: Rarity does not make value

"Those would be the same nerdy geeks that sold their thousands of 'worthless' bitcoins they'd mined in the early days at $250 each, and are now rich and retired in their 20's?"

So BC has already been exploited by greed, just because they are nerdy kids rather than smarmy idiots in suits doesn't change anything. It's amazing how people get sucked into the concept of some tree hugging idea but already those who started it are the ones cashing in, a bit like the union bosses. Add to that the criminals are already exploiting it too.

I can't see it taking off, yes those who start it might get rich and it will be all those who come later in the hype who pay for it. It's basically MLM. Selling an idea without any substance, it will die as soon as the hype does, then I expect those who started this will rehash it and start again.

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