The Legality of Bitcoin

 

No Central Authority

Digital Cash / Currency

 

1. Is it Legal?
2. Regulations
3. The Wild West

 

 

It’s hard to say what the legal ramifications of the currency, as there is no central figure to attack behind Bitcoin, nor were bitcoins ever issued in exchange for currency or sold publicly by any one company or individual.

 

It has only ever been sold or exchanged by holders of bitcoins.

 

 

Is it Legal?

 

Is there a Consensus? Ubiquitous

 

The sale of Bitcoin is not a regulated activity being as there is no central governance nor guarantor of it as a store of value redeemable for a fixed amount of real world currency.

 

 

2013, The Business of Money Transferring – Cease and Desist in California¹

The Dept of Financial Institutions, California _> to the Bitcoin Foundation

 

 

Response by the Bitcoin Foundation²

 

The California Money Transmission Act prohibits “engag[ing] in the business of money transmission,” “or advertis[ing], solicit[ing], or hold[ing] itself out as provid[ing] money transmission in this state” without a license or exemption from licensure.

 

1 Specifically, California defines money transmission as including any of the following:

 

1. “selling or issuing payment instruments”
2. “selling or issuing stored value”
3. “receiving money for transmission”

 

 

1. bitcoin is not a payment instrument, a product can only be an instrument if it involves a writing, bitcoin is not written or signed notes or drafts- nor is there a “drawer” a person who signs in a note who is undertaking to pay as there is no single entity undertaking to pay a fixed sum of real currency for them

 

2. bitcoin never represents a claim against the issuer, because there is no issuer of bitcoin, no one is liable for any fixed amount of real world currency nor to the holder of the stored value of bitcoin and no one is obligated to pay the stored value

(i.e. there is no guarantor of any value, so it’s not a security)

 

3. a transaction in which money is received and monetary value is transmitted is not regulated, it also requires parity of currency on either side of the transaction

 

 

As described below, 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. These conclusions are borne out by the following discussion, which evaluates the Bitcoin Foundation’s operations under each element of California’s definition of money transmission.

 

 

Summary

Bitcoin is none of these things. It is nothing more than a mutual agreed upon global record of accounts. As no one entity guarantees the value of any bitcoin it therefor is legally not a store of value as defined under traditional US regulation

There are companies that use Bitcoin, and companies that are in the Bitcoin industry. However, they have nothing to do with the governance nor the existence of Bitcoin.

 

 

Regulations

 

Government

US

Canada

EU

Worldwide

 

 

Taxes

Info Here

 

 

US Security and Exchange Commission

ICOs

Exchanges

 

 

 

Canadian Security Commission

STOs

Exchanges

 

 

The Wild West

 

Anonymity

Info Here

 

Decentralization

Info Here

 

 

 

• https://www.sharhon.com/files/bitcoin-foundation-california-cease-and-desist-2013.pdf
• https://www.scribd.com/document/151346841/Bitcoin-Foundation-Response-to-California-DFI