Re: Tradehill Bitcoin exchange shut down for 2nd time in 2 years

RE: "It doesn't matter if we create a great open payment technology if
no one will be allowed to use it due to the current regulatory
environment"

Manu, The above quote from your previous email (to the list) calls
attention to, I think, a mission critical "deep architecture" issue
involving "civil code" upon/within which "source code" may or may not
function. A good part of the legal profession has come to understand
and (albeit very quietly) agree with Lawrence Lessig that "Code is
Law".  http://www.codev2.cc/
http://harvardmagazine.com/2000/01/code-is-law-html   That's why the
financial system incumbents will not let bitcoin be the sort of
bitcoin that its community envisions, because that would require that
the incumbents cede part of their field to bitcoin geeks, who would
thereby get to make the de facto laws. The incumbents are not going to
let that happen.

Years ago the incumbents' lawyers didn't bother to interfere with
Digicash, because its community model was always understood to be
brittle, and yes soon enough it cracked and fell in on itself. But
bitcoin has demonstrated its internal organizational strengths --
being a very seaworthy flagship 3rd-generation free/libre
collaboration. So push-back should not be surprising.

In my assessement, the "current regulatory environment" is only a
problem for the W3C webpayments implementers if the standard is
advanced in a manner that is aloof from, and thus inevitably at some
point in opposition to some existing laws/regulations. Such business
architecture issues can render the most elegant source code un-usable
-- as you commented regarding the Tradehill news. My recommendation is
to anticipate and discuss such civil code matters early on, so that
deep business architectural bugs don't get built into the application
layer.

Our concerns need to extend beyond what might actually be contrary to
existing laws/regulation, to include what may simply be
perceived/portrayed to be so even if technically sound. In general,
one needs to assume that well-funded yet frivolous and/or vexatious
legal challenges can be extremely "successful" when the complaintant's
objective is just to waste the target's resources for a decade, never
to actually "win" in the end on substantive merit.


On Tue, Sep 3, 2013 at 12:58 PM, Manu Sporny <msporny@digitalbazaar.com> wrote:
> The Tradehill Bitcoin exchange has just been shut down for 2nd time in 2
> years. This after just recently partnering with the Internet Archive
> Federal Credit Union to store customer funds in FDIC insured accounts.
>
> It seems as if there is no way regulators are going to allow them to
> operate without Money Transmitter Licenses. Getting money transmitter
> licenses in all 50 states requires a company to go through an entirely
> different process in each state. It requires that company to be surety
> bonded for around $25M dollars, which results in close to $140K/year in
> fees to operate. The regulatory environment in the US is forcing many
> Bitcoin exchanges out of business:
>
> http://bitcoinsinsider.com/regulation-forces-tradehill-bitcoin-exchange-to-suspend-all-trading_b249
>
> This has deep repercussions for the work that we're doing here. It
> doesn't matter if we create a great open payment technology if no one
> will be allowed to use it due to the current regulatory environment.
>
> -- manu
>
> --
> Manu Sporny (skype: msporny, twitter: manusporny, G+: +Manu Sporny)
> Founder/CEO - Digital Bazaar, Inc.
> blog: Meritora - Web payments commercial launch
> http://blog.meritora.com/launch/
>



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Received on Monday, 9 September 2013 01:57:05 UTC