[ale] [OT] (but computer and cryptography related) Bitcoin, Litecoin

[Alex Carver]

On 3/30/2013 09:55, Michael B. Trausch wrote:
> On 03/29/2013 03:18 PM, Ron Frazier (ALE) wrote:
>> By the way, the treasury department recently issued a ruling that
>> this is legal.  So that's not an issue.
>
> Everything else aside, why would _that_ even matter?
>
> The United States does not have the right to regulate any currency but
> its own issue.  BTC is not issued by the United States Government.
> That'd be like the Treasury Department saying that the Euro is legal.
> Of course it is.
>
> Any currency anyone is willing to use is legal, if they're willing to
> use it.
>
> That'd be like saying "I would love to barter with you, but I'm not sure
> that it's legal for me to trade my 22" monitor for your stack of
> raspberry pi systems, since my 22" monitor isn't blessed by the Treasury
> Department as currency..."
>
> You really are paranoid, aren't you?
>

The only thing the Treasury did was to clarify the rules of bank 
regulation with the miners of Bitcoins.  It never said it was or was not 
legal, just that there were rules that needed to be followed if anyone 
was going to convert Bitcoins to fiat currency (US currency in this case).

The clarification stated that using Bitcoins directly to purchase goods 
and services (using it as its own currency rather than exchanging and 
then using that exchanged currency) is not subject to any currency laws 
and regulations.  However, mining and then exchanging Bitcoins for US 
Dollars puts them under the umbrella of the Bank Secrecy Act (the user 
becomes a "money transmitter" in BSA terms) and the user must register 
with the Financial Crimes Enforcement Network (FinCEN).

This doesn't happen to people exchanging one fiat currency for another 
because both currencies are centralized and the exchange itself is 
regulated and monitors all the activity.  The rules were clarified 
because Bitcoin is decentralized.  In theory, if a small town decided 
collectively to perform all activities using pebbles pulled out of the 
nearby river, every resident that exchanged pebbles for real cash to go 
out for a night in the big city would be subject to the same regulation. 
  These rules also apply to companies like Western Union.  Technically a 
Western Union money-order is a form of currency recognized only by 
Western Union.  A person exchanges fiat currency for  money-order 
currency and, later, someone exchanges it back.  That puts Western Union 
in the position of money transmitter and it must register with FinCEN.

For the most part, it just seems to clarify a few grey areas and 
otherwise doesn't really affect the majority of the Bitcoin users.  It 
will have some effect on miners but only if they exchange for fiat 
currency.  It amounts to Bitcoin being viewed as similar to Western Union.