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Governments are terrified of Bitcoin and are trying to destroy the value by eliminating providers of liquidity. No buyers, no value. As to some of the comment

Governments are terrified of Bitcoin and are trying to destroy the value by eliminating providers of liquidity. No buyers, no value. As to some of the comments stating that they have not been "suspended by the state" - that is a disingenuous argument that only a lawyer could love. The state sent them a letter accusing them of violating laws that carry the organizational equivalent of the death penalty, and possible jail time for the founders. It was intended to threaten and intimidate them into suspending operations, and it worked.

mikeash 13y ago
Alternative interpretation: governments couldn't give a rat's ass about Bitcoin, but care deeply about financial institutions (at least, those too small to purchase legislators) actually following the rules. This company is transmitting money, Virginia requires companies that transmit money to be licensed, this company is not licensed, seems pretty straightforward to me. One can argue about the merits of the regulation in question, but since regulations like this long predate Bitcoin, it's clearly not any sort of reaction to Bitcoin or any other virtual currency.
- downandout 13y ago
  Wrong. This company does not sell Bitcoins - they buy them (the state's "initial investigation" - which likely consisted of reading a complaint filed anonymously by a competitor - had this entirely wrong). They are only "transmitting money" in the same way that people who buy things from Amazon or eBay are when they buy products. By your definition, I guess I need to become a licensed MSB next time I buy a replacement power supply on eBay.
  - TylerE 13y ago
    How is this really any different from Western Union?
    - downandout 13y ago
      I don't even understand the comparison. They were buying (not selling) Bitcoins directly from sellers. Western Union is specifically engaged in the business of enabling people to send money to others.
      - TylerE 13y ago
        They were taking money from customers, in exchange for which the customer received some sort of token of value, which could be used as a medium for exchange or reconverted to USD later.
        downandout 13y ago
        It's not a token or store of value. Bitcoins only have value to the extent that others will buy them. There is not a person on the planet that has a contractual obligation to exchange or buy Bitcoins for anything.
        TylerE 13y ago
        Bullshit. Things with easily accessible, live-updated exchange rates have value. We're not talking about baseball cards here.
        downandout 13y ago
        We're not talking about baseball cards here. You're right, we are literally talking about the buying and selling of random numbers. However, once again, Bitcoins have zero inherent value. There is no person or organization that has any obligation to buy or otherwise exchange them. They only have value to the extent that others will buy them.
        TylerE 13y ago
        I'm just going to invoke No True Scotsman at this point.
  - mikeash 13y ago
    If I buy Euros, am I not transmitting money? There's a difference between Bitcoin and power supplies, namely that the former is money and the latter is not. The law applies to currency. Bitcoin advocates can't seem to make up their mind as to whether Bitcoin actually qualifies as "money". It's money right up to the point where the law starts talking about "money", then magically it's just some arbitrary good that's not actually a currency at all.
    - deleted 13y ago
      [deleted]
    - oleganza 13y ago
      Law may say what it wants. The reality is people trade things for things. Some other people define certain things as special and force you to comply based on their definitions. No one outside the legislative structures gives a rat's ass about those definitions. When you and me trade something for something, we don't care about someone's definitions, we only care about the value that we get in result. And your friends also don't care. Only people who have power to force you to comply use that power to play with words and mess with your mind.
      - mikeash 13y ago
        That's a fantasy. Here in reality, if you're operating a commercial enterprise, the way you operate depends greatly on what kind of item you sell. For example: 1. Hard liquor not for consumption on site: illegal to sell in Virginia, only the state can. 2. Firearms: highly regulated. 3. Food: must meet health department regulations. 4. Computer parts: fairly open, must still meet basic business licensing requirements, collect sales tax, etc. You can talk about how things ought to be all you want, but all that matters here is how things are, and how things are appears to be that this Bitcoin operation falls under a certain category of law with which they are not compliant. The law is not written with Bitcoin in mind at all, so conspiracy theories about governments specifically targeting Bitcoin do not appear to have any basis.
        oleganza 13y ago
  - gamblor956 13y ago
    If Bitcoins are considered currency, then it is subject to all of the same laws that would apply to any other currency. Money transmitter laws are currency agnostic--they apply equally to transmitters of pesos as they do to transmitters of dollars. OTOH, if Bitcoin is not a currency, then it would not be subject to these laws--but in such case it would be unlikely for Bitcoin to ever become more than an extremely niche means of exchange.
    - dragonwriter 13y ago
      > If Bitcoins are considered currency, then it is subject to all of the same laws that would apply to any other currency. Money transmitter laws are currency agnostic--they apply equally to transmitters of pesos as they do to transmitters of dollars. The main reason many Bitcoin-related business are potentially covered by money transmitter (and related) rules is because of how they handle traditional currencies like US dollars in connection with their Bitcoin-related business.
  - dragonwriter 13y ago
    > They are only "transmitting money" in the same way that people who buy things from Amazon or eBay are when they buy products. Per the FinCEN guidance on virtual currencies [1], " An administrator or exchanger that [...] buys or sells convertible virtual currency for any reason is a money transmitter under FinCEN's regulations, unless a limitation to or exemption from the definition applies to the person." So, no, the situation isn't the same in the eyes of the federal regulator, and its not really surprising that state regulators whose scope of authority is set by the federal rules view things the same way as the federal regulators. [1] http://fincen.gov/statutes_regs/guidance/html/FIN-2013-G001.html http://fincen.gov/statutes_regs/guidance/html/FIN-2013-G001....
- Zigurd 13y ago
  but care deeply about financial institutions (at least, those too small to purchase legislators) actually following the rules Might want to ask Elizabeth Warren about that one.
  - mikeash 13y ago
    I don't understand what you're getting at, can you elaborate?
    - Zigurd 13y ago
      You did include "too small to buy legislators" so that takes away a good deal of the irony.
- cocojumbo123 13y ago
  Good point. Assuming ad absurdum that all exchanges (fiat/BTC) will be forbidden, does bartering via a 3'rd party - in this case BTC subjects to the same regulations ? For example: instead of "I exchange 3 bananas for 3 apples" to "I exchange 3 bananas for 3 btc which I can exchange for 3 apples".
  - mikeash 13y ago
    I'm not quite sure I grasp the idea of bartering via a 3rd party, but it sounds a lot like a credit card processor or similar, which are certainly regulated.
    - cocojumbo123 13y ago
      Our existing established currencies (USD, EUR, etc) were born out as an easier way of bartering (i.e. don't have to carry the the weight) or in form of exchangeable IOUs (I'll pay you back when I'll harvest). I was just wandering if BTC could take the role that the shells used as money by our ancestors. To add on top of that, for bartering there is no sales tax, etc.
      - mikeash 13y ago
        BTC is certainly intended to take on that role. Whether it can is the big question. Note that barter isn't actually exempt from taxes at all. Transactions are taxed at the market value of the barter. People generally ignore this, but they only get away with it because the transactions are tiny. If e.g. Exxon started selling oil by barter, the IRS would take its share.
gamblor956 13y ago
It's disappointing that this is the highest-ranked comment on the thread. The government of Virgina is not terrified of Bitcoin. As a state, Virginia does not have the power to issue monetary currency. What Virginia cares about is that money transmitters--of any currency--which send money into or take money out of the state are subject to regulations to protect the citizens and residents of that state. A legal suspension is a very different thing from a voluntary shutdown. One is the state's use of legal force--the other is the business choosing not to challenge a form letter before any legal proceedings have even begun. A form letter, legally speaking, is like a boxer saying he's going to destroy his opponent--before the match has even been arranged.

mikeash 13y ago

Alternative interpretation: governments couldn't give a rat's ass about Bitcoin, but care deeply about financial institutions (at least, those too small to purchase legislators) actually following the rules. This company is transmitting money, Virginia requires companies that transmit money to be licensed, this company is not licensed, seems pretty straightforward to me. One can argue about the merits of the regulation in question, but since regulations like this long predate Bitcoin, it's clearly not any sort of reaction to Bitcoin or any other virtual currency.

downandout 13y ago
Wrong. This company does not sell Bitcoins - they buy them (the state's "initial investigation" - which likely consisted of reading a complaint filed anonymously by a competitor - had this entirely wrong). They are only "transmitting money" in the same way that people who buy things from Amazon or eBay are when they buy products. By your definition, I guess I need to become a licensed MSB next time I buy a replacement power supply on eBay.
- TylerE 13y ago
  How is this really any different from Western Union?
  - downandout 13y ago
    I don't even understand the comparison. They were buying (not selling) Bitcoins directly from sellers. Western Union is specifically engaged in the business of enabling people to send money to others.
    - TylerE 13y ago
      They were taking money from customers, in exchange for which the customer received some sort of token of value, which could be used as a medium for exchange or reconverted to USD later.
      - downandout 13y ago
        It's not a token or store of value. Bitcoins only have value to the extent that others will buy them. There is not a person on the planet that has a contractual obligation to exchange or buy Bitcoins for anything.
        TylerE 13y ago
        Bullshit. Things with easily accessible, live-updated exchange rates have value. We're not talking about baseball cards here.
        downandout 13y ago
        We're not talking about baseball cards here. You're right, we are literally talking about the buying and selling of random numbers. However, once again, Bitcoins have zero inherent value. There is no person or organization that has any obligation to buy or otherwise exchange them. They only have value to the extent that others will buy them.
        TylerE 13y ago
        I'm just going to invoke No True Scotsman at this point.
- mikeash 13y ago
  If I buy Euros, am I not transmitting money? There's a difference between Bitcoin and power supplies, namely that the former is money and the latter is not. The law applies to currency. Bitcoin advocates can't seem to make up their mind as to whether Bitcoin actually qualifies as "money". It's money right up to the point where the law starts talking about "money", then magically it's just some arbitrary good that's not actually a currency at all.
  - deleted 13y ago
    [deleted]
  - oleganza 13y ago
    Law may say what it wants. The reality is people trade things for things. Some other people define certain things as special and force you to comply based on their definitions. No one outside the legislative structures gives a rat's ass about those definitions. When you and me trade something for something, we don't care about someone's definitions, we only care about the value that we get in result. And your friends also don't care. Only people who have power to force you to comply use that power to play with words and mess with your mind.
    - mikeash 13y ago
      That's a fantasy. Here in reality, if you're operating a commercial enterprise, the way you operate depends greatly on what kind of item you sell. For example: 1. Hard liquor not for consumption on site: illegal to sell in Virginia, only the state can. 2. Firearms: highly regulated. 3. Food: must meet health department regulations. 4. Computer parts: fairly open, must still meet basic business licensing requirements, collect sales tax, etc. You can talk about how things ought to be all you want, but all that matters here is how things are, and how things are appears to be that this Bitcoin operation falls under a certain category of law with which they are not compliant. The law is not written with Bitcoin in mind at all, so conspiracy theories about governments specifically targeting Bitcoin do not appear to have any basis.
      - oleganza 13y ago
- gamblor956 13y ago
  If Bitcoins are considered currency, then it is subject to all of the same laws that would apply to any other currency. Money transmitter laws are currency agnostic--they apply equally to transmitters of pesos as they do to transmitters of dollars. OTOH, if Bitcoin is not a currency, then it would not be subject to these laws--but in such case it would be unlikely for Bitcoin to ever become more than an extremely niche means of exchange.
  - dragonwriter 13y ago
    > If Bitcoins are considered currency, then it is subject to all of the same laws that would apply to any other currency. Money transmitter laws are currency agnostic--they apply equally to transmitters of pesos as they do to transmitters of dollars. The main reason many Bitcoin-related business are potentially covered by money transmitter (and related) rules is because of how they handle traditional currencies like US dollars in connection with their Bitcoin-related business.
- dragonwriter 13y ago
  > They are only "transmitting money" in the same way that people who buy things from Amazon or eBay are when they buy products. Per the FinCEN guidance on virtual currencies [1], " An administrator or exchanger that [...] buys or sells convertible virtual currency for any reason is a money transmitter under FinCEN's regulations, unless a limitation to or exemption from the definition applies to the person." So, no, the situation isn't the same in the eyes of the federal regulator, and its not really surprising that state regulators whose scope of authority is set by the federal rules view things the same way as the federal regulators. [1] http://fincen.gov/statutes_regs/guidance/html/FIN-2013-G001.html http://fincen.gov/statutes_regs/guidance/html/FIN-2013-G001....
Zigurd 13y ago
but care deeply about financial institutions (at least, those too small to purchase legislators) actually following the rules Might want to ask Elizabeth Warren about that one.
- mikeash 13y ago
  I don't understand what you're getting at, can you elaborate?
  - Zigurd 13y ago
    You did include "too small to buy legislators" so that takes away a good deal of the irony.
cocojumbo123 13y ago
Good point. Assuming ad absurdum that all exchanges (fiat/BTC) will be forbidden, does bartering via a 3'rd party - in this case BTC subjects to the same regulations ? For example: instead of "I exchange 3 bananas for 3 apples" to "I exchange 3 bananas for 3 btc which I can exchange for 3 apples".
- mikeash 13y ago
  I'm not quite sure I grasp the idea of bartering via a 3rd party, but it sounds a lot like a credit card processor or similar, which are certainly regulated.
  - cocojumbo123 13y ago
    Our existing established currencies (USD, EUR, etc) were born out as an easier way of bartering (i.e. don't have to carry the the weight) or in form of exchangeable IOUs (I'll pay you back when I'll harvest). I was just wandering if BTC could take the role that the shells used as money by our ancestors. To add on top of that, for bartering there is no sales tax, etc.
    - mikeash 13y ago
      BTC is certainly intended to take on that role. Whether it can is the big question. Note that barter isn't actually exempt from taxes at all. Transactions are taxed at the market value of the barter. People generally ignore this, but they only get away with it because the transactions are tiny. If e.g. Exxon started selling oil by barter, the IRS would take its share.

gamblor956 13y ago

It's disappointing that this is the highest-ranked comment on the thread. The government of Virgina is not terrified of Bitcoin. As a state, Virginia does not have the power to issue monetary currency. What Virginia cares about is that money transmitters--of any currency--which send money into or take money out of the state are subject to regulations to protect the citizens and residents of that state. A legal suspension is a very different thing from a voluntary shutdown. One is the state's use of legal force--the other is the business choosing not to challenge a form letter before any legal proceedings have even begun. A form letter, legally speaking, is like a boxer saying he's going to destroy his opponent--before the match has even been arranged.