Posted on 3 Comments

Politicians Begin to Accept and (Attempt to) Regulate Bitcoin

The FEC recently issued an opinion that opened the door for candidates and committees to begin accepting bitcoin. An article by highlights a few of the candidates who have begun accepting the alternative currency. One such candidate is Steve Stockman, who last month introduced legislation to overturn the IRS decision that bitcoin is property. Stockman’s bill, the “Virtual Currency Tax Reform Act,” would define “Virtual currency” as “a digital representation of value that functions as a medium of exchange, a unit of account, and/or a store of value.” The bill also states, “The Internal Revenue Service shall treat virtual currencies as a foreign currency for Federal tax purposes,” and impose a 5 year moratorium in which the federal government would not be allowed to “impose, assess, collect, or attempt to collect capital gains tax on virtual currencies.”

The key words in that moratorium are “capital gains tax.” The bill would not make bitcoin and other crypto-currencies tax exempt, it would simply change the regulatory definition from “property” to “currency.” This would then put the IRS regulation in-line with the FinCEN definition that crypto-currency is currency. The FinCEN regulations require a “money transmitters license” in order to operate a business “that provides money transmission services. The term ‘money transmission services’ means the acceptance of currency, funds, or other value that substitutes for currency from one person and the transmission of currency, funds, or other value that substitutes for currency to another location or person by any means.”

I realize that a sizable percentage of bitcoin users will not comply with any regulations placed on it. While I am in no way supportive of any government regulation of bitcoin, there are people and businesses currently accepting bitcoin that will comply with the regulations, and they need as much support as possible from the people who aren’t complying. If whatever regulations come about place too much burden on the businesses, they will stop accepting bitcoin.

A locally-owned store in Keene, NH (that currently accepts bitcoin) was approached about having a Bitcoin ATM, and after looking into the regulations, decided it was too much hassle to get the needed license to have the machine in the store. If the burdens for just accepting bitcoin become too high, this store may stop accepting bitcoin. I know, the hardliners approach is, “they can put any regulation they want, I’ll just ignore it.” But not everyone will, and if bitcoin (or crypto-currency, in general) is to thrive, we must work together, and try to have as little regulation as possible.

Posted on 1 Comment

Bitcoin Goes to Mordor

Mordor, affectionately known as Washington D.C., appears to have taken an interest in bitcoin lately. With the price rising rapidly over the past few weeks, sociopaths under the title of “senators” held meetings this week on what to do about this strange, new digital currency. They asked all of the vital questions: How would they tax it? Why would anyone want to use it when there’s the perfectly good dollar still around? Are they tools for terrorists? Can I eat them? Can I buy hookers and blow with them? (Oops, strike that from the record.)

Representatives from the Bitcoin Foundation appeared before the senators to calmly assure them that these new-fangled blowstamps are benign and simply another form of currency. While technically you could buy blow with them (just as with blood dollars), you can also buy a variety of legal, everyday items like suits or jackboots. The curiosity from the lawmakers was bound to come with the rise because everyone who has heard of them is thinking the same thing: “How can I make money off of bitcoin?” The old adage remains true; buy on the dips. But the dips bitcoin has been experiencing have been brief, so pay attention.

Even Ben Bernanke seems to have to have some opinions on the cryptocurrency, and though the Fed chairman is much maligned by the bitcoin community and others who disagree with his “solutions” to the economic instability we are experiencing, he actually appears to have no interest in regulating bitcoin. Admittedly, he writes that the Fed is bound by law from regulating bitcoin:

Although the Federal Reserve generally monitors developments in virtual currencies and other payments system innovations, it does not necessarily have authority to directly supervise or regulate these innovations or the entities that provide them to the market. In general, the Federal Reserve would only have authority to regulate a virtual currency product if it is issued by, or cleared or settled through, a banking organization that we supervise.

While there is always the ability for more laws to be made and senators no doubt still have the power to make them, it must be frustrating for them that the speed at which they can make a law is so far behind the speed at which technology is advancing. And always will be. While many senators seemed genuinely curious and—dare I say—excited at the prospects of cryptocurrency, on some level they must realize that it makes their efforts at regulating commerce futile.

Deep Thoughts by Senator Kirk of Illinois
Deep Thoughts by Senator Kirk of Illinois

It also makes them irrelevant in the long term because if more people simply opt out of the dollar, their war machine suffers and the profits that go with it go kaput. Also, if doctors, already furious at the impending implementation of the Affordable Care Act, choose to perhaps accept bitcoins or cash only instead of insurance it would strike a major blow to the industry. Of course it is hopeful conjecture that doctors would jump on the bitcoin bandwagon, and the ACA is doing well on its own at proving the inefficacy of centralized control over healthcare.

Politicians are playing nice in regard to this bitcoin phenomenon for now and in all seriousness during the hearing they seemed interested in understanding more. I think that’s great that they as individuals sincerely want to know more about this currency, though some were dismissing it as a passing fad. However, they are fully aware of their role in the greater machine of the state, and make no mistake once they (if they haven’t already) gain a full understanding of just how severe a blow bitcoin and other altcoins could make to their power structure, they will be taking action against it. Thankfully, they will be hindered by the tedious legislative process of their own design while bitcoin users carry on unaffected and technology improves at an awe-inspiring rate. The war makers will have been outpaced by the time they get around to passing a law, and if they think some scribbles on paper can stop the momentum of bitcoin, I suspect they are in for quite the surprise.

To hear some witty commentary on the Senate hearings check out these videos from Peace News Now‘s Derrick J. Freeman featuring Thomas of Mad Bitcoins and our own Davi Barker:

Be sure to show some mad love to Derrick J and Thomas by subscribing to their Youtube channels.

Original content by Meghan, copyleft, tips welcome