Proposed New York State Virtual Currency Regulations [pdf]

http://www.dfs.ny.gov/about/press2014/pr1407171-vc.pdf

by mdelias • 12 years ago

91 54 12 years ago

dfs.ny.gov

rektide• 12 years ago

Rrriiight. Good luck making it past the Commerce Clause, trying to thieve what is an enshrined Federal power ("To regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes").

Who are these chumps that so enjoy playing with themselves in the public forum? Why do they think they're not stepping all over the constitution by imposing burdens on commercial activities that happen to intersect with NY?

murbard27• 12 years ago

They'll have no problem making it past of the commerce clause. The law doesn't matter, politics do.

The rule of law is not a self-enforcing principle, it's a political equilibrium built around a consensus. Checks and balances mean that it's somewhat detrimental to depart from this consensus, which is why it's stable.

However, it's not a very tight equilibrium. The restoring forces are weak, and they keep weakening over time.

natrius2• 12 years ago

"Why do they think they're not stepping all over the constitution by imposing burdens on commercial activities that happen to intersect with NY?"

Because they regulate plenty of financial activity that happens to intersect with New York already.

wyager• 12 years ago

NY is not known for following the constitution.

bjt• 12 years ago

The states are what give the constitution its authority, not vice versa. The commerce clause is part of the fed govt's "enumerated" powers, meaning that the fed govt only has the powers listed in the Constitution. The states, however, have the "police power", letting them pass pretty much whatever laws they want.

When it comes to the commerce clause, courts have decided to let states do what they want, more or less, unless a specific federal law "preempts" the state one.

hawleyal• 12 years ago

This is old.

The guy did an AMA a while back.

http://www.reddit.com/r/IAmA/comments/1ygcil/as_requested_im...

natrius2• 12 years ago

This is not old. The proposed regulations were released today.

dmix• 12 years ago

Here is a Reddit comment breaking down the proposal:

http://www.reddit.com/r/Bitcoin/comments/2aycxs/hi_this_is_b...

mrfusion2• 12 years ago

This line saddened me, "In fact, Satoshi would have commited a crime creating Bitcoin without registration. (200.2n5)"

bobbygoodlatte• 12 years ago

Well, Orville Wright didn't have a pilot's license :)

broolstoryco• 12 years ago

Here is a better thread

http://www.reddit.com/r/BitcoinMarkets/comments/2ayenj/press...

mrfusion2• 12 years ago

What happens if the entities aren't based in NY?

wmf4• 12 years ago

If they have any customers in NY they need to follow NY laws. This is one of the problems with money transfer laws in the US.

_archon_• 12 years ago

This is an interesting question and answer. I personally believe that legislation will be forced to change so that de jure can more closely resemble de facto... But this will not happen (anytime soon) while NY lawmakers think they can tax or regulate something.

innguest2• 12 years ago

This is absolutely ridiculous.

That some part of "The Government" thinks they can regulate something that is not theirs is laughable.

They've done (and continue to do) enough harm regulating their fiat currency. Who gives them the right, and more importantly, how can they be so delusional to think they can actually regulate something that is built in such a way as to be regulation-proof?

Where's the torrent regulation PDF? These folks are clowns.

wmf4• 12 years ago

It sounds like you're saying that if I create something I can simply declare it to be exempt from any laws I don't like. The whole point of laws is that they're not voluntary.

As for torrents, there is that thing called copyright law.

innguest2• 12 years ago

Yes, and how has copyright law been faring on the face of torrents?

What I'm saying is that it's silly to try and regulate things that are mathematically designed to withstand any regulation. I do not believe unenforceable laws are the way to go. If the government prefers that we do things differently then it should lead by example, convince by arguments, etc, just like anyone else. Instead they're acting childishly by passing laws that regulate something they don't even understand, and that ultimately are not amenable to regulation.

wdewind9• 12 years ago

They've done (and continue to do) enough harm regulating their fiat currency.

It is extraordinarily easy to point out how shitty a job the Fed has been doing from a society that completely depends on it. When you compare how the American financial system has been doing compared to the rest of the world the results are astoundingly in our favor.

I find it difficult to understand how Bitcoin enthusiasts can so thoroughly discount how well our current system actually functions. There are no questions that there are deficiencies in the current system, but the Btc community hasn't seemed to even identify what they actually are, much less propose solutions in any reasonable way.

Propose, for instance, how HSBC would be prevented from laundering money for literal international terrorists and drug dealers. Or remittances, another Btc enthusiast favorite: do you really think the fees you are paying Western Union are related to flipping bits and not to keeping massive stores of cash, securely, in remote locations? Maybe some day cash wont be necessary, but we are extremely far from that point, and until we are there Btc remittances are essentially useless.

That some part of "The Government" thinks they can regulate something that is not theirs is laughable.

That some part of our culture thinks it is reasonable to create a new currency and not have the government regulate it is laughable.

slg• 12 years ago

I find it difficult to understand how Bitcoin enthusiasts can so thoroughly discount how well our current system actually functions. There are no questions that there are deficiencies in the current system, but the Btc community hasn't seemed to even identify what they actually are, much less propose solutions in any reasonable way.

A large percentage of the Bitcoin community's view on this front appears to be "past regulations have occasionally failed, therefore we shouldn't have any regulations." This makes no sense. It would be like your home being broken into and so you decide that you are better of leaving your door unlocked.

TylerE• 12 years ago

Of course, "The Fed" actually isn't part of the government.

tonyhb2• 12 years ago

It's not that our current system functions well:

- ACH/normal bank transfers take days

- Files and money transfers are handled via SFTP

- There's no checks in place to see if the account transferring the money actually has enough funds. The money is moved and rolled back once the bank finds out

- It's legitimately difficult to move or accept non-cash payments through a bank (without Stripe/Braintree etc.)

- Checks are still valid

- Banks charge for incoming transfers (I don't understand this still)

It's more like it has had to do well; it's all we have had. Compared to Europe, it's really not great.

There is a much better alternative out there now. And it's tenable.

jerf• 12 years ago

'That some part of "The Government" thinks they can regulate something that is not theirs is laughable.'

Bwuh? I can not come up with a sensible interpretation of this sentence. And I've tried.

virtue3• 12 years ago

the government has effectively 0 control over bitcoin. They can control the population in the US (or in this case, NY state) that uses it. But outside of that they can get bent.

murbard27• 12 years ago

s/can/may/

GFK_of_xmaspast• 12 years ago

Since when does New York State have their own currency?

blazespin2• 12 years ago

US government can do anything if you live within their borders. I think they outlawed sodomy once.

brasky• 12 years ago

It is still illegal to buy a vibrator unless you have a doctors prescription in some places.

vinalia• 12 years ago

I understand the state's fear after the Mt. Gox fallout but their effort seems too overreaching. How could they possibly enforce _all_ citizens and businesses involved in cryptocurrencies to have licenses, hold 10 years of records, etc.?

OTOH, would there be a way to hold currency exchanges legally accountable without breaking cryptocurrencies?

There are too many stupid exchanges that scam peoples' coins and this seems like a barrier to adoption for lots of people. It would be nice to just push $100 from a bank account into a bitcoin account (like paypal does).

wcummings• 12 years ago

It would be nice to just push $100 from a bank account into a bitcoin account (like paypal does).

Literally coinbase

wmf4• 12 years ago

Which may become literally illegal under these new regulations.

olalonde• 12 years ago

Retained earnings and profits of in invested in US dollars. They may not keep any profit in Bitcoin. (200.8b)

Bitcoin businesses cannot keep profits in Bitcoin? This is just too ridiculous to be true...

paulrr• 12 years ago

Matt Levine has excellent commentary on this: http://www.bloombergview.com/articles/2014-07-17/bitcoin-ban...

blazespin2• 12 years ago

Ben Lawsky posts on Reddit: http://www.reddit.com/r/Bitcoin/comments/2aycxs/hi_this_is_b...

zaroth• 12 years ago

Wow, this is down in the weeds. E.g.

  (4)  include procedures for the maintenance of back-up facilities, systems,
       and infrastructure as well as alternative staffing and other resources
       to enable the timely recovery of data and documentation and to resume
       operations as soon as reasonably possible following a disruption to
       normal business activities; 

    ...

  (3)  Source code reviews.  Each Licensee shall have an independent,
       qualified third party conduct a source code review of any internally
       developed proprietary software used in the Licensee’s business
       operations, at least annually.

A lot of these regs may have started out as Best Practices, but shouldn't regulations focus on the What, not the How? Also, the right place for these regs, if we must have them, are under FinCEN at the Federal level. If you watch some of their presentations, some smart people working there whom I'm sure would love to tackle this in a way that doesn't create an quagmire of conflicting and overlapping state regs.

A little passage in some old document about interstate commerce comes to mind.

The great thing about Bitcoin is this only applies to 3rd party companies wanting to assist you in transferring bitcoin, it doesn't apply at all to individual transfers between private entities. So this will do a lot to encourage private wallet software over centralized points of failure and intelligence gathering. For that, at least, you can thank NY.

tjaerv• 12 years ago

Erik Voorhees's response, at length:

http://moneyandstate.com/reflections-right-privacy-response-...

fiatjaf• 12 years ago

If you thing the State will ever do the right thing then you're wrong.

random8799• 12 years ago

Desperation... haha, Bless their hearts for trying. 18th century paper proclamations/thinking only go so far as technology progresses...

Proposed New York State Virtual Currency Regulations [pdf]

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