California Sends a Cease and Desist Order To the Bitcoin Foundation 396
An anonymous reader writes in with bad news for the Bitcoin Foundation. "California's Department of Financial Institutions has issued a cease and desist letter to the Bitcoin Foundation for "allegedly engaging in the business of money transmission without a license or proper authorization," according to Forbes. The news comes after Bitcoin held its "Future of Payments" conference in San Jose last month. If found in violation, penalties range from $1,000 to $2,500 per violation per day plus criminal prosecution (which could lead to more fines and possibly imprisonment). Under federal law, it's also a felony "to engage in the business of money transmission without the appropriate state license or failure to register with the US Treasury Department," according to Forbes. Penalties under that law could be up to five years in prison and a $250,000 fine."
Canada (Score:4, Informative)
Last I heard, Canada was still OK with it [pcworld.com] as long as you pay taxes [rt.com] on any applicable transactions. I don't know how long it will last.
Re:Catch-22 (Score:2, Informative)
Re:Catch-22 (Score:4, Informative)
No, the 'payment system' you mention is the kind of thing a restaurant or shop does. They don't need to be licensed, but a central entity that works like a bank does have to. If it looks like a bank, flies like a bank and quacks like a bank, then it is a bank and should be licensed.
Re:Future regulation (Score:5, Informative)
In a world where seismologists can be jailed for not predicting an earthquake [guardian.co.uk] anything is possible.
Re:Uh (Score:5, Informative)
Quite.
I think that the foundation could send back a nicely worded letter to the effect that they write software/sponsor the writing of software (delete as applicable). They do not sell cars, sell drugs, or engage in money transfer. They should not be held any more responsible for the use their software is put to, than Microsoft is responsible for MS Word being used to write threatening letters to people.
Also, dear the editors, specifically samzenpus, please link to the original source, in this case Forbes [forbes.com], rather than to some random other website. You might also link to the cease and desist letter [scribd.com] itself.
Re:Future regulation (Score:5, Informative)
They were not jailed for failing to predict it, but for giving (provably) false assurances that no earthquake was eminent. Subtle difference, and one the "science community" seems to conveniently forget when bringing this story up.
The seven defendants, who belonged to the National Commission for the Forecast and Prevention of Major Risks, were accused of offering an unjustifiably optimistic assessment to the local population a week before the disaster. By then, the area had been hit by some 400 tremors over a period of four months and a local researcher had warned of the risk of a major earthquake, largely on the basis of abnormal radon emissions.
But after an extraordinary meeting of the commission in L'Aquila, one of the experts told a press conference that the situation was "normal" and even "favourable" because potentially destructive energy was being released through the tremors. The prosecution, which brought charges of multiple manslaughter, maintained that lives could have been saved had people not been persuaded by the assurances to remain in the area.
They were in a position of authority on the subject, yet they failed to exercise due diligence with respect to their own research. They ignored evidence that did not fit their own world view, and they presented their own as fact. The correct answer would have been "we don't know, take precautions", when asked. They didn't give that answer, and because of that 307 people died and 1,500 were injured. 80,000 lost their homes, but that would have happened regardless.
Re:Copyright violation? (Score:4, Informative)
I thought Cease and Desist is for copyright violation only?
No, it's a lawyer's letter saying "Stop doing that or my client will sue you". That's really all it is.
Re:Context is everything (Score:5, Informative)
Re:Uh (Score:5, Informative)
If this country built a strong cannabis industry, right now, what would the benefits be?
Cannabis in the Industrial Hemp strain does not produce enough THC to get you high. The THC-production-ready strains represent an emerging market thanks to recent changes in the legislative climate.
All cannabis will grow in less-ideal conditions. It is easily grown and harvested on land unfit for the growth of more sensitive crops. See discussions about switchgrass for this concept; the benefits here are the same. Better land utilization means increases in economic wealth, as land is a wealth-bearing asset which holds less value when unused (You own land, but produce nothing? You can SELL it, but you're not gaining wealth by PRODUCING on it).
Industrial Hemp provides strong fibers which you can blend with clothes in 30% hemp 70% cotton to make cotton-like fabric of extremely light weight--sort of like silk--with high durability. Higher hemp content would be perfect for labor-clothes (i.e. denim), as it's ridiculously hard to cut and tear. Hemp is also very smooth and so very comfortable. Spun hemp fiber, being that hemp has better tensile strength, doesn't break down as easily under the stresses of wash and wear, and so produces less lint, so the clothing lasts longer.
Longer lasting, higher-quality clothing made from lower-cost materials means poor people can purchase clothing at a discount price and less often. They are then able to more effectively manage their money, improving their economic situation. The middle class and the rich similarly benefit, ending up with more money to spend elsewhere and stimulate other economic sectors. This represents an increase in wealth via a decrease in the destructive turn-over of goods (i.e. things don't wear out as fast, so are not destroyed as often; and the lower resource intensiveness of production reduces the amount of wealth sunk into creating the good, thus greatly increasing the wealth of society by replacing a high-cost good with a low-cost good of equal or greater value).
Hemp seed is highly nutritious and can be used for feed or food. Hemp seed oil can be processed into biodiesel fuel. Again, this allows for the use of unsuitable land toward a valuable economic end, thus increasing the wealth of society.
Hemp damages the cotton industry. The cotton industry, being large and powerful in the time of slave-negros, thus lobbied congress as is American tradition to produce protectionist laws. Hemp was, for a time, heavily regulated; moving onto hemp production would today require some relatively large start-up costs, despite that the process of spinning plant fibers into thread and yarn is largely the same. It would also incur a frightening amount of risk due to the risk of accidentally growing recreational cannabis (the plant is the same, the seeds look the same, and pollen on bees and in the wind from nearby grow operations could taint your crop and produce high-THC seeds). Government regulation of recreational cannabis would require regular DEA inspections, meaning expensive permits to cover the cost of these inspections, as well as the risk of determining that cross-pollination has created a hybrid and your entire crop can give folks a weak buzz--so you must now raze and burn it at your own expense, a huge loss of wealth.
We would have been better off if we didn't ban the stuff. Jefferson was, in a way, right. Maybe a little overzealous--it's a great crop with wonderful uses and a huge amount of economic benefit, but it's not the absolute top-priority of anything--but he was right.
Dear Bitcoin (Score:4, Informative)
We are uncomfortable that your fiat currency is a) starting to make our fiat currency look a little silly, and b) circumventing our ability to control the public. Please stop or we will have to get rough.
Signed,
California and the Fed
Re:Uh (Score:3, Informative)
Pigs are not currency (Score:4, Informative)
Does that mean a pig is now a unit of currency as I used it to buy goods and services (off the same person).
Probably not since the pig is not used as a medium of exchange [wikipedia.org] and it is not used as a as a unit of account [wikipedia.org] so it does not meet the definition of being money. (It is arguably a store of value however) While it would be possible to use pigs as currency in theory, in common practice it would simply be used in barter transactions. You can barter for goods or services. While you could channel your inner Guy Fieri and say that bacon is "money", it wouldn't be in the financial sense of the word.
Bitcoin on the other hand fits the definition of money (medium of exchange, store of value and unit of account) to the letter. Doesn't mean using it is a good idea as it is very risky and relatively illiquid. But it certainly would be accurate to describe bitcoin as a currency.
Re:Context is everything (Score:4, Informative)
Bullshit. There is lots of virtually no-THC hemp growing all over the American midwest. Nobody grew it commercially sense the 70s or 80s and it is everywhere. It's called 'ditch weed' for a reason.
We used to call the cops on wild hemp fields, keep them out of trouble and keep the crap pollen out of our patches.
Federal money service business regulations control (Score:4, Informative)
California is applying the rules of the federal regulations on money services businesses, which require state licensure of money transmitters. Those regulations -- 31 CFR Sec. 1010.100(ff)(5)(i)(A) -- define a "money transmitter" as one who provides "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."
Bitcoin doesn't need to be a "legitimate currency" for an exchange which accepts dollars, keeps accounts in dollars and bitcoins, exchanges one for the other, and transmits dollars and bitcoins back to people to qualify as a money transmitter under the rules.