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Bitcoin Businesses Government

California Looking To Make All Bitcoin Businesses Illegal 224

An anonymous reader writes A new law has been proposed in California that would effectively outlaw all Bitcoin-related businesses that don't first get "permission." The details are vague within the bill itself, which is part of what makes it dangerous. If you're doing anything with virtual currency, you may have to go line up in Sacramento to get permission first.
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California Looking To Make All Bitcoin Businesses Illegal

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  • by Anonymous Coward

    To do something like this and then either never issue said permissions or arrange it in such a way that getting said permission purposefully violates some other law that they can then hit you with.

    • by ShaunC ( 203807 ) on Wednesday March 11, 2015 @09:24PM (#49238167)

      Yes, it's sadly common. Ask anyone who owns a strip club or an adult bookstore or a pawn shop, or even a bar in some places. The government doesn't usually make them illegal outright*; instead, they make them regulated. Then they draft regulations stating that those businesses can only operate in a certain zone of town. Oh, and you need a license, but it's going to run you half a million dollars, and they'll only grant one license every 10 years, or one license per 250,000 citizens (in a town of 30,000), or some other hurdle that's insurmountable enough so as to make your business effectively illegal.

      Your second point reminds me of the marijuana tax stamps that are still law in 20 or so states. You incriminate yourself just by asking to buy the stamp in the first place.

      *Because then the mayor couldn't accept an enormous campaign contribution in exchange for issuing a special license now and then.

      • by vux984 ( 928602 ) on Wednesday March 11, 2015 @11:39PM (#49238829)

        In many of THOSE cases its government functioning as it should -- representing the will of the people in the community.

        Lots of communities CITIZENS don't want strip clubs or pawn shops or porn shops or Walmarts or whatever; but they aren't illegal and the community can't outlaw them outright.. so the local government's mazes of red-tape to make opening such a business in the community difficult are simply a reflection of what the community wants implemented with the tools they have available to them.

        Not always, of course, but often.

        On the one hand its annoying if you want to open such a business; on the other hand... why exactly shouldn't a community be able to decide what businesses it does and doesn't want within its borders? It raises all kinds of genuinely interesting questions about the role of local government.

        • by The Rizz ( 1319 ) on Wednesday March 11, 2015 @11:51PM (#49238881)

          Lots of communities CITIZENS don't want strip clubs or pawn shops or porn shops or Walmarts or whatever; but they aren't illegal and the community can't outlaw them outright.. so the local government's mazes of red-tape to make opening such a business in the community difficult are simply a reflection of what the community wants implemented with the tools they have available to them.

          This is pure and complete bullshit. If the community's citizens didn't want such a business there, the business would get no customers and close down naturally. What actually is happening is that a cabal of Bible-thumping prudes who wish to impose their sense of morality upon others forces these laws through in order to control the larger population.

          • Yeah, that works for crack houses and drug dens, doesn't it?

        • Re: (Score:2, Interesting)

          by drinkypoo ( 153816 )

          In many of THOSE cases its government functioning as it should -- representing the will of the people in the community.

          No, commerce represents the will of the people in the community. If you put up a strip club and nobody shows up and it goes out of business, that is the will of the community. If you want to put up a strip club and the government says no, that may or may not be the will of the community. I live in a town where government generally does the opposite of the will of the community. They imported a shitload of derelicts some decades ago (literally deliberately moving criminals and wingnuts into Clear Lake, CA) a

          • by vux984 ( 928602 )

            No, commerce represents the will of the people in the community. If you put up a strip club and nobody shows up and it goes out of business, that is the will of the community.

            If 95% of the people don't want it in the community, the remaining 5% that patronize it can still keep it thriving; especially if its bringing traffic from outside the neighborhood its actually in as well.

            Commercial viability vs the will of the community are not necessarily in alignment either.

            If you want to put up a strip club and the government says no, that may or may not be the will of the community

            Of course.

      • by Cyberax ( 705495 )
        Can I open a bar and a trash dump near your house?
      • Your second point reminds me of the marijuana tax stamps that are still law in 20 or so states. You incriminate yourself just by asking to buy the stamp in the first place.

        Supreme court tossed this out. Besides, near as anybody can tell, all the tax stamps sold have been to stamp collectors and people looking for curiosity items. So not much good.

  • by Anonymous Coward on Wednesday March 11, 2015 @08:21PM (#49237827)

    "Papers Comrade!"

    Enjoy. You made it that way.

  • by rmdingler ( 1955220 ) on Wednesday March 11, 2015 @08:22PM (#49237831) Journal
    That is a crafty way to describe registered and monitored.
  • by roc97007 ( 608802 ) on Wednesday March 11, 2015 @08:24PM (#49237845) Journal

    Alternately, don't do business in California.

    • by SeaFox ( 739806 )

      Alternately, don't do business in California.

      NewEgg has a warehouse in City of Industry. Wonder how this will effect them.

      • NewEgg has a warehouse in City of Industry. Wonder how this will effect them.

        Probably not at all. This is a proposed law, and it is unlikely that it will be passed. Most bills never become law. I don't see who would benefit from this.

        • by mysidia ( 191772 )

          Except, this one just might..... Bitcoin is one of those scary new techie things the government officials will feel a need to reign in on. Wouldn't want Californians to get hurt

          • by Mashiki ( 184564 )

            Well they can move it to Canada. The government here doesn't really care as long as:

            1) It's legal
            2) If you're mining, you pay capital gains over $5k earned
            3) You preform due diligence and pay your taxes if they apply on BT transactions.

      • by perpenso ( 1613749 ) on Wednesday March 11, 2015 @11:49PM (#49238871)

        NewEgg has a warehouse in City of Industry. Wonder how this will effect them.

        It probably wouldn't even if passed. Many merchants who "accept" bitcoins in fact never touch them. They pay a bitcoin exchange to do so. The merchants tell the exchange the $ amount. The exchange creates a payment address and a BTC amount to give the buyer. When the coins show up at this address and are verified the exchange credits the merchant's account for the exact amount of $ originally stated by the merchant. The merchant does all pricing and accounting in $ and has no risk from BTC price fluctuations.

        It seems the only thing necessary would be for the exchange not to be in California.

    • Comment removed based on user account deletion
  • by NostalgiaForInfinity ( 4001831 ) on Wednesday March 11, 2015 @08:31PM (#49237891)

    If you look at the state, it's deeply in debt and politically utterly dysfunctional. Educational performance has fallen to nearly the bottom of the nation. The infrastructure is falling apart. Taxes are sky-high. The prisons are overcrowded and an embarrassment to the nation. Everything is regulated, from putting a shed in your backyard to how the hens are kept that produce your eggs. People and businesses are moving out of the state if they can.

    California weather and scenery will mean that it will always remain a playground for retirees and the wealthy. And its widespread crony capitalism will keep some corporations around. But anybody with half a brain, and anybody who actually wants to innovate and accomplish something will move elsewhere.

    • by Anonymous Coward on Wednesday March 11, 2015 @08:45PM (#49237973)

      Funny, Wells Fargo's California Economic Outlook report for last month starts off "California’s economy continues to power forward, with many of the Golden State’s largest and most important industries gaining momentum over the course of 2014."

      https://www08.wellsfargomedia.com/downloads/pdf/com/insights/economics/regional-reports/California_Economic_Outlook_02242015.pdf

    • California weather and scenery will mean that it will always remain a playground for retirees and the wealthy

      There's your explanation. They're trying to run out the riff-raff.

    • People and businesses are moving out of the state if they can.

      I wish that were true. Then I could drive around the bay area on a weekend without getting in a traffic jam.

    • by mvdwege ( 243851 )

      I'm sorry, but a debt of 130 billion on a Gross State Product of 2 trillion hardly counts as 'deeply in debt'.

      As most economic illiterates, you confuse debt with interest. Debt is irrelevant. What is relevant is being able to service that debt; California has had its troubles in that area, but mostly because idiots like you managed to shackle the government's tax-raising powers.

  • I mean, if is approved for political donations [rt.com] how can California ban it?
    • Re:Unconstitutional? (Score:5, Informative)

      by NicBenjamin ( 2124018 ) on Wednesday March 11, 2015 @08:49PM (#49237995)

      The guy who wrote the original piece does not understand the Legislative process. He does not understand bills.

      This particular law is supposed to make any BTC-based business acting like a wire-transfer service follow the same laws dollar-based-witre-transfer-services follow. Since paying for things, and accepting payments, do not result in you having to register you McDonald's as a wire transfer service and comply with financial regulations; most BTC-using businesses will be fine.

      If you were setting up a newer, better Mt. God, or a tumbler, or something like that you've got extra paperwork.

  • by NicBenjamin ( 2124018 ) on Wednesday March 11, 2015 @08:44PM (#49237965)

    Or is so unfamiliar with the US Political process they really shouldn't be commenting on bills. In Westminster-style democracies a bill being introduced by the government has a virtually 100% chance of becoming law, so it's very important when such a bill is introduced. But in the US there is no body in the state Legislature with the same role as the Prime Minister and his Cabinet, so all bills are the equivalent of Private Member's Bills in Canada/the UK/etc.

    Which means that it's very important to know who sponsored this bill? Are they a Republican or a Democrat? What's their political point of view on the issue? What are their relationships with the rest of the State Assembly? The Senate? The Governor? These are all very important facts that the original story does not tell you, probably because the author does not know how the US Legislative process work.

    The answers seem to be this was authored by Matt Dababneh, who represents a slice of the "Valley Girls" Valley in greater LA. He's a Democrat. The latter is good for the bill's odds of passage, the fact he has no Senate cosponsor is not because if it's not introduced in the Senate it can't become law. His point of view seems to be that you can use Bitcoin as a money-transfer service so any business based on changing dollars into BTC should follow the same banking rules that write-transfer services do.

    • ...the fact he has no Senate cosponsor is not because if it's not introduced in the Senate it can't become law.

      Can someone explain this quadruple negative? I'm not sure I understand it.

      • Reads well to me - to become law it needs to be passed in the Senate. To be passed in the Senate, it needs to be introduced by a Senator, no one else can introduce a bill into the Senate. And this bill has no Senator signed on as a sponsor of the bill, so it can't be introduced into the Senate, so the Senate cannot pass it, so it cannot become law.

  • WARNING: (Score:5, Funny)

    by Irate Engineer ( 2814313 ) on Wednesday March 11, 2015 @08:54PM (#49238015)
    Bitcoin contains features known to the State of California to cause untraceable transactions, speculation, and other financial harm.
    • by nomel ( 244635 )

      > cause untraceable transactions

      And this differs from cash, how? And...what's so untraceable about bitcoin, considering every transaction *permanently and publicly stored*. It's such a pain in the ass to anonymize [bitcoin.it], that even Dread Pirate Roberts seemingly got sick of it.

      • > cause untraceable transactions

        And this differs from cash, how? And...what's so untraceable about bitcoin, considering every transaction *permanently and publicly stored*. It's such a pain in the ass to anonymize [bitcoin.it], that even Dread Pirate Roberts seemingly got sick of it.

        WhilenI agre with your comments re: Bitcoin anonymity it does differ from ash in that I need to actually hand you cash rather than make a payment from McD's via free WiFi. cash transactions are limited by the need to to a face to face exchange.

        • by nomel ( 244635 )

          Not when you fold your bills into little paper airplanes, and deliver via well aimed transfers from the tops of sky scrapers. BRING IT!

    • by tsotha ( 720379 )
      I think the financial harm they're most concerned about has to do with tax evasion.
  • ... but I think states lost most of their powers to regulate currencies and securities to the federal government a long time ago.

  • FALSE HEADLINE (Score:5, Insightful)

    by Anonymous Coward on Wednesday March 11, 2015 @09:13PM (#49238115)

    From the text of the bill:

    26004. The following are exempt from the licensing requirement described in Section 26002:
    (6) A merchant or consumer that utilizes virtual currency solely for the purchase or sale of goods or services.

    This bill has nothing to do with people who wish to buy or sell goods or services in bitcoins. It is intended to regulate bitcoin exchanges, presumably to avoid another Mt Gox scenario. The bill is still in its very, very early stages, and so I'm sure there are problems with the verbiage. But the headline and summary are absolute bullshit, intended to drive readers into an anti-government rage, and thus generate clicks.

  • by Billly Gates ( 198444 ) on Wednesday March 11, 2015 @09:14PM (#49238119) Journal

    Last I checked that was unconstitutional. Feds make these rules and laws

  • ... with barber shops. You need a permit, and to take an exam which shows you know how to avoid electrocuting your customers with the electric clippers, and how not to transmit ringworm or scabies.

    Radical stuff.

    • by dissy ( 172727 )

      My state does that ... with barber shops. You need a permit, and to take an exam which shows you know how to avoid electrocuting your customers with the electric clippers, and how not to transmit ringworm or scabies.

      Rats, I knew I should have checked with a lawyer before opening my Joe's Barber Shop and Scabies Quartet franchise!

  • retarded article (Score:4, Informative)

    by bloodhawk ( 813939 ) on Wednesday March 11, 2015 @09:38PM (#49238241)

    This looks like a simple case of a blogger not knowing what the fuck he is talking about. Nothing being banned in the legislation, seems to merely be trying to ensure virtual currency is regulated in the exact same way as dollars. If anything you could say this is a positive for bitcoin, but it seems the tards that support bitcoin look at anything that takes away there opportunities for fraud and tax evasion as the government stomping on their god given rights.

  • They are just evacuating the state in anticipation of a series of earthquakes. They are looking for as many people to get the hell out as possible.
  • ... it's Bitcoin.

    The only thing that makes less sense than Bitcoin is this goddam bill in California regarding it.

  • by l0ungeb0y ( 442022 ) on Wednesday March 11, 2015 @10:37PM (#49238541) Homepage Journal

    After all, what is a "virtual currency" but a "good" to be exchanged? All in-game credits should be prohibited from being used to pay for items outside the game or being exchanged for cash Trading goods or services for other goods or services? Also should be illegal, since how can the Government monitor such transactions? Cash should also be made illegal, since it can not be immediately tracked and might be used for nefarious purchases and most importantly, privately held cash destabilizes our glorious economy by keeping it out of the hands of the almighty Financial Institutions who can use it to invest in hedge funds and conduct other sound business practices like lending it out to other large institutions or buy up massive tracts of property to mortgage to Wealthy Chinese Citizens thereby keeping our economy strong.

    The only legal means of paying for goods or services should be with a Chip and Pin implant on your hand or forehead.

  • I'd like to see them ban barter for everyone who didn't get "permission" first.
  • Comment removed based on user account deletion
  • ... you can't really stop a currency like this... that's sort of the whole point. You can make it less convenient but you might also make the process by which it operates even harder to monitor.

    Also, the legality of such a law is dubious.

  • And just where does a transaction take place? If a citizen of California goes online and buys bitcoins in Virginia where does the transaction take place? From what I can see that issue is a legal nightmare to begin with. Maybe California could rule that no business inside California is allowed to accept bitcoins but what about businesses that have branches in several states? I don't see this working out well without creating all kinds of agencies and laws to enforce such nonsense.
  • (FUDD = fear, uncertainty, doubt, and disinformation)

    Money-transfer businesses are already regulated in California as the result of several such businesses failing. The proposed law merely adds bitcoin-transfer businesses to that category. This is a consumer-protection proposal in an attempt to prevent another Mt. Gox.

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