Heeere’s Regulation


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Heeeere’s Regulations

Hiroja Shibe

Novemeber 4 2014


The United States Government Begins Its Regulation of the Cryptocurrency Business Space with two new FinCEN Regulation. FinCEN- Financial Crimes Enforcement Network releases two new regulations that are aim directly at Cryptocurrency and how they are to be governing by the finical system. SEC- (not Southeast Conference) Securities Exchange Commission has issue letters and subpoenas to a number of Bitcoin related companies.. FTC- Federal Trade Commission. Right now Butterfly Labs is under court receivership and is being sued by the FTC for fraud and misrepresentation. There is belief in the community that more companies maybe facing action by the FTC and SEC in the coming months Bitlicense- which is occurring in New York(Financial Hub of US not so much the World) is seeking to regulate the Cryptocurrency space within the state. At the Money 20/20 conference that took place in Las Vegas Ben Lawsky trotted out a “Transitional Bitlicense” to address the concerns about start ups in the state of New York. Crypto 2.0 will not be cover by the Bitlicense and it may not be in their prevue of the New York Regulators so things like Sidechains and counterparty . California has passed a law earlier this year that you can use cryptocurrency in the state.

Russia has banned cryptocurrency. China has on and off again ban with cryptocurrency.

Other countries…….. Restricted Bitcoin usage in India, Indonesia, China, and Taiwan. Bolivia, Bangladesh, Ecuador, and Iceland complete ban. Hong Kong allows Bitcoin but there has been some concern whether Companies that state they are in Hong Kong may in fact be in the Mainland.

FinCEN- Falls under the Department OF US Treasury

FinCEN mission is to safeguard the financial system of the US from illicit use and combat money laundering and promote national security through the collection, analysis, and dissemination of financial intelligence and strategic use of financial authorities.

Created in May 1990. Has had its powers expanded couple of different times since its inception the biggest of which was in 2002 with the Patriot Act. The Motto “follow the money” 1. FIN-2014-RO11 Regulation As explained in the Guidance a person is an exchanger and a money transmitter if the person accepts convertible V. Currency from one person and transmits it to another person as part of the acceptance and transfer of currency, finds, or other value that substitutes for currency. 2. FIN-2014-RO12 As described above, the company is an exchange under the Guidance because it engages as a business in accepting and converting the customer’s real currency into (VC) fir transmission to the merchant. The fact that the company uses its cache for Bitcoin to pay the merchant is not relevant to whether it fits within the definition of Money transmitter.

Money Transmitter is need for 48 out of 50 states. You pay as low as 500- 100k waiting as long as 18 months to as short as 90 days maybe. You can register with FinCEN for a money transmitter licenses but still have to register with the state you operate out of and whichever state your customer is in. Now, you think that operating at of the US is not going to help because you have still have to a transmitter licenses. 1Money Transmitter site 2. Money Transmitter Site SEC-. governs Stocks, Bonds, IPOS, and Securities Establish in 1934-1940 through a series of acts and then had a major overall in 2002 with the Patriot Act. News reports have Seven Companies under investigation and a blanket of letters have been sent out to various companies by the SEC concern certain business practices in particular not being a register or issuing unregister securities. These letters seem to have gone out to a number of companies that have used Counterparty to raise funds for their company. Coinfire- had a news report in which a couple of different people share their letters from the SEC to the news site within a day of release of the news article on the subject the site was hit with a DMCA Notice and they were fore to migrate to another site. They’re currently looking into their legal options at this time concerning the notice. IRS had ruled earlier this year that virtual currency as regarded as property rather than currencies FTC- Federal Trade Commission is lurking in the background

What does this all mean? Compliance sounds like Hydra. Multisig- Coinbase, and other Bitcoin systems. FBI- Intellectual Property Theft RIAA – Recording Industry Association Of America MPAA- Motion Picture Association Of America Comparison to the file sharing and torrent enforcement and how the government could not stop that the same thing will happen with cryptocurrency. Pirate Bay founders is someone that the FBI goes after (last one) has been found and another has just been sentences to four years in Sweden. Megaupload- Kit Dotcom.

Major difference: 1.SEC 2.FinCEn. 3. IRS. 4. FTC 5.US Treasury 6.US department Justices KYC- Many of number of exchanges have done this before regulations had come down and then it began to be something to be required.

Exchange-Bitcoin address, one BTC tax purpose washing coin mixing. Tokens issues do not have KYC.

If you want to skirt the law and go deeper into the Dark Net there are options.

Color Coins-built on top of Bitcoin protocol.

Colored coins are tokes used to represent assets: stocks, bonds, commodities. Color a Bitcoin Mastercoin- p2p exchange token Bitsquare- Oct 26 2014 looking to coming out soon. Coin Mixing : Bitcoin Fog, Coin Join ,Shared Coin Darkwallet embed with coin join. OpenBazaar.

Good Stuff Games4doge.pw- a contest to acknowledge and promote games with Dogecoin as a theme or in-currency use contest has end. Voting on which Game is the best will begin on Thurs Nov 6 2014 on Reddit! Sidechains- project whitepaper is out. I am still trying to wrap my head around the subject and will report back soon. May play into either skirting regulations or supporting regulation. Brian Wallet- Brain Wallet is a passphrase which is a twelve phrase code you memorize and create yourself. It combines your public and private key. Dogeparty uses brain wallet to access your wallet. There is a problem if you lose the phrase you will not access the wallet. If you have a keylogger on your computer you could lose your coins. With a brain wallet you can control your private keys. Bit Ball Hosted by Follow the Coin taking places on 12/11/14 and in SF. A party to meet up with people who similar mindset. Fireside Chat on 11/18/14- Tim Swason and Jackson Palmer. March4Doge.com- Sponsors the walk. A Charity event taking place next year in for March of Dimes. Doge4eSport- Full discloser I won a prize in the chat room on Twitch.tv. I mention that such thing was occurring on the last episode. It was a fun event chatting with people on twitch. Still needs sponsors for the reaming games. If you have a Dogecoin business or know someone who just has a business and is

seeking a wider customer base consider sponsoring this great event. Trying to put together a Team Shibe detail on Reddit. Skype Chatting involve. Josh Wise- Dogecar fundraiser is going on right now. Please buy a t-shirt if you want to see a Dogecar out on the track next year. Remember there is not a Moolah that is going to come to the rescue to get this off the ground. We as members of the community if we want it need it need to make it happen. You can also vote for Josh Wise as popular driver both of these things are winding down. So time will be running out. Cool Running Too. Is still going on not much movement has happen so we need to get on it if you want to see a documentary about the Jamaican Run to Sochi 2014.