Tuesday, January 28, 2014

Governance of BitCoin and other "Crypto Currencies"

This week the USA arrested two heavy guys involved in the proliferation of the global phenomenon called "BitCoin". The compliance and AML (Anti Money Laundering) industry is all in a tizzy on what we do about regulating and controlling "BitCoins".

We must stop seeing BitCoin as a "currency" and see it more as a global "exchange" for ALL currencies. Think Commodities Exchange of currencies, but no metals or hard assets required. And just like the Internet, no ONE country is going to control or regulate this crypto exchange. It will be more about a global forum that can PARTICIPATE in issuing and regulating TRANSACTIONS, not the BitCoins themselves. It is not a fiat currency to control or manipulate. It is totally about being a FREE MARKET exchange...the only one existing in the world today. Why is everyone so paranoid about freedom of markets or exchange? I think we know why.

As for AML and compliance...this exchange is perfect for leaving a digital trail forever versus cash currencies that do not. Perfect for legally proving payment sources, legal or non. Legalities of such transactions are not based on the money or exchange itself, but the legality of the actual products or services it acquires. Instead of prosecuting money exchange, we must start prosecuting the products or acts the exchange represents...IF they need to be prosecuted.

Small example...prostitution, the worlds oldest profession. Is it illegal to have sex, or is it only illegal to pay for it? In some jurisdictions it is totally legal. In others it is legal to prostitute, but not to be a customer. In others, both provider and customer go to jail. But is the issue the money? Why?

If it is about taxes...well those issues have to be taken up in each jurisdiction separately, but getting the global financial ecosystem to enforce any one country's citizen obligations or local tax codes is totally unrealistic. Won't happen in general.

Finally, as to the BitCoin executive arrests...it is my understanding they were arrested for using BitCoins to pay for illegal activities in the USA. Not for simply using BitCoins. Without knowing if they are guilty or not, this is a prime example of the issue. Even if they had exchanged paper greenbacks for their purposes...the legal issue is the same. Its not about the money.


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Yasmin Adam said...

Thank you for this excellent and extremely informative bitcoin currency information.

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