“Financial regulators can’t regulate consumer behaviour” brett king
As part of the emergence of bitcoin and digital finance, there are a lot of questions regarding the legality of bitcoin and its derivative projects.
One of the main hurdles in financial innovation has always been legistlation and regulation, while regulators have the to keep the best interest of it local citizens, the ussually block innovation due to the exisitng local legal insfrastructure, and the lack of a more agile global infrastructure.
I suggest forming a collaborative brainstorm wiki to create a legal act that people of all countries can try and pass. That will, in effect, formalize bitcoin as a legitimate and legal virtual currency, which business and people can transact with.
I suggest crafting a simple act, that any person can read, understand and promote, for example :
1. Any Person buying/selling virtual currencies is exempt from any future claims of taxes, money laundering or securities law violation, as long as the person reports its buying and selling activity either publicly or privately to a goverment website.
2. Any Company/Business dealing with virtual currencies is obliged to report its buying and selling activity either publicly or privately to a goverment website. Company/Business that report are exempt from future legitlation
3. As Goverment are studying legal aspects of Digital finance, companies who deal with virtual currencies are obligates to provide answers to general questions regarding their activity to help form and promote AML and consumer protection.
4. This legal act is global, and protects companies adhering to the reporting standards.
This will allow a country to build a framework to gather information and usage, and gradually shift its economy toward complete digital transparency. This type of law can draw international businesses which seek legal/regulatory certainty to the country that passes it. Once the volume become significant enough, the country can consider adding taxes on the selling/buying portion or specific virtual activity, so we could look at it as potential revenue.
If just one country claims passes the bitcoin act and by so making is legitimate, there will be a domino effect legalizing it around the world. Of course some countries might try to make it limit its scope and over regulate it, but since they can’t stop or control a decentralized free market they will simply pass a law that they can’t enforce, tey will simply shift business to other countries.
I believe there will always be a black market in bitcoin, just like in the existing economy there is a big http://en.wikipedia.org/wiki/Black_market, but creating simple rules to privately/publicly report activiry can create a white market for it as well. Since the total amount of bitcoin is limited to 21M bitcoin, every company and person who report their activity will in fact will whiten the bitcoin black market, and in fact it should be fairly simple to whiten the majority of bitcoins out there.
While I find the idea of free markets and no regulation romantic, I do not believe governments will (or can) allow their people to hold a majority of their assets in an anonymous digital world, and I truly believe creating competition between governments in which one makes the laws of digital finance more attractive, and drawing people and business around the world to open their business there is a great step towords digital finance.
I would love to get people on board to see how the bitcoin act can be further defined and pushed forward.