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The Hidden Rule that Could Kill Bitcoin’s Irrevocability

[Reading Time: 5 minutes]

If federal anti-money laundering rules ‘killed’ Bitcoin’s anonymity, could consumer protection rules ‘kill’ its irrevocability?

Last March, the crypto-currency world was struck dumb when the Financial Crimes Enforcement Network (FinCEN), the United States federal agency responsible for enforcing anti-money laundering and anti-terrorist financing regulations, issued the now famous interpretive guidance equating exchangers and administrators of ‘convertible virtual currencies’ to money transmitters.

Although some of us saw it coming, crypto-preneurs are just now slowly waking up to the reality of what it really means to be this particular species of non-bank financial institution.  See the final section for a compendium of risks and obligations.

One set of regulations that I included in the laundry list of obligations last April but has yet to come to the fore are the federal consumer protection rules emanating from the Dodd-Frank Act and being enforced by the Continue reading →

Winklevii Warn Investors in Their ETF That Bitcoin May Become Illegal

[Reading Time: 6 minutes]

Apart from the cookie-cutter risks everyone is required by law to disclose, the Winklevoss Bitcoin Trust prospectus contains a series of unique risk factors that would make even Bernie Madoff cringe.  One of those risks, indicated as my favorite below, almost made this post qualify for my ‘Seriously?’ category, reserved for cases of utmost nonsense and near insanity.

All joking aside, the unique virtual currency-related risks listed in the Winklevoss twins’ new Bitcoin fund SEC filing hint at the number and complexity of roadblocks that the crypto-community will need to surmount if it aspires to take digital currencies to the mainstream.  On the positive side, this first (technically, second) Bitcoin fund marks Bitcoin’s official entry into the capital markets and could go a long way towards legitimizing it as a commodity.

Here are some of the more salient risks for your edification and enjoyment:

• The loss or destruction of a private key required to access a Bitcoin may be irreversible.  The Continue reading →

2013-07-01 Crypto-Timeline

Here is a log with relevant legal, regulatory, law enforcement and business risk milestones in the crypto-currency race to maturity with links to trusted sources.

The Key June 2013 Crypto-Events were:

• 6/10/2013 – LibertyBit temporarily suspends operations due to RBC closing their bank account
• 6/19/2013 – Bitspend suspends operations due to Chase closing their bank account
• 6/20/2013 – Mt Gox temporarily suspends U.S. Dollar withdrawals
• 6/23/2013 – Bitcoin Foundation receives Cease and Desist Order from California
• 6/24/2013 – DEA Bitcoin seizure is first ever in US history

Please point me to any events that you consider important and would like to see on the log. Continue reading →