NYS Dept. Financial Services: Bitcoin is a "Threat to National Security"

[presence]

NY regulator may crack down on Bitcoin


A 25 Bitcoin token. / Rick Bowmer/AP



ALBANY, N.Y. New York financial regulators are investigating the "Wild West" atmosphere of virtual currency, such as Bitcoin.


Benjamin Lawsky, superintendent of the state's Department of Financial Services, said in a memo that the agency is considering new regulatory guidelines for virtual currencies.


Virtual currency is composed of digital bits and based on mathematical schemes that guard against counterfeiting. Bitcoin was started in 2009 as a currency free from government controls.



Like any money, virtual currency can be used for legal or illegitimate reasons. Lawsky's memo claims it has been used for narcotics, illegal guns and child pornography.

"If virtual currencies remain a virtual Wild West for narcotraffickers and other criminals, that would not only

threaten our country's national security,

but also the very existence of the virtual currency industry as a legitimate business enterprise," Lawsky said in the memo. "Indeed, it is in the common interest of both the public and the virtual currency industry to bring virtual currencies out of the darkness and into the light of day through enhanced transparency. It is vital to put in place appropriate safeguards for consumers and law-abiding citizens."


A state official says 22 subpoenas were issued last week. They seek records of anti-money laundering measures, consumer protections, and investment and promotional materials.


Although the probe is in its early stages, the Department of Financial Services is concerned that virtual currency exchanges may be transmitting money, which is regulated by the agency.


"We believe that - for a number of reasons - putting in place appropriate regulatory safeguards for virtual currencies will be beneficial to the long-term strength of the virtual currency industry," Lawsky wrote.


The value of Bitcoin has steadily climbed in recent years. This spring, the price spiked from a little over $40 to a U.S. dollar to over $266, before suddenly crashing to as low as $40 the next day. The surge was said to be tied to limits on capital leaving Cyprus after the island nation in March clamped down on banks and confiscated deposits.

..

[goRPaul]

In other news, freedom is dangerous. Thank you for being a good obedient taxpayer.

[evilfunnystuff]

but also the very existence of the virtual currency industry as a legitimate business enterprise,

BTC is not a business enterprise lol, it eliminates the need for a business enterprise that has been terrorizing people throughout history.

[kpitcher]

You know it's serious when they mention the trifecta of narcotics, illegal guns and child pornograph. I assume the author wants the same regulatory safeguards that overlooked things like Madoff, HSBC from laundering billings of dollars, the entire financial meltdown? Wonderful idea!

I do wonder what those 22 subpoenas were for. Some 22 random users? 22 idiots who bought something on a SR sting?

[phill4paul]

Bitcoin is done. Make what you can off of it and run. Governments cannot allow competition.

[Jackie Moon]

You know it's serious when they mention the trifecta of narcotics, illegal guns and child pornograph. I assume the author wants the same regulatory safeguards that overlooked things like Madoff, HSBC from laundering billings of dollars, the entire financial meltdown? Wonderful idea!

I do wonder what those 22 subpoenas were for. Some 22 random users? 22 idiots who bought something on a SR sting?

List of companies subpoenaed by the New York State Department of Financial Services

BitInstant
BitPay
Coinabul
Coinbase Inc.
CoinLab
Coinsetter
Dwolla
eCoin Cashier
Payward, Inc.
TrustCash Holdings Inc.
ZipZap
Butterfly Labs
Andreesen Horowitz
Bitcoin Opportunity Fund
Boost VC Bitcoin Fund
Founders Fund
Google Ventures
Lightspeed Venture Partners
Tribeca Venture Partners
Tropos Funds
Union Square Ventures
Winklevoss Capital Management

http://www.forbes.com/sites/kashmirh...ial-regulator/

[hazek]

I think it's funny to read many of the posts on this forum. Really funny.


You know what most of you are? Chicken $#@!s. That's what.



First you are too thick to grasp just why this technology may be our one shot at freedom through economic sovereignty in our lifetime and then when the people that Bitcoin was designed to withstand start to actually attacking it, proving to you that it's not a fraud, scam, ponzi, delusion, whatever ridiculous understanding of it you had, you again are only able to complain and bitch again missing the main point.


Well guess what, I and many others are not like you. And if there's one way I'm going to fight for my freedom it's going to be using Bitcoin how I damn well please, no matter what anyone or any government says. Because guess what you thick chicken $#@!s, it was designed to offer me this freedom and you can bet your fiat I'm going to make the best use of it possible.

[dannno]

I think it's funny to read many of the posts on this forum. Really funny.


You know what most of you are? Chicken $#@!s. That's what.



First you are too thick to grasp just why this technology may be our one shot at freedom through economic sovereignty in our lifetime and then when the people that Bitcoin was designed to withstand start to actually attacking it, proving to you that it's not a fraud, scam, ponzi, delusion, whatever ridiculous understanding of it you had, you again are only able to complain and bitch again missing the main point.


Well guess what, I and many others are not like you. And if there's one way I'm going to fight for my freedom it's going to be using Bitcoin how I damn well please, no matter what anyone or any government says. Because guess what you thick chicken $#@!s, it was designed to offer me this freedom and you can bet your fiat I'm going to make the best use of it possible.

Hard to believe sometimes.

[FSP-Rebel]

The businesses that are involved in bitcoin can be regulated but the protocol and the currency itself cannot be controlled. Thx for the extra press tho, NYS.

[muh_roads]

You can probably blame the Winklevoss for this one. Their ETF described precisely how BTC works. So much so that the elite probably $#@! their pants and all over the floor around them. Everyone should go read their ETF submission some time. It was well-written.

This could affect you if you are a miner. Let me give a worst case scenario, but I don't believe it will come to that yet. But it is something to think about.

Butterfly Labs is on that list. Worst case scenario they may try to ultimately impose the money transmitter license on miners via order book information. I don't think Montana has a money transmitter license. By comparison, the state of Texas costs $2 million. If they try to impose the entire 48-state transmitter license on miners, no matter how small of a network speed, that would be pretty damn cold. That would be trying to squelch competition so their rich buddies can be miners.

I think it would come down to a case of discrimination because Intel, AMD, and nVidia can mine as well. Despite those devices not being application-specific, those miners collectively got the majority of Bitcoins. Not the FPGA & upcoming ASIC people mining.

This is the worst case scenario, IMO. But if that scares you and you don't have the means to move to a cheaper state, I would suggest that you try very hard for a refund from BFL. If you ordered in 2013 when the prices became 230% higher for the devices, your ROI will be $#@! anyway at the pace BFL is shipping. This isn't just an issue of wanting your money back anymore. If you don't want to be associated with something the Government is trying to associate with "terrorism", I'm sure your credit card will force paypal or the FTC will force BFL to refund if paid in BTC.

For anybody else that still has their ballsack between their legs, I think it might be time to get political? I'm sticking this out.

This is about Liberty god damnit. Any Ron Paul supporters that don't see the value in helping us out should go read some more economics books and retire their "End the Fed" book. This is your chance to fight for a competing currency.

[Barrex]

I think it's funny to read many of the posts on this forum. Really funny.


You know what most of you are? Chicken $#@!s. That's what.



First you are too thick to grasp just why this technology may be our one shot at freedom through economic sovereignty in our lifetime and then when the people that Bitcoin was designed to withstand start to actually attacking it, proving to you that it's not a fraud, scam, ponzi, delusion, whatever ridiculous understanding of it you had, you again are only able to complain and bitch again missing the main point.


Well guess what, I and many others are not like you. And if there's one way I'm going to fight for my freedom it's going to be using Bitcoin how I damn well please, no matter what anyone or any government says. Because guess what you thick chicken $#@!s, it was designed to offer me this freedom and you can bet your fiat I'm going to make the best use of it possible.

Finally some civilized philosophical opinion to debate...you empty headed animal food trough wiper. I fart in your general direction. Your mother was a hamster and your father smelt of elderberries.

[Quark]

Forgive me for my ignorance of Bitcoin (and currencies in general) but from what I've heard Bitcoin cannot be regulated even if they wanted to? Is that true?

[presence]

Forgive me for my ignorance of Bitcoin (and currencies in general) but from what I've heard Bitcoin cannot be regulated even if they wanted to? Is that true?

Are you Benjamin Lawsky?

[Quark]

Are you Benjamin Lawsky?

Can you be more explicit rather than implicit? Whatever implication you were trying to make went over my head. Basically I was asking, by what means (other than outlawing the use of Bitcoin) can they manipulate the market through legislation, if they can at all? I'm sure if there is a way, they'll find it, but I've consistently read online that it's just not controllable through legislative means.

[muh_roads]

Can you be more explicit rather than implicit? Whatever implication you were trying to make went over my head. Basically I was asking, by what means (other than outlawing the use of Bitcoin) can they manipulate the market through legislation, if they can at all? I'm sure if there is a way, they'll find it, but I've consistently read online that it's just not controllable through legislative means.

They can't manipulate the market via legislation because other miners around the world would puke on a new version that has their Government implementations. Every miner must be in agreement or the system forks and you'd have two Bitcoin chains. This is how it stays decentralized. The community would most likely take their own path if the Bitcoin Foundation and Gavin Andresen was told to implement changes that hurt the integrity of Bitcoin.

[Barrex]

The more powerful they (government) get, they get easier to scare.

[muh_roads]

Bitcoin can't be shut down. All the Government will do is empower foreign countries like Russia & China if they exclude miners from being able to take part in the western world. ASICMiner will grow its operation even further then.

American miners should be protected. Not regulated and licensed out of existence. IF they truly cared about National Security.

I could see a mining license as a % of your mining income being imposed. That is the best case scenario.

[amonasro]

First you are too thick to grasp just why this technology may be our one shot at freedom through economic sovereignty in our lifetime and then when the people that Bitcoin was designed to withstand start to actually attacking it, proving to you that it's not a fraud, scam, ponzi, delusion, whatever ridiculous understanding of it you had, you again are only able to complain and bitch again missing the main point.

It really is amazing, isn't it? A bunch of libertarians, freedom lovers and small government conservatives are presented with a dream currency that can directly compete with all forms of fiat and help undo the shackles and tyranny of our central banking system, and they turn their back on it.

Well guess what. Bitcoin is real, and it's not going anywhere. Have fun sitting on your pile of gold holding a rifle.

[kpitcher]

Have fun sitting on your pile of gold holding a rifle.

I've bought gold with bitcoins. They work well to buy things online.

[MoneyWhereMyMouthIs2]

It really is amazing, isn't it? A bunch of libertarians, freedom lovers and small government conservatives are presented with a dream currency that can directly compete with all forms of fiat and help undo the shackles and tyranny of our central banking system, and they turn their back on it.

Well guess what. Bitcoin is real, and it's not going anywhere. Have fun sitting on your pile of gold holding a rifle.

Rifles and bullets will make $#@! out of your ipad. Believe that. Try spending bitcoins if the grid goes down. I suggest you think about taking a more balanced approach.

[willwash]

Can someone explain what bitcoin is. I HAVE a very vague understanding that each unit of the currency has its own unique digital signature and that the algorithm for generating these units has some Mathematical cap on how many can be generated, rendering it physically/chemically/mathematically impossible to counterfeit.

Is there a thread or website that explains the theory behind bitcoin somewhere? The wiki is a little technical.

[kpitcher]

Willwash you're correct. Here's a popular description of what bitcoin is.

https://bitcointalk.org/index.php?topic=7269.0