Um, duh? That one is literally right in the Constitution (between regulating Coinage and control of interstate commerce).
http://en.wikipedia.org/wiki/Christopher_Bechtler#The_Bechtl...
This move with regard to Bitcoin is merely Bank.Gov trying to protect its monopoly on the issuing of currency.
What this says is that any commercial exchange is subject to government regulation.
"To coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures;"
As I had to explain the difference between lunch and arbitrary use of government power, do I also have to explain the difference between government of consent and tyranny?
It's not your fault; this is just a really terrible venue for political discussions.
The overarching power of government is the problem, not how we discuss it on the net.
Actually, it is Congress. Specifically, the Court ruled that the use of bitcoins for the transactions at issue does not (as the defendant attempted to argue) cause them to fall outside the scope of the Exchange Act of 1934.
You can't defraud someone in any currency in the US. Or launder money or perform illegal activities. I can't mug a tourist and take the money out of their wallet and then claim that because I didn't steal any US currency I'm not a thief.
This case isn't about regulating authority over currency. Its about whether the fact that an investment was sold for bitcoins isntead of a fiat currency takes that investment out of the scope of the definition of "securities" subject to various provisions of the Exchange Act relating to securities fraud.
Yes, but as I understand it, foreign currency within the US is still regulated.
The fact that Congress chooses, for a time, not to exercise a power within the scope of its enumerated powers in Art. I does not in any way change the fact that it is an enumerated power.
> This move with regard to Bitcoin is merely Bank.Gov trying to protect its monopoly on the issuing of currency.
No, this is about punishing fraud in selling investments, not about issuing currency.
Were that true, the principals of Goldman Sachs would be in jail.
No, actually, that has nothing to do with what the issues in this case are.
If you want to make the argument that there is evidence (whether from their response to Goldman-Sachs or otherwise) that the SEC's interest in the case at issue here is not securities fraud, go ahead and make the argument.
Waving your hand in the direction of Goldman-Sachs, however, is not making that argument.
Any medium of exchange can theoretically be used as currency (e.g. cartons of cigarettes in prison, or cans of chewing tobacco on a submerged submarine on its third month of patrol).
Whether the government pays attention to it or not will depend on whether that type of currency starts to act as coinage or as a medium of interstate commerce, but just because the government doesn't deign to notice cowrie shells being used for trade doesn't mean they don't have the power to regulate it.
They were. The government's reaction to the popularity of the Bechtler coins was to open two mints in North Carolina, not to "regulate" Bechtler's coins.
The government does not lose enumerated powers, or the ability to apply them in a particular manner, because it chose not to apply them in that manner at one time in the past in a similar circumstance.
You can, of course, make the argument that, power aside, the government should not use its enumerated powers in the way in question and should instead act as it did in the past case, but that takes more than waving your hand in the direction of the past case and asserting that it exists and therefore the restraint the government exercised then must be repeated, it takes actually making the case that that decision would be correct in the present circumstances.
Generation to generation, the natural tendency of a relative minority is to seek and maintain influence over the many. This is reflected in the continued advance of the power of the State over the rights and liberties of its citizens. Unlike our own political vocabulary, The Greeks had terms for this particular dynamic: hoi polloi and hoi oligoi.
> You can, of course, make the argument that, power aside, the government should not use its enumerated powers in the way in question and should instead act as it did in the past case
My larger argument is more fundamental. If power is asserted over rights often enough, there will be few, if any, actual rights left.
Perhaps. But in this case you're not speaking of any actual 'right' that people had in the first place, so there's no right that would be eroded by SEC action here.
I haven't read the decision yet, but the justification in the article is weak. If Bitcoin is a currency because it can be exchanged for dollars and other real currencies, anything I can sell on Ebay is a currency as well. I guess the SEC will crack down on fraudulent dealers on ebay now.
"To coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures;"
So the Constitution gives Congress not just the right to issue currency, but to regulate both its own currency and other currencies.
In any case, Shavers's argument was ridiculous to begin with. He claimed that his investments didn't fall under the umbrella of the SEC because Bitcoin isn't money. But the SEC regulates securities, not currency. A security is just a tradeable financial instrument. The subject of the security doesn't have to be, and often isn't, money. E.g. a share in a corporation is not backed by dollars, it's backed by an ownership stake in some legal entity.
To be clear, I'm devil's advocate arguing that this probably shouldn't be an SEC case, not that he hasn't committed a prosecutable fraud.
Securities always represent a legal obligation to something. A stock represents legal ownership of a legally recognized organization. If this guy wasn't making such binding obligations, as I suspect he wasn't, it isn't a securities issue - just fraud.
Because applied this broadly, the SEC would therefore regulate as Securities Dealers: Ebay, Baseball Card publishers, and Blizzard's World of Warcraft.
You've got a good point that, depending on how Shavers's investment was structured, he might not have been issuing anything that could be called a security. But he was billing it as a "bitcoin hedge fund" so if there was some sort of tradable interest in the fund that would in fact be a security.
Actually I think there is a bit of a tradition of the SEC prosecuting people for purporting to sell securities, even if they legally weren't. So I'd say that should be the basis of prosecution as opposed to "Bitcoin = Money."
I'm mostly just sore that the SEC hasn't bothered to prosecute MF Global principals, as that was outright, straightforward Securities Fraud.
[1] http://www.archive.org/download/gov.uscourts.txed.146063/gov...
It's also not saying Bitcoin is official legal tender, just that for purposes of investment and securities law, it's a form of "money" and fraud involving Bitcoin investments can be prosecuted under existing securities law.
From the decision: "It is clear that Bitcoin can be used as money. It can be used to purchase goods or services, and as Shavers stated, used to pay for individual living expenses. The only limitation of Bitcoin is that it is limited to those places that accept it as currency. However, it can also be exchanged for conventional currencies, such as the U.S. dollar, Euro, Yen, and Yuan. Therefore, Bitcoin is a currency or form of money, and investors wishing to invest in BTCST provided an investment of money."
Exchangeability for other currencies isn't the only factor, the real factor is "it can be used as money", and further, that the defendant in the case agreed that it can be used as money.
> I guess the SEC will crack down on fraudulent dealers on ebay now.
If they were selling securities contracts (which is the issue here) on ebay , the SEC would already be cracking down on them.
Shaver tried to argue that the contracts he was selling were not securities contracts because they were being sold for bitcoins rather than dollars, among other arguments.
The important part of this news seems to be that bitcoin is indeed going to be a currency. That currencies can be regulated is not news at all.
In computing terms, the definition of a local variable in one scope doesn't tell you anything about a variable with the same name in a different scope.