‘Generation Blockchain’ Issues Demands at TNABC 2016
The cavalcade of the great minds that are shaping the Bitcoin and blockchain industries continued in earnest on Day Two, 22 January, of The North American Bitcoin Conference (TNABC) 2016. Presenters and panelists focused on regulations affecting Bitcoin and its blockchain technology, mining future perspectives, and investments. In addition, student organization “Generation Blockchain,” presented their list of demands that will help them to change the world for the better.
TNABC 2016: Bitcoin & Blockchain Regulatory Trends
Bitcoin cannot be regulated. However exchanges and websites using Bitcoin can be regulated, asserted Joe Colangelo, Executive Director Consumers’ Research. Colangelo and his team authored the “Bretton Woods 2015 White Paper: The Promise of Bitcoin and the Blockchain.” In his presentation, Colangelo referred to this document, which “identiﬁes and explains the opportunities presented by blockchain technologies, the challenges faced by those opportunities, and potential ways to address those challenges.” Recently, Jamie Redman reviewed the Bretton Woods 2015 White Paper here: “The Bretton Woods White Paper Review.”
Jerry Brito, Executive Director of Coin Center, dealt with the question, is Bitcoin regulated? Brito affirms that Bitcoin has never been regulated. However, Bitcoin users and businesses have been subject to regulation since Bitcoin’s inception. He gave a detailed description of the areas of Bitcoin regulation, which are anti-money laundering and terrorist financing, sanctions, consumer protection and others (tax, security, derivatives, and others).
For each of these areas, Brito highlighted the challenges involved with adhering to their specific regulations. For example, according to the U.S. Office of Foreign Asset Control (OFAC), businesses should not deal with individuals or businesses that are included in the Specially Designated National Lists. But how could businesses comply with this regulation when Bitcoin transactions are pseudo-anonymous, involving only cryptographic keys or Bitcoin addresses? Similarly, how could anybody comply with the “business rule” when sending bitcoins across borders? Notice that the “Travel” rule is the ABank Secrecy Act that requires all financial institutions to pass on certain information to the next financial institution, in certain funds transmittals involving more than one financial institution.
Brito also defined the good, the bad, and the ugly of regulations. According to Brito, regulations would be good for the Bitcoin industry because there would be increased clarity for innovators and entrepreneurs, a potential for greater consumer protections, and possible new paradigms for regulation. The bad side of regulations is the risk that ignorance could lead to unintended consequences and a patchwork of local and national laws. He added that the ugly aspect of regulations would be an overreaction toblack swan events, and the unwillingness to adapt to the new reality created by the technology.
Marco Santori, Partner at Pillsbury Winthrop, reviewed the top regulatory changes Bitcoin experienced in 2015. He highlighted the UK Treasury Report and the holistic manner in which it was prepared. For instance, the public was asked to send comments during the preparation of the report. Santori also alluded to the European Court of Justice ruling of taxation, the New York BitLicense and Trust Charter, the SEC determination that some mining contracts are securities, and the U.S. Commodity Futures Trading Commission ruling that bitcoins are commodities. He also mentioned the act he drafted called the Digital Currency Jobs Creation Act.
Santori also discussed what did not happen in 2015. For example, there was no Federal enforcement against unlicensed money services businesses (MSBs), and there was no Federal Enforcement against bitcoin broker-dealers. And, he remarked that during 2015, there were no blockchain technology statutes, regulations, or interpretations.
For 2016, Santori predicts that as the blockchain technology becomes more prominent, some states or federal agencies will want to regulate it. Santori also expects that Virtual Currency Transaction Report (VCTR) requirements could be extended to Bitcoin. Presently, Bitcoin transactions are not subject to VCTR. For auditing purposes, this is a hole for the Financial Crimes Enforcement Network (FinCen).