One would think that California has so many problems that concerning itself with a tiny crypto currency might be last on its list. Alas, that is not the case. In what seems to be a fishing expedition, California’s Department of Financial Institutions issued a cease and desist order to Bitcoin Foundation. The order is to stop engaging in the “business of money transmission”. But the Bitcoin Foundation does no such thing, hence the strong suspicion that California is trying to gather information on Bitcoin’s operations , without having to uncover any pesky “evidence” on its own. At Forbes, a member of Bitcoin Foundation describes it thusly:
The Bitcoin Foundation is a nonprofit corporation registered in Washington, D.C. with mailing address in Seattle, WA. As a nonprofit, its mission is to standardize and promote the open source Bitcoin protocol and it receives generous support from individuals and corporations to advance those objectives. (snip) One activity that the foundation does not engage in is the owning, controlling, or conducting of money transmission business. Furthermore, that activity would also be against the original charter of the foundation.
So, while clearly the organization has more than a passing interest in seeing the currency succeed, it does not actually run the operation. Of course, the whole idea of Bitcoin in the first place is that no one “runs” anything. So what is a poor regulator to do? Well, he goes after anyone and everyone to try to get them to stop facilitating and educating. And there are indications that more than Bitcoin Foundation has come under the boot of the government:
Peter Vessenes, head of the Bitcoin Foundation, went further. “The state of California is blanket C&D-ing all Bitcoin businesses,” he claimed, on Y Combinator’s Hacker News site.
And the state of Illinois, another government wallowing in unsustainable debts, is also in on the party of harassment. A bunch of payment companies, such as NetSpend have received cease and desist orders. The idea here seems obvious. Yes, of course they are on a mission to find out information about Bitcoin, and threatening companies with fines of a thousand dollars a day (or more), will likely get some very quick responses with no research required. Call me cynical, but doesn’t there seem to be an unsaid motivation here as well? As relatively tiny as Bitcoin may be, you can be assured that the big financial institutions are well aware of it. Coincidentally, those cease and desist orders are not going after Bitcoin as a currency, but as potential competition of their payment services. Visa, Mastercard, Paypal etc. make quite a lot on those services and with Bitcoin’s setup allowing for money transfers at a near zero cost, their very existence is under threat (long-term of course). And those big companies are known to give generously to politicians (ever heard the term too-big-to-fail?) — See, I told you I was being cynical. With Litecoin, Ripple and other crypto currencies popping up, it remains to be seen if these governments will be playing the equivalent of whack-a-mole for the foreseeable future. Maybe these actions will be enough to scare any present or future “payment service” companies from getting involved with Bitcoin or other currencies. But the internet is a big place, so eventually these currencies will probably win out, in some form or another, and sooner rather than later.
One would think that California has so many problems that concerning itself with a tiny crypto currency might be last on its list. Alas, that is not the case. In what seems to be a fishing expedition, California’s Department of Financial Institutions issued a cease and desist order to Bitcoin Foundation. The order is to stop engaging in the “business of money transmission”. But the Bitcoin Foundation does no such thing, hence the strong suspicion that California is trying to gather information on Bitcoin’s operations , without having to uncover any pesky “evidence” on its own. At Forbes, a member of Bitcoin Foundation describes it thusly:
The Bitcoin Foundation is a nonprofit corporation registered in Washington, D.C. with mailing address in Seattle, WA. As a nonprofit, its mission is to standardize and promote the open source Bitcoin protocol and it receives generous support from individuals and corporations to advance those objectives. (snip) One activity that the foundation does not engage in is the owning, controlling, or conducting of money transmission business. Furthermore, that activity would also be against the original charter of the foundation.
So, while clearly the organization has more than a passing interest in seeing the currency succeed, it does not actually run the operation. Of course, the whole idea of Bitcoin in the first place is that no one “runs” anything. So what is a poor regulator to do? Well, he goes after anyone and everyone to try to get them to stop facilitating and educating. And there are indications that more than Bitcoin Foundation has come under the boot of the government:
Peter Vessenes, head of the Bitcoin Foundation, went further. “The state of California is blanket C&D-ing all Bitcoin businesses,” he claimed, on Y Combinator’s Hacker News site.
And the state of Illinois, another government wallowing in unsustainable debts, is also in on the party of harassment. A bunch of payment companies, such as NetSpend have received cease and desist orders. The idea here seems obvious. Yes, of course they are on a mission to find out information about Bitcoin, and threatening companies with fines of a thousand dollars a day (or more), will likely get some very quick responses with no research required. Call me cynical, but doesn’t there seem to be an unsaid motivation here as well? As relatively tiny as Bitcoin may be, you can be assured that the big financial institutions are well aware of it. Coincidentally, those cease and desist orders are not going after Bitcoin as a currency, but as potential competition of their payment services. Visa, Mastercard, Paypal etc. make quite a lot on those services and with Bitcoin’s setup allowing for money transfers at a near zero cost, their very existence is under threat (long-term of course). And those big companies are known to give generously to politicians (ever heard the term too-big-to-fail?) — See, I told you I was being cynical. With Litecoin, Ripple and other crypto currencies popping up, it remains to be seen if these governments will be playing the equivalent of whack-a-mole for the foreseeable future. Maybe these actions will be enough to scare any present or future “payment service” companies from getting involved with Bitcoin or other currencies. But the internet is a big place, so eventually these currencies will probably win out, in some form or another, and sooner rather than later.
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