1. Bitcoin Legal & Regulatory Environment
Digital Currency, Real Revenue

2. Digital Currency, Real Revenue
About me
Todd Erickson-
Bitcoin Foundation, Regulatory Affairs Committee
Professional background:
Senior Vice President and COO in a Credit Union
Senior role in organizations in Government, Destination Resorts, Restaurants, Banks and also as an euntrapenuer
A Lifetime Technologist and Austrian Economics
Owns and operates a Horse Park
Digital Currency, Real Revenue

3. The Invention of Bitcoin
“Satoshi Nakamoto” (2008)
Bitcoin: A Peer-to-Peer Electronic Cash System
- Abstract: A purely peer-to-peer version of electronic cash would allow online payments to be sent directly from one party to another without going through a financial institution
Directly in response to Central Bank’s manipulation of the money supply
First Transaction message: “The Times 03/Jan/2009 Chancellor on brink of second bailout for banks”

4. Bitcoin allows...
→ The publicly verifiable transfer of the ownership of an asset (or fractional portion) without requiring a trusted 3rd party
Person #1
Person #2

5. Historical Transfer Model
→ Possession was Law
→ Currency: Commodities, Metals
→ Limitations: Portability, Fungibility
Person #1
Person #2
Store of Wealth
Financial
Institution

6. → Currency: Paper (Fiat)
Modern Transfer Model
→ Trusted 3rd Party
→ Currency: Paper (Fiat)
→ Limitations: Durability, Fungibility, Portability
Person #1
Person #2
Method of payment
Financial
Institution
Store of Wealth

7. Digital Transfer Model
→ 2 party transfers
→ Currency: CryptoCurrency
→ Limitations: Intrinsic value
Method of payment
Person #1
Person #2
Store of Wealth
Financial
Institution
????

8. Bitcoin is... Bitcoin bitcoin
→ Electronic Cash, Currency of the Internet, Money 2.0
→ The internationalization of money
→ Facilites the global commoditization of labor
Bitcoin
→ A Distributed Global Payment Network
bitcoin
→ A Digital Currency Unit

9. bitcoin the Currency What makes for “Good” Money?
Aristotle’s Four Criteria for Money
Durability: No decay, and like the internet, there’s no single point of failure
Portability: Carry millions on a phone, thumb drive, or even in your brain
Fungibility: Divisible to , each one identical and interchangeable with all others
Intrinsic Value?: Useful, scarce, programmable money...or not

10. Bitcoin the Payment Network
First of its kind
Open-source code, fully transparent
Decentralized, peer-to-peer operation
Public ledger of every transaction ever made
Push transactions, private info stays private
Irreversible payments, optional fees
Send any amount anywhere instantly
Consensus in real-time on a global scale!

11. Bitcoin is NOT...
Bitcoin is not recognized by the U.S. or any foreign government as legal tender.
Bitcoin is not a check, and does not involve any document or writing.
Bitcoin is not an instrument or device for the payment or transmission of monetary value; like a dollar or a peso, it is itself the monetary value.
Bitcoin does not obligate any third party to pay its value to its holder; Bitcoin itself is the payment and value.

12. Bitcoin is NOT...
Bitcoin is not a stored value device; it is not a card or other tangible object, and no party besides the holder of bitcoin himself stores any value.
Bitcoin is a “push” system, unlike bank accounts and credit cards, which are “pull” systems that can be debited without the owner’s knowledge or permission.
Bitcoin transactions do not require providing any personally identifying information that hackers can steal or marketers can appropriate.
Bitcoin is a decentralized, peer-to-peer system where bitcoins are sent directly from one person to another over a network of computers, without requiring a third party money transmitter or bank.

14. Digital Currency, Real Revenue
Regulatory Outline
Bitcoin is legal, can be legally used for commerce
Many corporate partners already do! Expedia, Overstock.com, Dell
Many early adopters ran afoul of the law
Silk Road, BitInstant and many others
Many States have ruled on Digital Currencies
Specifically: Bitcoin is NOT money for transmission purposes (which is opposite of Federal Policy)
Bitcoin’s unique properties still make it difficult to legally classify but progress is being steadily made
Digital Currency, Real Revenue

15. Regulation (as of 5/8/2015)
Domestically here are the watershed documents
FINCEN
IRS -
GAO -
Texas legal documents

16. Regulation (as of 5/8/2015) Domestically here are major recognitions
Federal Reserve -
Bank of America -
And a host of others -

17. Regulation (as of 5/8/2015)
North Carolina (2nd largest banking State in U.S.) -
NC Commissioner of Banks – VC Corner
May 2015 – Money Transmitter Act proposed
Virtual Currency. While we are still waiting on final rules for the New York BitLicense, North Carolina has addressed virtual currency regulation under its existing money transmitter framework and has arguably done a better job than some other states that have taken a similar approach, particularly relating to permissible investments. The proposed amendment allows virtual currency to serve as a permissible investment “to the extent of outstanding transmission obligations received by the licensee in like-kind virtual currency.”

18. Regulation (as of 5/8/2015)
Internationally there is also A LOT of varying guidance
China, Singapore, Korea, Thailand, India, Germany, France, Denmark, Norway, Switzerland, Poland, Slovenea
ECB Guidance -

19. Risk Factors What are the largest risk factors
Federal Regulatory Guidance Change
Governments adopt their own flavor
Cost / Compliance burden unprofitable
Management-Study-Spring-2014.pdf

20. Who is Watching? Who is paying close attention to this emerging trend
Governments (primarily due to money the potential for money laundering)
Banks – How this affects wealth, investments, payments and saving
Payment Processors (Visa, MC) – Payments and remittances