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An act to amend Financial and Corporations Codes relating to digital currency

leginfo.legislature.ca.gov

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Re: An act to amend Financial and Corporations Codes relating to digital currency

#31

Post by mhluongo »

verisimilidude wrote: post #12

Some meat from page 30 about the definition of "digital currency business" for the purposes of this act... (d) “Digital currency business” means the business of offering or providing the service of storing, transmitting, exchanging, or issuing digital currency. “Digital currency business” does not include the following: (1) Transmission of digital currency where the transaction is undertaken for non financial purpose…

On first read, it looks like this doesn't cover merchants accepting digital currency, or using it to pay invoices. I hope that's the intent as well.

Re: An act to amend Financial and Corporations Codes relating to digital currency

#32

Post by Animats »

mhluongo wrote: post #26
Hermel wrote: post #25

Earlier quoted context omitted.

As someone who has suffered a significant loss from the Bitfinex hack, I still prefer technical over regulatory solutions. You should also note that Bitfinex used to have a much more secure setup, with most of its Bitcoins being stored in cold, offline storage. However, US regulation required them to use segregated accounts for each user. Under such a requirement, the cold storage variant does not work any more, so t…

I think the CFTC interference is overstated- BitFinex still could have segregated cold wallets for the whales, and I've heard they made the change primarily in response to the last hack. I want the CFTC interference to be the primary issue, though- it certainly fits the narrative and would be a great lesson going forward. Note: I also lost money on the hack.

Offline combined storage is not a more secure setup if the problem is insider theft. Mt. Gox had offline storage controlled by Mark Karpeles. Given how hard it is to find the principals of this company, this looks like an inside job.

Re: An act to amend Financial and Corporations Codes relating to digital currency

#33

Post by jsprogrammer »

dogecoinbase wrote: post #29
jsprogrammer wrote: post #27

Earlier quoted context omitted.

Missing is a definition of what "value" is. My Bitcoin is a digital representation of the bits needed to solve a particular block. It doesn't represent value, but a numerical solution to a mathematical problem.

Playing dumb only makes you look dumb. Judges/legislators/basically everyone can see right through this kind of pretense and aren't particularly sympathetic to the "b...but I'm technically correct!" stance.

Technically correct is the only kind; no pretense needed.

>Playing dumb only makes you look dumb.

Re: An act to amend Financial and Corporations Codes relating to digital currency

#34

Post by will_brown »

verisimilidude wrote: post #18
verisimilidude wrote: post #12

Some meat from page 30 about the definition of "digital currency business" for the purposes of this act... (d) “Digital currency business” means the business of offering or providing the service of storing, transmitting, exchanging, or issuing digital currency. “Digital currency business” does not include the following: (1) Transmission of digital currency where the transaction is undertaken for non financial purpose…

For my part, the wording in #1 looks especially flimsy. What the hell does "nominal" mean? Is "nominal" measured against some absolute dollar value, or against the scope of the task/services rendered? It's not hard to imagine some massive smart contract transactions that would require a lot of resources to perform, but which wouldn't otherwise have any financial purpose. Would those be deemed too costly, not nominall…

>What the hell does "nominal" mean?

Off the top of my head, I think the Federal Law for Money Transmitter Business (MTB) carves out businesses for up to $100/day so unless a company is registered as a MTB I think that would be the daily cap.

Re: An act to amend Financial and Corporations Codes relating to digital currency

#35

Post by rnbrady »

Hermel wrote: post #25
Animats wrote: post #23

Read "The $65 million Bitfinex hack shows that it is impossible to tell a good bitcoin company from a bad one"[1] on Quartz. They can't even find the company's offices. The Hong Kong address is a mail drop. The British Virgin Islands address is a mail drop. The CEO is missing. Looks a lot like an inside job. Fingerprinting cryptocurrency company management is a good idea. [1] http://qz.com/753958/the-65-million-bitfi…

As someone who has suffered a significant loss from the Bitfinex hack, I still prefer technical over regulatory solutions. You should also note that Bitfinex used to have a much more secure setup, with most of its Bitcoins being stored in cold, offline storage. However, US regulation required them to use segregated accounts for each user. Under such a requirement, the cold storage variant does not work any more, so t…

Surely cold storage is compatible with segregated accounts using payment channels or one of the other novel Bitcoin mechanisms. But if not, and cold-storage had to be abandoned, then that would have been a good signal to walk away.

And if accounts had to be segregated then losses should have been segregated too, not socialised.

Re: An act to amend Financial and Corporations Codes relating to digital currency

#36

Post by jdavis703 »

djrogers wrote: post #19
verisimilidude wrote: post #18

Earlier quoted context omitted.

For my part, the wording in #1 looks especially flimsy. What the hell does "nominal" mean? Is "nominal" measured against some absolute dollar value, or against the scope of the task/services rendered? It's not hard to imagine some massive smart contract transactions that would require a lot of resources to perform, but which wouldn't otherwise have any financial purpose. Would those be deemed too costly, not nominall…

It's vague on purpose, as vagueness gives the appointed bureaucrats more power in their rule-making processes. Strict, detailed laws don't give them any extra leeway to make rules that favor rent-seekers and friends.

On the flip-side flexible rules allow for regulatory agencies to adapt and respond to changing conditions without having to wait on a legislative body to get around to updating its rules.

Re: An act to amend Financial and Corporations Codes relating to digital currency

#37

Post by Spivak »

shepardrtc wrote: post #30
jsprogrammer wrote: post #27

Earlier quoted context omitted.

Missing is a definition of what "value" is. My Bitcoin is a digital representation of the bits needed to solve a particular block. It doesn't represent value, but a numerical solution to a mathematical problem.

It represents the resource and infrastructure investment needed to calculate the solution to a block. The resource being electricity, and the infrastructure being the computer and any peripherals needed (i.e. expensive video card).

It represents the resource and infrastructure investment needed to produce the note. The resources being ink and paper, and the infrastructure being the machinery, labor, electricity, gas and trucks needed.

You're not really arguing that currency derives its value from the material cost of producing it, are you? Because then everything is a currency. Modern currencies are special precisely because they have much more value than their material cost.

Re: An act to amend Financial and Corporations Codes relating to digital currency

#38

Post by smokeyj »

dogecoinbase wrote: post #29
jsprogrammer wrote: post #27

Earlier quoted context omitted.

Missing is a definition of what "value" is. My Bitcoin is a digital representation of the bits needed to solve a particular block. It doesn't represent value, but a numerical solution to a mathematical problem.

Playing dumb only makes you look dumb. Judges/legislators/basically everyone can see right through this kind of pretense and aren't particularly sympathetic to the "b...but I'm technically correct!" stance.

> and aren't particularly sympathetic to the "b...but I'm technically correct!" stance.

That stance is called the rule of law and being technically correct matters. That's the whole point of that court thing.

http://time.com/money/4421955/bitcoin-miami-judge-money-laun...

Re: An act to amend Financial and Corporations Codes relating to digital currency

#39

Post by milcron »

r00fus wrote: post #3

So what constitutes a digital currency? I mean, I've heard arguments that BTC is really an asset being traded. Didn't see that Also: looks like proposed fee has been increased to $5000 from $500 (didn't look for other details). Amusing that legalese is essentially similar to code, but without variable declarations (ie, $digitalcurrency := "currency that's traded online, including but not restricted to BTC, etc") it's…

Legalese does have variable declarations, they just look a little different and are used more sparingly. For example, look at section 17 of Facebook's terms of service: https://www.facebook.com/terms

The interesting part about legalese is that you get to argue with the compiler.

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