HomeBusinessPolitics
Archive

On November 5th, the United States put into effect the harshest round of sanctions on Iran to date, scaling back Tehran’s ability to do business with foreign entities significantly. As a result of these

With an abundance of energy provided by the mighty Itaipú dam in Paraguay; a dilemma arises. Should the country invest in the sprouting crypto-mining industry, or invest in tackling the country’s immediate poverty?

Wyoming is a mountainous, sparsely-populated rectangle located in the middle of the United States. Despite its landlocked position, many Wyomingites are laying legal foundations to make it a harbor for the virtual world.

Pyrite’s metallic sheen and pale brass-yellow hue gives it a superficial resemblance to gold, leading to the well-known nickname of “fool’s gold.”

Forks happen. I think it’s a good thing. I don’t support Bitcoin Cash (and don’t even get me started on Segwit2x), but I believe that anyone has the right to adapt open-source software to tailor it to their vision of what it should be. With Bitcoin, this ensures that the system remains fair.

Established in the early 1970s, the petrodollar has secured the United States’ influence over the oil trade for over 40 years, but recently, it is clear that this monopoly is slowly beginning to fall apart – in some part due to the influence of Bitcoin and other emerging cryptocurrencies.

Hacker's Congress in Paralelni Polis saw speakers such as Peter Todd of Bitcoin Core and Amir Taaki discuss a range of topics from bitcoin technicalities to the applications of bitcoin on libertarian ecosystems.

Chino:  “All the banks are scared of the NY rules.”

On October 10 a confrontation is scheduled which may significantly affect the future of bitcoin in many parts of the world. And if you’re a crypto freedom advocate anywhere near New York, bitcoin businessman Theo Chino is requesting your presence at it.

The New York Supreme Court is to hear arguments in his upstart challenge against the infamous BitLicense. Its New York’s onerous but velvet-gloved attempt at regulating bitcoin businesses.  Although, as Wikipedia puts it, the regulation does not forbid “merchants and consumers that utilize virtual currency solely for the purchase or sale of goods or services or for investment purposes,” it has (also according to Wikipedia) resulted in at least ten bitcoin businesses announcing they would cease doing business in New York. 

A French national who nevertheless has deep roots in New York, Chino developed crypto-commerce of his own there.

“I had installed Bitcoin processing in about 150 bodegas in Northern Manhattan and in the Bronx,” Chino writes. “I figured a way to earn their trust… that is why I was under the radar of so many people… and that is what gives me standing to sue.”

Ernest Hancock from FreedomsPhoenix argues that NY authorities probably thought they were going to close the flap before any “uncontrolled people” had entered the golden tent.  Chino, being a small business, may have taken them by surprise.

“I have a bank in a garage,” Chino says, pointing out that this is how Hewlett-Packard got started. “You have to start in the technology world in the garage.”

That is what Chino is standing up for… the ability for crypto businesses to start small and easily do business with banks.  He has challenged the license by mounting an “Article 78” lawsuit. As LawNY.org puts it, “An Article 78 proceeding is used to appeal the decision of a New York State or local agency to the New York courts.”

Chino writes that his team will be naming these grievances:

“1. Violation of the Separation of Powers Doctrine and Ultra Vires Conduct

Meaning that the legislature did not give NYDFS the authority to regulate bitcoin.

2. Arbitrary and Capricious Regulation

And even if the legislature did, Bitcoin is ridiculously small that is completely arbitrary (like asking a kid to get a CDL license to ride a Big Wheel Tricycle in the event he decides to get on the Interstate.)

3. Federal Preemption

And if it’s OK with two above, then Dodd Franck has since passed and it’s the Fed that can regulate.

4. Violation of the First Amendment of the U.S. Constitution and the New York Constitution

And after all that, what they are asking I disclose is worse that cigarettes.”

At its core, Chino believes this case rests on the question “what is bitcoin?”  He says the New York Department of Financial Services’ argument that it has the authority to “BitLicense” only makes sense if bitcoin is defined as money.  He also says it will affect how and sometimes whether crypto-businesses around the world can exist… because of New York’s leverage over banks elsewhere.  Nevertheless, he says the issue has been under-reported, even in the “crypto press.”

“The big name reporters… are not saying a single word,” he tells Crypto Insider by e-mail, “They reported on the Bitfinex suing the Wells Fargo; but they are not saying a words on my case nor Morpheus case. From the specialized media: about just underneath of the bare minimum.”

Some blockchainers do not consider the BitLicense a major impediment. The pithy bitcoin bull Richard Heart says regulations like the BitLicense actually helped bitcoin by making it practical for Coinbase.com to, as he put it, “easily onboard millions of new people into the system.”

Chino sees a smaller picture.

“Bitcoin is a censorship resistant store of value,” he writes, “and like every one tells me, is that regardless of what the government does, so what you are doing is useless.”

“Now, the problem, it is resistant however, now and then, the government is able to break it; and each time the government breaks it, it sweeps all those people into jail (at least those who committed what the government considers illegal).”

“If we don’t fight, we accept that the government will be snooping into our shit and we will always looks into our back to make sure that the government is not monitoring us regardless of what we use Bitcoin for.”

“Bitcoin is not censorship resistant since the government made it illegal to create a business if one doesn’t apply AML/KML rules (know your customer). And if you decide to use it outside AML/KML, the government will target you as someone doing something illegal. That is why (Arizona bitcoiner) Morpheus is in jail.”

He also believes the BitLicense limits the growth of “bit-businesses” all over the world.

“Ask Bitfinex,” he writes, referring to this incident.

“Any business that does bitcoin that need a bank, will never get one, because all the banks are scared of the NY rules. Bitfinex transfer had nothing to do with the United States (somewhere in Africa to Taiwan I believe) but the money was frozen in the US. So it doesn’t matter where you are in the world, the NYS rules will apply to any bank doing business with you.

Chino says the impact of a victory for his side would be “restoring the censorship-resistant aspect of crypto because the government will be prevented to establish rules. [sic]”

Chino has been crashing speeches by NY bitcoin regulators… questioning officials on camera. Toward the end of this video he interrupts the District Attorney.  Others pressure him to pipe down, but both officials do answer at least one of his questions and maintain a calm, respectful demeanor toward the activist.  Chino reports that to his knowledge, no officials have yet attempted to intimidate or retaliate against him.

In one of Tom Clancy’s novels, a politician accidentally cements the legitimacy of an allegedly-illegitimate president by filing a suit against him which names him as… president. Could a Chino victory have its own unintended negative consequences for crypto users?  Could it stem the arguably healthy decentralization process in which promising finance institutions are leaving and avoiding New York?  In attacking flawed local over-regulation by somewhat-accessible, somewhat-limited New York officials – arguing this is at least partly a Federal matter – could it help cement or grow the rule of a much less accountable Power, the central government?

Anything bad is usually possible, but the BitLicense situation is sufficiently stifling that there may not be much to lose by losing it.  As Wikipedia puts it: “… as of January 2017 only three BitLicenses were awarded, multiple applicants also tried to receive it, but were all denied.”  That was after the license had been in effect for over two years.  If U.S. historical precedent is any indication, a defeat for the BitLicense would tend to discourage that type of regulation from spreading to other states.  It would presumably provide a morale boost and a sense that the bitcoin community is now a hardened legal target (somewhat like Apple) capable of peaceably defeating unusually powerful authorities with only a tiny segment of its community engaged.

The practical nature of bitcoin is about more than just price… we already knew drugs went up in price when outlawed/over-regulated… but we simultaneously know that this can make them more dangerous and comes with a massive human cost. Bitcoin prices might benefit from or withstand laws that restrict how people use it. But the little people trading it or looking to start businesses… won’t.

“They should care,” writes Chino.

The court event has already been rescheduled at least once, so you may want to check the Meetup page for updates and changes before trying to attend.

Cash is expensive. And across the world, countries without currencies often have to pay huge premiums just to use another country’s money. But a new trend has emerging in the digital era; many of these countries are looking toward the crypto-realm for a solution.

Palestine

In the years following the Oslo I Accord, signed in 1993, Palestine’s political system was implemented, the Palestine Monetary Authority (PMA) was created, Palestinians were issued passports, and finally, in 2015, the UN raised Palestine’s flag. But the country still lacks its own currency.

Since the termination of the British Mandate for Palestine, the country has used multiple currencies in different frequency depending on the region.  Three main currencies are common throughout Palestine; the U.S. dollar and Jordanian dinar are most common in higher value purchases such as houses, land, or cars, while most day to day transactions will involve the new Israeli shekel (NIS). This is due to 1994’s Paris Protocol which gave Palestine a central bank, however without the capacity to issue its own currency, forcing a dependence on the Israeli economy.

The Protocol on Economic Relations, originally supposed to last only 5 years – but still in place today – is an agreement between the Palestine Liberation Organization and Israel. The protocol essentially merged the economies of Israel and Palestine, with Israel remaining in control. A key negotiation was a measure that which allowed Palestinians to continue work in Israel.

The protocol regulates taxes, labor, agriculture, and industry. Israel acts as Palestine’s trade conduit and dictates all taxes and VAT on goods imported through Israel. This system has created an advantage for Israel, with the country abusing the clearance system for political reasons, withholding revenue payments which severely impacted the Palestinian economy.

Use case

With no currency of its own, circulating and spending money in Palestine is not as easy as it may seem. Most stores do not accept credit or debit cards and withdrawing cash from 3 out of 4 of the country’s major banks will leave the recipient with Jordanian dinar which will then need to be converted to NIS.

Not only is the process complicated, but it is expensive. The official newspaper of the Palestine National Authority, Al-Hayat al-Jadida, explained that the country loses $1.6-billion every year due to its lack of its own national currency.

Because of the tremendous challenges involved with not having a currency of its own, Palestine has announced an initiative to create a currency inspired by bitcoin technology.

Early 2017, Azzam Shawwa, the Governor of Palestine Monetary Authority, announced the intention to develop a digital currency within the next 5 years.

Shawwa noted: “That is something we would like to see; It will be called the Palestinian pound.”

The PMA is still weighing its options. While creating its own cryptocurrency could be a promising fix, the authority is also looking to accepting up to 4 currencies, or adopting one as its primary.  The complications with Israel and the inability to actually print its own money make the digital currency solution very appealing for the PMA.

“If we print currency, to get it into the country you would always need clearance from the Israelis and that could be an obstacle; So that is why we don’t want to go into it,” said Shawwa.

As the Palestine Monetary Authority mulls over the idea of the Palestinian pound, it remains unclear of how it would impact the Paris Protocol, but it could provide the country with an option to forge its independence both in identity and on an economic level previously unobtainable.

While simply using bitcoin presents several challenges through its fees and the amount of time to process transactions, cryptocurrencies are quickly becoming a reasonable solution to difficult economic issues which countries without currencies are experiencing.

Max Keiser wrote in 2013: “The Palestinian economy is a multi-billion-dollar economy that unfortunately benefits mostly outsiders. But if Bitcoin were adopted as the official currency, Palestinians would be able to shape their own economic destiny and in so doing their sovereign destiny.”

/