Serious question for those of you who want to regulate Bitcoin out of existence:
What do you propose to do with those of us who, despite your attestations of its uselessness, have deemed it useful and purchased it with our hard earned money? For example, MSTR has ~$4 billion in Bitcoin on its balance sheet. It purchased it on the free market for reasons that were valid to it. However, you disagree and want to step in and do something about it. What do you propose to do about entities like MSTR?
Most bitcoin regulation scenarios would just be an ordinary investment risk, in some senses. If you invest in commercial property and then changes in the tax treatment of real estate mean that the value of your investment falls then that just sucks for you. I can't see that it's any different if, for example, the US Government started demanding annual declarations of crypto wallets on tax returns and started taxing capital swings as income.
If cryptocurrency is actually confiscated I'm sure that the US government at least will be obliged to pay out. Given the volatility of bitcoin (and the extent to which it will likely drop if governments come out full square against it) I'm sure there will be legal arguments about what the compensation for the taking should be. But if the use-case is largely either (1) speculation or (2) hiding things from governments and governments limit the upside of (1) with tax or structural changes and crack down on (2) I don't think anyone's going to make the bag-holders whole in case of regulation rather than confiscation. Bigger companies than ~$4bn have gone bankrupt by misreading their market risks before.
> is actually confiscated I'm sure that the US government at least will be obliged to pay out
To be clear, nobody is proposing confiscation. Once regulated, the value of these assets will presumably fall. People invested in casino bonds don't have a magic claim to restitution when gambling laws are updated.
Serious answer: nothing. Absolutely utterly nothing. Why should we? Why is there an expectation that we should? Where does this sense of entitlement come in from those who gambled, that others are responsible for rescuing you out of it?
I assume you understood the landscape, and the risks, and took the gamble as an informed, consenting adult, and are willing to stand by it as an adult if gamble doesn't work out.
If NOT, well that's exactly what regulations are meant to prevent - make it a little bit harder for uninformed or unconsenting people to make a foolish or unaware gamble. Mostly, about treating it the same as everything else under the sun ("cry me a river", as they say:)
If it helps understand my seemingly heartless position: I have exactly as much sympathy and empathy for somebody spending $4bil on crypto, as for investing $4bil in Phillip Morris or another tobacco company a couple of decades ago.
Just because you "deemed it useful" (i.e. hoped to profit massively), doesn't mean we as society cannot decide otherwise and attempt to limit, regulate, inform, or otherwise stop the madness. And we owe you nada.
> If it helps understand my seemingly heartless position: I have exactly as much sympathy and empathy for somebody spending $4bil on crypto, as for investing $4bil in Phillip Morris or another tobacco company a couple of decades ago.
This did help, thank you.
Your gambling metaphor is useful, but incomplete. Consider this instead: You come across your fellow citizens gambling in a casino. You decide they must stop what they are doing for reasons. My original question was basically how do you shutdown the casino in a fair and orderly way?
You seem to be saying that when people lose money playing casino games, that is their problem, they signed up for it when they entered the casino. I agree.
However, suppose gambling were made illegal today. Do you think everyone currently seated at a table, people who entered the casino legally, should lose the money they brought into the casino with them?
I think "increased regulations" is a wide spectrum. Extremes (I believe) are rarely a good thing.
"Confiscate money from all people in Casino" / "Confiscate all Bitcoin" are, I believe, extremes.both
"Issue licenses for gambling, provide oversight, age restrict, run information campaigns about dangers of gambling, create support and help programs", is, I think, reasonable (and we can further discuss details, and we do; "Are loot boxes gambling"; "should state / group X run casinos"; who and how should be able to gamble, what is the right amount if disclosure, what is an informed responsible consenting adult, etc. All good things for us as society to honestly discuss).
"Ensure bitcoin income is taxed (like every other investment), that it follows disclosure rules (like every other investment), that it is open and transparent and licensed, etc cetera", is I think reasonable and merely catches up the playing field and closes off loopholes that EVERYbody knew were temporary loopholes (and smarter people than me can discuss details). "Government should not spend gazillion dollars blindly investing into this technology hoping to find problem to solve" is also, I think, a statement I'd stand behind. And not unique - there are MILLION fads or technologies or endevours I don't want government to invest in, so don't feel picked on :)
IF that latter option still somehow causes everybody involved to lose money... well ain't that just food for thought though, right? It means people were literally banking/hoping/assuming they can do things without oversight and through magical loopholes forever. I don't want to say "illegally" because there may or may not have been a law in time with new technology. But crypto and bitcoin are almost as much fun to discuss as religion with a Christian apologetic - it gets all shifty very quickly; it is and isn't investment, or a transactional system, or currency, or stable, or volatile, or private or public,or efficient, or safe, reversible or fixed, etc etc depending on needs of the moment and which point we're trying to make.
I don't see anything synonymous with "Confiscate" in that letter. I see it as a small attempt to counterpoint the massive over-enthusiasm, bluster, lobbying, and tall tales that abound around crypto (there may or may not be a nugget of useful technology, use case, future approaches in blockchain; willing to discuss that; but anybody that rejects the observable amount of scam and dishonesty in today's actual crypto implementations, investments, sales pitches and pushes and frankly disinformation campaigns, is not having an honest conversation with me and/or is trying to sell me something and/or has been sold/swindled themselves).
I don't think there's a need or way to "shut down all blockchain / crypto / bitcoin". I don't think anybody seriously proposes that. The letter certainly does not. So the analogy of somebody coming in and taking the gamblers' money doesn't apply - not sure how that would even work in terms of confiscation (though the value of any given chain or crypto currency certainly can, and usually should approach zero, but that's empathically not "somebody else stealing my money":).
But I've been in any number of conferences / meetings / governing bodies where a blockchain / crypto evangelist comes in, flashes couple of dozen slides of essentially nothing, and the non-technically astute leaders get hyper excited about something and get all "Shut up and take my money!" ("In the morning, you'll be picked up in a self-driving car powered by blockchain!" is literally the sentence that was uttered - to wide applause. I felt in a Twilight zone of unquestioning zombies). This TERRIFIES me. Governments adopting bitcoin for alternative currency or inserting crypto where it doesn't belong TERRIFIES me. Because yes, eventually it'll be "too big to fail" and we'll now start propping up stupid-ass systems because "Companies invested $4bil into them and we can't let it evaporate into smoke that it should". And now I and mine will be stuck with stupid-ass stuff.
I'm happy to let blockchain and bitcoin and crypto exist. Let them exist in the same regulated ecosystem and world that all of us exist in. Let the enthusiasts enthuse and investors invest and gamblers gamble. But for the love of all that is holly, let's temper that enthusiasm and counter the immense lobbying and hype before it all gets too far down the black rabbit hole of no return and no sanity.
This has to be the least convincing argument for not regulating Bitcoin:
“What about this obscure enterprise software company that took billions of loans to buy Bitcoin? The company’s shareholders would be very sad if they had a margin call on those loans.”
MSTR would presumably have to go back to selling software instead of speculating on unrelated assets. And everybody else can keep their Bitcoins too, it might just not be as easy to convert them to cash.
What was done for those who held vast stores of tulips and tulip bulbs at the end of the tulip craze? As far as I know, very little.
Today companies at least have bankruptcy protection and corporate structures that should shield individuals.
That said, I think Bitcoin should face most of the same regulations that other securities face and in the end I think this will help Bitcoin and other cryptocurrencies. I don't think they should be regulated out of business.
Government has a right to regulate in order to deal with negative externalities and the negative externalities from Bitcoin and other crypto are extremely large. Most of crypto has been various type of financial schemes and regulators should ensure at a minimum that all investors in such schemes were properly accredited and impose regulation if the tokens were historically taking unaccredited investment.
The government also has the right to regulate polluters and even an outright ban is reasonable if they conclude that the environmental cost of proof of work vastly outweighs the very limited use cases and benefits that have been shown to date.
Finally, and I think the strongest argument is the government is allowed to regulate financial transactions. Bitcoin and other crypto intentionally circumvent this by removing the party conducting the financial transaction. Government could conclude this is unreasonable resulting in a ban or could create reporting requirements for any cryptocurrency transaction, subjecting one or both end users to requirements currently dealt with by banks. The idea that crypto-proponents seem to have is that removing the bank should remove all reporting requirements on transactions and I don’t see a reason for that to be true.
I think in aggregate there is a fairly reasonable case for a ban across multiple substantial issues.
And no, the government does not owe people for the price consequences of its regulatory policy. Investors in casinos are not made whole for changes in gambling laws.
They bought a highly speculative vehicle knowing that eventual government intervention was a risk. I feel sort of bad for the little guys who get wiped out thinking it actually had value, the big funds who institutionally should know the risks can eat cake.
> What do you propose to do with those of us who...
Not my problem. It's your life and your money. And of course you know that not everyone who has purchased it has deemed it "useful" beyond the use of hodling until you sell to someone else for more money. I've used BTC myself, to buy drugs 10 years ago. Sadly, it seemed more useful then than it is now.
Anyway, I don't think anything should be done to dramatically affect Bitcoin directly, but there probably should be something done about people taking advantage of the shitcoin market. It's far too easy to make your own crypto and rugpull a bunch of people. I'm quite disgusted with it and with American society's slow cultural procession toward becoming gambling addicts, which is most likely not a coincidence (although, I won't blame crypto for it entirely).
(And no, it's not now nor ever was the same with trading public securities, which have financial statements whose format and structure are regulated by the government.)
You are misconstruing what I wrote, which is that it's not my problem. I don't care what happens to their money, just as I don't think anyone should care what happens to mine. Although, sure, I wish ill on anyone who is using crypto to scam others.
Were you planning on sharing your gains with me? No, right?
If a law gets made saying what MSTR is doing is illegal and they keep doing it, I'm pretty sure what to do involves the police, SEC, etc. Why would one think it's anyone else's problem?
> What do you propose to do with those of us who, despite your attestations of its uselessness, have deemed it useful and purchased it with our hard earned money?
Penalize you for the collateral damage you caused. Bitcoin has consumed a lot of energy and greatly contributed to global warming. In addition, it has led to a bunch of fraud. In addition, it has made ransomware much more common.
The world is worse off because of Bitcoin and because people like you invested in it.
I propose that they should restructure or go out of business, in the same way as a payday loan company might go out of business if it becomes impractical to offer usurious loans. I wouldn’t support anything like a Bitcoin Confiscation Act, but I fundamentally reject the idea that we can’t impose strict regulations on bad financial products without paying off the people who’ve invested in the unregulated version.
I don't think it should be regulation as much as made illegal. I'd encourage all governments to put policy in place to outlaw exchanging crypto for fiat. Until that policy takes action, you can convert still trade in your crypto.
Realistically regulations don't take effect out of nowhere so people would have time to exit their positions. Of course the price would crash but that's going to happen anyway.
What do you propose to do with those of us who, despite your attestations of its uselessness, have deemed it useful and purchased it with our hard earned money? For example, MSTR has ~$4 billion in Bitcoin on its balance sheet. It purchased it on the free market for reasons that were valid to it. However, you disagree and want to step in and do something about it. What do you propose to do about entities like MSTR?