[ukoto]

I agree, but for anyone who wants the summary:

The Bitcoin Foundation is not in the business of selling bitcoin to consumers and does not otherwise operate a bitcoin exchange. Even if it did sell bitcoin to consumers, however, the Foundation believes it would not be regulated as a seller or issuer of payment instruments because a bitcoin is not a payment instrument under California law.

[anigbrowl]

I don't mean to offend, but this is what is wrong with the typical tl;dr summary; you've excerpted a core part of the argument, but you haven't explained the assertion made therein. To follow on (in my own words):

As Bitcoin is a separate currency from the USD, the kind of transactions that Bitcoin Foundation members are engaged in are in effect foreign exchange (forex) transactions, and Forex is not considered subject to money transmission regulations by the state of California.

I'm not sure I buy this argument, but haven't studied the legal background enough to form a proper opinion yet. the reason I was so pleased to see a link to a document with primary sources is that it makes it a lot easier to research the arguments therein, inviting good-faith attempts at falsification.

[bigiain]

Hmmmm, I wonder how strategic this claim is?

Perhaps they're just waiting for the state of California to declare in a legally binding way that Bitcoin is not a "separate currency from the USD". That'd be something a _lot_ of people would love to be able to promote and quote prominently…

[biot]

For those too lazy to read ukoto's post, here's the TL;DR summary:

We don't sell bitcoin; not like it matters anyways.

If that was too long, here's the TL;DR of the Bitcoin Foundation's response to California's Department of Financial Institutions:

You're wrong.

Of course, my point is that if someone is actually interested in bitcoin and learning the legal arguments behind it, don't waste your time with incomplete summaries; just read the actual letter. It only takes a few minutes.

[scoot]

Indeed, but either the DFI knew this, in which case the threat was malicious, or they didn't know this, and the threat was incompetent. Either way, it's not a good position to start from.

[anigbrowl]

There's a third possibility, which is that the BF argument is flawed and the DFI is actually correct.

I'm not at all sure about this and have yet to check, but I have my doubts about whether BTC/$ exchange can truly be called a Foreign Exchange transaction as BTW are not issued by a sovereign entity and thus may not be considered a Foreign Currency for the purposes of this law.

[Dylan16807]

They're still wrong because the foundation is not an exchange in the first place.

[anigbrowl]

Maybe, maybe not. It depends what sort of agency relationship exists between the Foundation and its members, whether the members are considered beneficial owners and so on.

It's not obvious from the website what corporate structure the Bitcoin Foundation has, for example. If it's a nonprofit, it has yet to file a 990 tax form. I find it understandable the the CA regulator wants to know what sort of entity it is dealing with.

[JoshTriplett]

> I find it understandable the the CA regulator wants to know what sort of entity it is dealing with.

That's the kind of thing a regulator should figure out before making legal threats.

[anigbrowl]

I could argue that this is the sort of thing a non-profit ought to figure out before soliciting donations. At present I can find no record of the Bitcoin Foundation having filed for nonprofit status, and they don't explain their corporate structure on their website. You can't just say you're a nonprofit entity, there are rules about how you must apply for that status and what sort of public declarations you must make.

How do you know, for example, that it's not a scam? According to the letter, BF it is incorporated in DC and has offices in Seattle, but good luck finding the address or any other information. Regulators are not psychic, and they're well within their rights to say 'stop soliciting money from the general public until you've made the requisite declarations,' because entities that solicit money without having their paperwork in order often turn out to be operating illegally.

[nullc]

It's a 501(c)(6)— the fact that they are a non-profit is something you should have known in an instant if you bothered looking. Even their bylaws are online: (https://github.com/pmlaw/The-Bitcoin-Foundation-Legal-Repo/b...).

[anigbrowl]

I did bother looking. Why isn't it conspicuously declared on their website? For that matter, why are you averse to supporting your argument with links?

As for their bylaws, I did find those before I wrote my remarks above. Besides the fact that github is not exactly a standard place for posting corporate information, it still doesn't include things like the address of the Seattle offices.

This is the entity data file with the Distict of Columbia: https://corp.dcra.dc.gov/BizEntity.aspx/ViewEntityData?entit... ...you may need to create an account to view this.

Map: https://www.google.com/maps/preview#!q=5431+41st+Pl+NW%2C+Wa...

The Bitcoin Foundation has not filed any documents with the SEC according to an SEC EDGAR search, nor can I find any existing IRS 990 record. I'm not a lawyer, and especially not a corporate lawyer, but I think you're required to file with those entities if you're a company and if you're claiming nonprofit status, respectively. Why haven't they done so, and why doesn't their website have any of that information available?

As for why the state of CA is involved, the fact that the BF has organized a conference in San Jose seems sufficient to establish minimum contact required to say that the company has operations in California.