| I'm not a lawyer, but what's likely to happen here is the following: Soon, Mark Karpeles and/or Tibanne Kabushiki Kaisha and/or Mutum Sigillum LLC are likely to be charged with at least one violation of 18 U.S.C. § 1960 for not having a money transmission license in any state. Even though Karpeles broke state laws, it's a federal crime by extension. He may be extradited from wherever he is to the U.S. to stand trial in federal court. What's interesting is that Coinbase, BitPay, Dwolla and every other current/former Bitcoin exchange company is in the exact same boat legally speaking, and yet people still trust them because of deliberately misleading statements they've made on a regular basis, such as last night's joint announcement. None of them are operating legally, whatever they may say. But mostly they don't say, because my company is already suing two of the three over this very fact. Many of them can be linked to Mt. Gox; Dwolla has already stopped dealing with Bitcoin as a result of NY DFS's subpoenas to the best of my knowledge; US DHS also investigated Mutum Sigillum LLC and froze its assets. The irony is that Mt. Gox is most likely in Japan in the first place because of the insane state regulatory structure in the U.S. So our state MTLs push entrepreneurs out, leave consumers high and dry, and make crashes of the sort we're witnessing now more likely. We need a federal regulatory regime; it's a shame that the other entrepreneurs and investors affected--including the ones who run this site--are too cowardly to come out and say it publicly as I have. There's only one exception: Greg Kidd, who is invested in a number of payment companies, including Coinbase, and now works for Ripple. http://fedpaymentsimprovement.org/wp-content/uploads/Greg_Ki... Here's my suggestions for what should happen now: http://www.thinkcomputer.com/20140214.cfpbcomment.pdf |
I like this guy. Greg's pdf is well worth reading (and pretty funny at points) if you're interested in this space.
And while I'm not sure I agree with Aaron's tactics, it's clear that there is a huge problem here: it's impossible for new businesses to innovate in the money transmission industry.
Overall, I agree with both Aaron and Greg's assessment of the problem: state money transmission laws are strangling financial innovation. However, I am very wary of placing more power in the hands of a federal government that failed to act in good faith in this space (see HSBC's fines versus the treatment Bitcoin is getting).
And realistically, some sort of unified state money license requirement like the NMLS is a far more likely outcome than letting the federal government to take over these responsibilities altogether.