Podcast: Criminal defense attorney Andrew Ittleman on digital currency law
By: Trace Mayer, J.D.
February 5, 2015
To listen to the podcast, click here.
Federal Marijuana Regulation: Why is Flexibility Critical in the Dawn of Legalization?
January 28th, 2015
Attorneys Andrew Ittleman and Jessika Tuazon of Fuerst Ittleman David & Joseph published their article, “Federal Marijuana Regulation: Why is Flexibility Critical in the Dawn of Legalization?” in the December 2014 issue of the Food and Drug Law Institute’s Food and Drug Policy Forum. A copy of the article is available here.
In the article, Mr. Ittleman and Ms. Tuazon confront “the complex question of how the federal government should go about the process of ending its decades-old prohibition of cannabis and bring about a regulatory regime designed to address the wide array of risks and opportunities presented by legalization.” After describing the history of the federal government’s prohibition of marijuana, as well as the efforts of various states to legalize it in various forms, the article recommends that “rather than attempting to devise a statutory scheme for cannabis in an echo chamber, Congress should be carefully studying the successes and failures of the individual states’ efforts to regulate marijuana, as they are the perfect ‘social and economic experiments’ encouraged by traditional notions of federalism.” The article further suggests that instead of “starting from scratch in developing regulations for marijuana, the government could – and should – borrow elements from regulatory regimes already in place for analogous products.” The article also describes how existing federal agencies – including the FDA, the Alcohol and Tobacco Tax and Trade Bureau (“TTB”), and
the Bureau of Alcohol, Tobacco, Firearms, and Explosives (“ATF”) – could all be delegated jurisdiction by Congress to regulate marijuana, as all three agencies
are well suited to handle the added task of regulating and enforcing laws overseeing the manufacture, distribution, and sale of marijuana.
Most importantly, Mr. Ittleman and Ms. Tuazon recommend that in undertaking the regulation of marijuana, the federal government should proceed flexibly, giving due regard to the marijuana industries already developing in numerous jurisdictions in the United States, as well as regulatory regimes already in place for analogous articles, including alcohol and tobacco. The article concludes with the following recommendations:
First, we respectfully submit that Congress should carefully study the marijuana industries already developing in numerous jurisdictions in the United States, and should likewise invite the individual states to participate in Congress’s legislative process. Additionally, because of the value of the data currently being developed
in states which have legalized marijuana in one way or another, the federal government should support the states in their efforts to regulate marijuana by providing regulatory guidance and law enforcement resources as requested by the states. The federal government should also continue to loosen restrictions on banks and other federally regulated financial institutions wishing to do business with licensed marijuana related companies, as the all-cash business model of the typical dispensary will only lead to security risks and the tainting of the information needed by Congress when considering how to govern the interstate market for cannabis.
Second, we respectfully submit that in evaluating its own regulation of medicinal and recreational cannabis, the federal government should look to regulatory regimes already in place for analogous articles, including alcohol and tobacco. By doing so, the process of writing regulations for the marijuana industry can be far more economical, and will give the regulated industry better notice and more opportunity to comply.
Third, we should all appreciate the scope of the task at hand, and understand that there is much more at issue than simply rescheduling or “legalizing” cannabis. Once prohibition has ended, marijuana may be available nationwide in the form of buds, edibles, drinks, tinctures and concentrates, potentially for medicinal and recreational purposes, and every possible variation on the manufacturing, distribution and use will be subject to regulation. It is therefore critical that Congress proceed deliberately so as to avoid a gap between the end of prohibition and the beginning of regulation, and flexibly so as to take all of the various forms and uses of cannabis into consideration.
Finally, everyone participating in the process of ending the federal government’s prohibition of cannabis should appreciate the magnitude of the black market and understand that it will not disappear overnight following a rescheduling. It is the black market, perhaps above all else, that mandates that Congress proceed deliberately when legalizing cannabis, to ensure that all possible voices are heard and seriously considered. Indeed, if federal regulation of cannabis is overly restrictive, leading to higher costs or elimination of choice for consumers, consumers will revert to the same black markets they have used for the past 40 years. A black market for cannabis – even following a federal rescheduling – will trigger all of the “Cole Memo Priorities” currently sought to be quelled by the Obama administration, including the diversion of profits to criminal enterprises, access to cannabis by children, and other adverse health consequences. Congress should thus take care to end prohibition deliberately, comprehensively, and with due regard for every interested party.
Fuerst Ittleman David & Joseph provides comprehensive representation to highly regulated businesses, including clients operating in the financial services, biotechnology, and international trade industries, and frequently lectures on these subjects for industry trade groups. The firm has more recently been called upon to combine its Food and Drug and Anti-Money Laundering practice areas in assisting marijuana-related businesses achieve financial compliance.
Podcast: Taxing Miners (but not like Forty-Niners) with Andrew Ittleman
January 26, 2015
To listen to the podcast, click here.
#BTCMiami: Regulation Panel Predicts New State Law Imminent — and “Look Out for the Lawsuits”
By: Hal M. Bundrick
January 17, 2015
Panels discussing regulatory issues can be a bit tedious at bitcoin conferences. But this afternoon in Miami at The North American Bitcoin Conference, predictions were made, warnings were issued and attendees may have heard a bit more than they bargained for.
Moderated by Jacob Farber of Perkins Coie, panelists included: Christopher Hopkins of Akerman, Marco Santori of Pillsbury Winthrop Shaw Pittman, Perianne Boring, founder and CEO of the Chamber of Digital Commerce, Kathryn Haun, assistant U.S. Attorney for the organized crime strike force and Andrew Ittleman of Fuerst, Ittleman, David & Joseph. Australian senator Sam Dastyari joined the panel in the second half hour to provide an international view.
The panel was asked to offer predictions of major events imminent in the regulatory realm. Ittleman provided the first fireworks by saying the beleagured bitcoin mining industry has witnessed “a shot across the bow” from the Internal Revenue Service. Ittleman says that unlike traditional mineral mining, Bitcoin miners experience a taxable event “the moment you mine it,” and that taxable event is “a serious one,” even before the asset is sold.
“If their position is going to be tested through audits and ultimately in tax court litigation, it could theoretically make mining, especially in the United States, completely unprofitable — worse than it is now,” Ittleman said. That could damage the bitcoin ecosystem, “worse than anything else.” He expects the already dicey business — suffering thin, if any, profits due to a sagging price and increasing mining difficulty — can expect heightened interest from regulators, likely resulting in the first tax audit of a miner soon.
Haun forecast the industry would see additional “government guidance” soon in matters of cryptocurrency regulations. Unspoken, but perhaps veiled in her prognostication was that the guidance could be issued in the form of enforcement action.
Marco Santori predicted that “a U.S. state” – and not New York, though its BitLicense has been top of the mind in the industry – would be putting the first digital currency-specific law on the books before the end of the second or third quarter of this year.
The panel continued to offer one dire prediction after another for the coming year. Hopkins said that consumer action would be spurred by a wave of lawsuits against cryptocurrency companies whose promises may have exceeded their performance. And Haun added that enforcement of money laundering laws don’t require a business to be officially categorized as a Money Services Business (MSB). Boring said that having a well-implemented and documented compliance program was the first step in staying out of trouble and that the Digital Chamber had resources available to guide such efforts.
Finally, Sam Dastyari, senator for New South Wales, Australia, gave a politician’s view of government regulation, by disputing the notion that for companies to simply “do the right thing” and expect a result of “the best policy outcome” was a mistake. The industry has to lead the initiative in helping structure a framework for regulation he said, rather than unrealistically expecting the government to create new laws that are better than what are already on the books.
To view original article, click here.
Andrew Ittleman will speak on the topic Banking Marijuana
Andrew Ittleman will speak on the topic Banking Marijuana
Andrew Ittleman will speak on the topic Banking Marijuana at the ACAMS (Association of Certified Anti-Money Laundering Professionals) and ACFE (Association of Certified Fraud Examiners) 2014 AML/Fraud Conference on November 7, 2014.
BigLaw Stands To Gain From New US Policy In Cuba
By Carolina Bolado
December 18, 2014
President Barack Obama’s announcement Wednesday that the U.S. would ease travel and trade restrictions with Cuba for the first time since 1961 positions Miami as a departure point for future investments and means major opportunities for lawyers in the hospitality, travel, telecommunications and construction sectors, experts say.
After 18 months of secret talks with Cuban President Raul Castro, Obama announced that the U.S. would begin normalizing diplomatic relations with Cuba and will lift restrictions on interstate money exchange, travel, trade, telecommunications and third-country financial transactions. While the announcement was met with mixed reactions in the political sphere, the legal and business communities looked to the opportunities that may open up with greater interaction with the island nation 90 miles away.
The easing of regulations and restoration of diplomatic relations is a “watershed moment,” according to Pedro Freyre, chairman of Akerman LLP’s international practice, who said he almost fell out of his chair when he heard the announcement.
“It’s not hyperbole to say that this is historic,” Freyre said. “The U.S. and Cuba have not had diplomatic relations since 1961.”
The hospitality and travel business will likely be immediately impacted thanks to loosened restrictions on travel to Cuba, according to Francis Rodriguez, a partner at Shutts & Bowen LLP in Miami. In addition to easing regulations on who can visit Cuba, the announcement that the U.S. would allow Americans to use credit and debit cards on the island will make travel in Cuba easier.
“In the immediate future, we see the primary opportunities for business interests and our clients in the tourist industry, including travel and hospitality,” Rodriguez said. “There has already been a lot of interest in Cuba in those sectors and we expect the president’s comments to increase those interests.”
He expects new opportunities for joint venture agreements with existing travel and hospitality operators to expand facilities and to market Cuba more broadly to the American public.
“Given the reality of the political situation in Cuba, our clients have been measured in their approach to investment in Cuba,” Rodriguez said. “However, the president’s comments may help facilitate Miami as a potential departure point for the investments which our clients wish to cautiously investigate and pursue.”
In many ways, South Florida, the hub of all things Cuban outside of Cuba, could be the epicenter of mid- to small-sized businesses that might want to participate in new opportunities opened up by the easing of regulations, according to Holland & Knight LLP partner Jose Sirven.
Sirven said that in addition to the travel sector, financial institutions, which previously were not permitted to have correspondent accounts with Cuban banks, will feel the immediate effect of the changes and that he expects his financial institution clients to call for advice on how these changes might affect them.
“It’s an immediate change that they need to figure out how to handle,” Sirven said. “They can’t currently have Cuban accounts, but that’s a particular change that the president has requested. It sounds like financial institutions will now be permitted to deal with Cuban banks.”
This will allow for more large-scale commerce to occur between the U.S. and Cuba, as opposed to just the family remittances that are regularly sent back to the island, according to Andrew Ittleman of Fuerst Ittleman David & Joseph PL. His partner at the firm, Mitchell Fuerst, added that he expects change to come quickly after the president’s announcement.
“There is a huge amount of business between the U.S. and Cuba, and it pings off of Colombia, Venezuela, Belize and Guatemala,” Fuerst said. “What you’re going to see is business instead of being directed in some ignoble way is going to go directly from the U.S. The embargo is not down, but I don’t believe that will influence people’s behavior. We’ve seen it already in remittances. With money transfers from the U.S. to Cuba, there is no barrier.”
Other attorneys think the increase in trade and business will be more incremental. Freyre at Akerman does not expect the trade floodgates to open immediately, but he said Obama’s move should facilitate trade in certain areas, beginning with foodstuffs, which are already allowed under the embargo and which U.S. companies have sold to the Cuban government for years. From there, trade could expand in telecommunications, which Obama specifically mentioned in his announcement Wednesday, and possibly construction materials, which are sorely needed on the island, where buildings are crumbling from decades of neglect.
“Step No. 1 is more trade, and that builds confidence and relationships,” Freyre said. “If things go well and there’s a lowering of tensions, you’ll see greater financial compacts and greater flow of goods. If that goes well and Cuba modernizes its corporate law, trade law and judiciary, investors will begin to feel confident that it’s a safe place to invest. It will not happen overnight.”
Among the many announcements made by the president Wednesday, one that exporters to Cuba were relieved to hear is that they will no longer have to wait for payment from Cuba before shipping their products. Cuba will still have to pay in cash for its purchases, but the payment can now be made just before handing over the goods at the port of entry, according to Freyre, who said the small tweak should make trade between the two countries run more smoothly.
But many of the impediments to increased trade come not from the U.S., but from Cuba, where the average citizen makes very little money. Trade is done with the government, which is cash-strapped, has no credit and whose economy is in shambles. The country is particularly suffering now that oil prices have plummeted, as it has in years past sold heavily subsidized Venezuelan oil on the open market to generate cash.
“They can’t rely on Venezuela anymore, which has its own problems,” Doug Jacobson of Jacobson Burton PLLC said. “They have to now fend for themselves, and that’s not easy to do in a truly state-run economy. The economy there is still very much a work in progress.”
Trade in agricultural products will likely increase incrementally, according to Jacobson, who added that suppliers of telecommunications products could also find buyers in not just the Cuban government but also with telecom companies from other countries that operate on the island.
Jacobson, who has worked on Cuba licensing issues for more than two decades, added that though the president’s goal of getting more Cubans connected with smartphones and computers is a good one, the Cuban government’s agenda is a different one.
“Average Cubans have very little access to the Internet, and infrastructure in Cuba is still very very poor,” Jacobson said. “In terms of what we want to accomplish, it sounds great, but if the Cuban government doesn’t want that, it won’t happen.”
Even if the embargo were lifted completely, large-scale changes will need to be made on the island before investors are willing to dip their toes in the market. But re-establishing diplomatic relations is an important first step, according to Freyre.
“We are now taking steps on our side to make things easier,” Freyre said. “We’re opening our valve a little bit. Cuba needs to do the same.”
Western Union BitLicense Response is Pro-Bitcoin, Legal Experts Say
By: Pete Rizzo
December 13, 2014
For many in the bitcoin industry, Western Union is the epitome of everything that’s wrong with traditional finance – one might say it’s the Blockbuster Video of a financial world that is on the verge of a Netflix solution.
As a result of this complicated history, bitcoin commentators took aim at Western Union’s latest act in the digital currency space: its public comment on New York’s controversial BitLicense proposal.
Published last week as part of a release of more than 3,700 comments that included big-name brands like Amazon and Walmart, it was Western Union’s submission that perhaps drew the mostattention and scrutiny, with some critics calling attention to language that was allegedly anti-competitive, and by extension, anti-bitcoin.
Though some passages would seem to support this notion at first glance, legal experts working in the bitcoin space largely disagreed with the interpretation of the community at large.
Speaking to CoinDesk, Pillsbury Winthrop Shaw Pittman attorney Marco Santori summed up this assessment, stating:
“Despite popular opinion to the contrary, Western Union’s recommendations telegraphed support for its involvement in the digital currency industry. Nearly every suggestion, save oversight for placement of kiosks, seemed geared toward creating a workable regulatory environment for all of us.”
While the surveyed legal experts agreed Western Union is certainly viewing developments in the bitcoin ecosystem through the lens of its own business interests, they suggested the filing shows it is seeking to prepare for the technology, should it prove more beneficial to its business model.
Fair playing field
Fuerst Ittleman David & Joseph, PL attorney Andrew Ittleman echoed Santori’s remarks, stating that while larger companies will commonly use regulatory processes to burden smaller competitors, Western Union’s filing shows little evidence that it is looking to engage in such behavior.
Ittleman suggested that big corporations will typically argue for tighter regulation, making the case that in the absence of such rulemaking, they might not have the same incentive to provide their products and services to consumers.
“Western Union’s is different,” Ittleman said. “I think that the tone that Western Union takes is for the most part reasonable, and I don’t think it shows on the part of Western Union some sort of intention to destroy the burgeoning virtual currency industry.”
Gusrae Kaplan Nusbaum PLLC attorney Aaron Kaplan posited that part of the filing can be read to suggest that Western Union may be interested in partnering with the industry.
In particular, he points to the following section, which reads:
“We request clarification that if we provide a money transfer to a consumer who has separately agreed to a transaction directly with a VC Licensee as described in the following examples, we would not be engaged in a Virtual Currency Business Activity.”
Kaplan said that this section further suggests Western Union may also be considering how it could “offer a compliance type service to virtual currency licensees”, while additional portions imply it could use bitcoin to fund money transfers.
More opportunity than threat
Perhaps the most visible lightning rod in the filing for the community has been the perception that Western Union wants the government to approve every bitcoin ATM location, as the machines are popularly viewed as a way to encourage new customers to the ecosystem.
However, to Kaplan, this part of the response actually suggests Western Union wants to clarify whether its existing agent network can become “NYDFS-approved locations for virtual currency kiosks”.
Kaplan suggested that Western Union may be hinting at how it could leverage the size of its operations to deploy the technology, should it become more widely used, while pointing out the positives and negatives of this interpretation.
“Where do you think those approved locations will be?” he asked. “Companies like Western Union with its more than 500,000 agent locations and existing infrastructure ‘approved’ as locations for bitcoin ATMs are definitely anti-competitive.”
One source, who declined to be named in the report, remarked that other parts of the response suggest Western Union sees bitcoin as “more of an opportunity than a threat”.
“You see a number of things that suggest if the world does move in this direction of blockchain-based frameworks, what would make this unworkable for us? If we found ourselves going down that path, what things would we want to nip in the bud now if we found ourselves doing that in the medium to long term?” he said.
In regards to Western Union’s call for clarity on the use of kiosks, the source added, “I saw that as a defensive service.”
Dissenting views
Still, not everyone believes that the filing finds Western Union playing nice with the bitcoin industry.
Kaplan, in particular, is at odds with his colleagues in viewing the filing as a positive sign for bitcoin as a whole, saying it did “nothing to promote innovation in the bitcoin industry”.
“It essentially tries to have the bitcoin industry conform to the business that Western Union is in, the traditional MSB business,” he said, adding that such businesses should be allowed to have a flexible regulatory environment in which to mature.
Kaplan also pointed to what he called Western Union’s bid to remain except from BitLicense registration, as a sign that it is looking for a competitive edge over new competition.
Ultimately, Kaplan called on regulators to help ensure that companies like Western Union aren’t able to block the new industry from blooming, voicing his belief that federal regulation is needed to preempt many varied state laws.
“Such a federal regulatory regime will allow and foster the growth of the bitcoin industry both domestically and internationally,” Kaplan continued. “Comparatively, Western Union’s approach is the same old wine in the same old bottle.”
To view original article, click here.
FinCEN Rules Bitcoin Payment Processors, Exchanges are Money Transmitters
By: Pete Rizzo
October 27, 2014
The Financial Crimes Enforcement Network (FinCEN) has released new guidance for custodial bitcoin exchanges and payment processors, ruling that such companies may be considered money services businesses under US law.
In a response to twin letters submitted in late 2013, the chief US money laundering and terrorist financing regulator explained that bitcoin exchanges may be money transmitters, even if they only match buyers and sellers on their platform. Further, the letters suggest this is true, even if the exchanges behave more like traditional securities or commodities exchanges, where no money is transferred between the company and any counterparty.
While the first of today’s issuances may have been expected by those following the space, the more surprising update is perhaps that such guidance could apply to bitcoin processors as well as exchanges.
The finding is notable as big companies in the sector like BitPay have indicated in the past that their services are exempt from FinCEN‘s guidance as they facilitate purchases between consumers and merchants, only accepting and transmitting funds as necessary to the sale.
However, Pillsbury Winthrop Shaw Pittman attorney Marco Santori told CoinDesk that FinCEN’s latest guidance implies that the exemption only applies in instances where both sides of the transaction are Bank Secrecy Act (BSA) regulated institutions, as is the case in credit card processors, which transfer funds between customer and merchant banks.
Santori explained:
“What most payment processors do today is just accept peoples bitcoin, from wherever those bitcoins may be, possibly their own wallet software […] and accept those coins and send them on to the merchant using whatever software they might be running. What this is saying is that if you’re a merchant payment processor and you’re doing that you’re not exempt from the rules, in fact, you’re a money services business.”
Worrying development
Andrew Ittleman, an attorney at Fuerst Ittleman David & Joseph, PL, further stressed the implications of the rulings, suggesting that they perhaps are a troubling sign for how the industry could be treated by the agency as a whole.
“Based on my reading of these documents, I’m not sure if there’s a limit to the breadth of [the MSB] definition,” he said. “It seems to me that, according to FinCEN, any company that’s dealing with bitcoin is a money transmitter, and I don’t know if I could have said that before before I read the payment processor note.”
In the two letters, FinCEN policy division associate director Jamal El-Hindi outlines the government’s arguments for why the unnamed businesses in question fall under the money transmitter definition. As a result, companies in the US that facilitate such bitcoin transactions may be required to adhere to additional reporting and compliance standards.
FinCEN told CoinDesk that the ruling is meant to be an official opinion to the companies in question, however, and that it may not apply more broadly.
“We encourage businesses to ask us directly if they are uncertain about their status as money transmitters, and to determine if they need to register with FinCEN,” a spokesperson said. “Depending on the specific facts and circumstances described to us, we offer an official opinion. These rulings are not meant to signal trends or to be interpreted as some broad pronouncement for the industry.”
To view original article, click here.
Governor Scott Signs Medical Marijuana Bill
By Brandon Larrabee
The News Service of Florida
June 16, 2014
TALLAHASSEE (CBSMiami/NSF) – Gov. Rick Scott quietly signed a bill Monday legalizing a limited form of medical marijuana known as “Charlotte’s Web,” even as much of the state’s GOP leadership continues battling a constitutional amendment allowing more sweeping use of pot.
The measure (SB 1030) allows some patients to use a strain of marijuana that ttlemans low in euphoria-inducing tetrahydrocannabinol (THC) but high in cannabidiol (CBD) — a mix that supporters say provides the health-care benefits of pot without the high.
The strain is supposed to dramatically reduce life-threatening seizures in children with a rare-form of epilepsy but has not been approved by the U.S. Food and Drug Administration.
“The approval of Charlotte’s Web will ensure that children in Florida who suffer from seizures and other debilitating illnesses will have the medication needed to improve their quality of life,” said Scott, who had announced during the legislative session that he would sign the bill. “I am proud to stand today with families who deserve the ability to provide their children with the best treatment available.”
The governor also signed a measure (SB 1700) shielding patient records related to the use of medical marijuana from public view.
The charge for the legislation was led by Rep. Matt Gaetz, a conservative Fort Walton Beach Republican who took up the cause after discussions with Holley and Peyton Moseley. They say Charlotte’s Web can help their adopted daughter, RayAnn, and children in about 150,000 other Florida families. Gaetz is also the son of Senate President Don Gaetz, R-Niceville.
“Thank you @FLGovScott for signing the Compassionate Medical Cannabis Act! #helpisontheway,” the younger Gaetz wrote in a Twitter post Monday.
The House limited eligible growers to large commercial nurseries that have been in business in Florida for at least 30 years. The measure also requires five distribution centers — one each in the northwest, northeast, central, southeast and southwest parts of the state.
Under the proposal sent to Scott, growers — who will also manufacture the substance and distribute it to users — must also be registered with the Department of Agriculture for the cultivation of more than 400,000 plants and post a $5 million bond.
Scott signed the bill as some conservatives are gearing up to oppose a proposed constitutional amendment, known as Amendment 2, which would allow for more widespread use of medical marijuana without the restrictions on THC content. That measure, backed by Orlando trial attorney and Democratic campaign contributor John Morgan, will go before voters in November.
Andrew Ittleman, an attorney who works on issues facing marijuana businesses in states that have legalized it, underscored the difference between the broader industry and the relatively narrow exception carved out for Charlotte’s Web in Florida.
“We’ve gotten one little variety, one little strain of cannabis passed,” said Ittleman, of the firm Fuerst Ittleman David & Joseph.
But he said that some of the issues that face growers in states like Colorado — where pot growers are facing trouble finding banks, for example — could still emerge in Florida under the law Scott signed, because the federal government would still consider Charlotte’s Web to be a Schedule I drug.
To view original article, click here.
Bitcoin seeps into mainstream
By Jeanine Prezioso
June 13, 2014
Bitcoin – an illusion, a fad, a passing hobby. Not so much. This week, travel web site Expedia.com said it would begin accepting the virtual currency as payment for hotel accommodations and the owner of a Canadian gold mine offered its sale for $2 million in Bitcoin.
Replacing or even comparing gold with a so-called crypto-currency is still something of a reach, but more and more investors are turning their attention toward how Bitcoin can be used for monetary transactions and how they can profit from it.
“I had my first Bitcoin-related client in 2011. I didn’t really “get” it until earlier this year when I started attending Bitcoin conferences and really digging in,” Andrew Ittleman, a partner with Miami, Florida-based Fuerst Ittleman David & Joseph told the Global Markets Forum this week.
The web-based monetary unit remains shrouded in mystery and is often times associated with the spectacular fall of Bitcoin operator Mt. Gox. Skeptics also point to the Silk Road case, the website where illicit activities were being transacted in Bitcoin.
“I think the community at large views the Silk Road case as something that was unfortunate, but a lesson nonetheless. There are still many, many people using it for perfectly legitimate purposes,” Ittleman said.
The issues of how to track the currency, how to use it and how to regulate have been percolating among regulators and the legal community in the last year. The U.S. Internal Revenue Service in March said it would treat Bitcoins as “property” rather than currency. Any money made from the sale of the crypto-currency would be subject to capital gains tax. An investor is responsible for booking a gain or loss from the time they purchase the Bitcoin to the time they sell it.
To make it more user-friendly: “I’ve been arguing that it is now critical for Bitcoin wallet companies to start building “basis trackers” into their wallets,” Ittleman told the GMF.
In April, New York State regulator Benjamin Lawsky said he hopes to have regulations in place this summer so residents can begin using the currency to send money back to family members in other countries for a fraction of the transactional fees.
“If these systems become more efficient, potentially you could do those kinds of transmissions in a much more efficient way and the charges would go down to 1 percent,” Lawsky, superintendent of the New York State Department of Financial Services told the GMF on April 29.
Ittleman echoed those same notions.
“People in the U.S. send billions of dollars a year internationally…and the companies that process those transactions rake in billions in fees. For many people in the Bitcoin space, that is the greatest attribute. The ability to spend money between countries with no currency restrictions. That’s huge!” he said.
