Law firm CMS publicised two contrasting approaches to regulating Bitcoin.
Whilst the European Parliament took steps in May 2016 to find out ways to regulate new technology, the Court Circuit of Miami ruled that Bitcoin was undefinable, noting that Bitcoin “had a long way to go” before it could be the equivalent of money.
The differing approaches to the same basic outlook of Europe v America on new technology.
European legal history could be summed up as “Everything is banned/criminalised, unless it is expressly permitted”.
American (and, historically at least, English) common law could be summed up as “Everything is permitted, unless it is expressly banned/criminalised.”
Just as German courts banned taxi-ride service Über and peer-to-peer hostelry service Airbnb, banned cloning, banned genetically-modified crops (provoking this response from Monsanto and damning criticism from the Genetic Literacy Project), the European Parliament’s steps in May 2016 are ostensibly to find out what Bitcoin is, how it works and to propose a ‘light touch’ regulation. But still to regulate it. Presumably if only to say “Bitcoin is lawful, OK?”.
The only alternative explanation for the EP’s act is to kick the issue into touch to keep the European Commission’s sticky fingers from fiddling with it, and ending up with another unworkable equivalent of the Markets in Financial Instruments Directive. MIFID is now in its second edition, and is probably another carefully selected blend of half-measures that look convincing, but just miss their targets. The first edition turned out to be as flexible, as sophisticated, as workable and as useful as Winnie-the-Pooh teaming up with Rupert the Bear to understand the physics of black holes.
I think the EP’s act is best considered in the context of preparing the way for a Eurozone-wide abolition of physical notes and coins (“cash”).
Cash and virtual currencies like Bitcoin pose a direct threat to central bankers, including the European Central Bank. If the objective of monetary policy is to transfer wealth from relatively poor, honest savers to relatively wealth, reckless, feckless borrowers, then the efficacy of the policy is severely undermined when central bank loses its monopoly on a single currency. A plurality of currencies - even black-market currencies - enable us serfy plebs to by-pass banks.
Criminals by-pass banks routinely. When using “legal” money, they have to “launder” it before using it. A virtual currency shortens the laundering cycle considerably.
Criminality is one of two major reasons why the abolition of cash is now a serious policy suggestion in the UK, and is already partially implemented by Norwegian banks and some Dutch supermarkets. The spin of “fighting crime” is something for the masses to swallow easily, but the reality is that enslavement to the bank - and therefore also government - is the inevitable consequence (Bonner, Lynn). And that is the second major reason why the unelected, unaccountable technocrats in charge of monetary policy like it. If you can erode wealth at the press of a button, you can blackmail the serf into spending for the sake of spending. This spending shows up in the economic growth statistics, and the technocrats can say they have created economic growth. Amazing. All without a single bit of value being added to anything.
More generally, talk about banning cash has been doing the rounds for decades. Its proponents tend to get the basics wrong, hence why they think it’s a brilliant idea. Worstall sets out the reality fairly succinctly.
Ultimately, the world has used fiat - unbacked - currencies since the end of the Bretton-Woods system, so the idea that only the state should be entitled to monopolise a fiat currency is immoral, hypocritical and a good excuse for a civil war.
So now that the European Parliament appears to have started down the standard European road of regulation, let’s see how quickly the EP realises that, in so doing, it’s just given credibility to the forces of financial tyranny.
After all, you don’t let a vampire into your house and then hope you can convince him to be a vegan for the night…