(4) include procedures for the maintenance of back-up facilities, systems,
and infrastructure as well as alternative staffing and other resources
to enable the timely recovery of data and documentation and to resume
operations as soon as reasonably possible following a disruption to
normal business activities;
...
(3) Source code reviews. Each Licensee shall have an independent,
qualified third party conduct a source code review of any internally
developed proprietary software used in the Licensee’s business
operations, at least annually.
A lot of these regs may have started out as Best Practices, but shouldn't regulations focus on the What, not the How? Also, the right place for these regs, if we must have them, are under FinCEN at the Federal level. If you watch some of their presentations, some smart people working there whom I'm sure would love to tackle this in a way that doesn't create an quagmire of conflicting and overlapping state regs.
A little passage in some old document about interstate commerce comes to mind.
The great thing about Bitcoin is this only applies to 3rd party companies wanting to assist you in transferring bitcoin, it doesn't apply at all to individual transfers between private entities. So this will do a lot to encourage private wallet software over centralized points of failure and intelligence gathering. For that, at least, you can thank NY.
Rrriiight. Good luck making it past the Commerce Clause, trying to thieve what is an enshrined Federal power ("To regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes").
Who are these chumps that so enjoy playing with themselves in the public forum? Why do they think they're not stepping all over the constitution by imposing burdens on commercial activities that happen to intersect with NY?
They'll have no problem making it past of the commerce clause. The law doesn't matter, politics do.
The rule of law is not a self-enforcing principle, it's a political equilibrium built around a consensus. Checks and balances mean that it's somewhat detrimental to depart from this consensus, which is why it's stable.
However, it's not a very tight equilibrium. The restoring forces are weak, and they keep weakening over time.
The states are what give the constitution its authority, not vice versa. The commerce clause is part of the fed govt's "enumerated" powers, meaning that the fed govt only has the powers listed in the Constitution. The states, however, have the "police power", letting them pass pretty much whatever laws they want.
When it comes to the commerce clause, courts have decided to let states do what they want, more or less, unless a specific federal law "preempts" the state one.
I understand the state's fear after the Mt. Gox fallout but their effort seems too overreaching. How could they possibly enforce _all_ citizens and businesses involved in cryptocurrencies to have licenses, hold 10 years of records, etc.?
OTOH, would there be a way to hold currency exchanges legally accountable without breaking cryptocurrencies?
There are too many stupid exchanges that scam peoples' coins and this seems like a barrier to adoption for lots of people. It would be nice to just push $100 from a bank account into a bitcoin account (like paypal does).
This is an interesting question and answer. I personally believe that legislation will be forced to change so that de jure can more closely resemble de facto...
But this will not happen (anytime soon) while NY lawmakers think they can tax or regulate something.
That some part of "The Government" thinks they can regulate something that is not theirs is laughable.
They've done (and continue to do) enough harm regulating their fiat currency. Who gives them the right, and more importantly, how can they be so delusional to think they can actually regulate something that is built in such a way as to be regulation-proof?
Where's the torrent regulation PDF? These folks are clowns.
> They've done (and continue to do) enough harm regulating their fiat currency.
It is extraordinarily easy to point out how shitty a job the Fed has been doing from a society that completely depends on it. When you compare how the American financial system has been doing compared to the rest of the world the results are astoundingly in our favor.
I find it difficult to understand how Bitcoin enthusiasts can so thoroughly discount how well our current system actually functions. There are no questions that there are deficiencies in the current system, but the Btc community hasn't seemed to even identify what they actually are, much less propose solutions in any reasonable way.
Propose, for instance, how HSBC would be prevented from laundering money for literal international terrorists and drug dealers. Or remittances, another Btc enthusiast favorite: do you really think the fees you are paying Western Union are related to flipping bits and not to keeping massive stores of cash, securely, in remote locations? Maybe some day cash wont be necessary, but we are extremely far from that point, and until we are there Btc remittances are essentially useless.
> That some part of "The Government" thinks they can regulate something that is not theirs is laughable.
That some part of our culture thinks it is reasonable to create a new currency and not have the government regulate it is laughable.
>I find it difficult to understand how Bitcoin enthusiasts can so thoroughly discount how well our current system actually functions. There are no questions that there are deficiencies in the current system, but the Btc community hasn't seemed to even identify what they actually are, much less propose solutions in any reasonable way.
A large percentage of the Bitcoin community's view on this front appears to be "past regulations have occasionally failed, therefore we shouldn't have any regulations." This makes no sense. It would be like your home being broken into and so you decide that you are better of leaving your door unlocked.
I'm not exactly sure what you mean by commercial banks issuing paper, and deposit banks buying. I think you mean investment banks issuing securities and commercial banks buying?
The reason Glass Steagall is important is because it stops commercial banks from needing to behave like an investment bank. Especially with publicly traded banks, you have entirely different types of investors with different expectations investing in investment banks vs. commercial banks, and that puts a huge amount of pressure on the commercial side of a merged bank to behave with similar risk profile to its ibank sibling. When they aren't merged there is significantly less pressure to buy higher risk securities. I think there's huge value in having both an aggressive ibanking system and a separate, stable commercial banking system, so yeah, I think we should bring back Glass Steagall.
The occupy wall street quip is unnecessary, don't do that stuff.
I did mean investment bank, thanks for correcting.
How are investors putting pressure on a bank? Investors are the owners of the bank, they don't "put pressure", they manage their property. Investors will want their property to grow and issue dividends as much as possible - investment bank or not. Calling it a deposit bank isn't going to change that.
The risk profile of investors is also not a consideration. More risk aggressive investors can simply leverage themselves. Investors want the risk level that's appropriate for the business. They may disagree on what that level is, but that disagreement will stem from different strategic outlooks and not from personal preferences.
An again: so ibanks cannot fund investments from deposits? That becomes entirely irrelevant the minute you have a liquid commercial paper market. Instead of investing deposits, the ibank will simply borrow money short term from a bank that has deposits. This is what happened in practice. It even happened with companies like GE which became de faco ibanks thanks to their high credit rating.
And yes, this means the deposit bank will be exposed to the risks the ibank is taking. If you want to regulate that out, you'll have to require banks be entirely in cash or treasuries. Glass-Steagall won't do.
The goal is not to make it so commercial banks cannot buy certain securities. The goal is to make it so they don't feel like they have to just to keep up with the Joneses. If they decide independently that they want to run their banks by investing in higher risk securities I'm fine with that, because in the history of banking that's just not what's happened (until, of course, the major parts of Glass Steagall were repealed). Commercial banks tend to have very different customer bases than investment banks, and they have investors* that they can keep happy without investing in higher risk securities.
*Edit: /s/customers/investors
> Investors want the risk level that's appropriate for the business.
How do you determine the appropriate risk level for a business half of whom's goal is to provide explosive growth and half to provide long term, stable, lending?
> They may disagree on what that level is, but that disagreement will stem from different strategic outlooks and not from personal preferences.
I agree entirely. Don't you agree the strategic outlook of an investment bank is entirely different than that of a commercial bank?
>Don't you agree the strategic outlook of an investment bank is entirely different than that of a commercial bank?
I do which is why banks will specialize in different niches regardless of regulation.
No law prevents a cement making company from leveraging itself like crazy and invest it all in high risk / high reward biotech research. And yet you don't see that happening.
Also, you fail to address the argument that a liquid commercial paper market gives ibanks de facto access to deposits.
> No law prevents a cement making company from leveraging itself like crazy and invest it all in high risk / high reward biotech research. And yet you don't see that happening.
And yet we did see commercial banks taking massive risk and going bankrupt because of it. Maybe that's ok though, I could certainly buy the argument that that's just the market.
> Also, you fail to address the argument that a liquid commercial paper market gives ibanks de facto access to deposits.
I don't know what you mean by that. Do you mean ibanks can buy publicly traded commercial bank stocks?
Edit: And let's bring this back around: if this is not the appropriate regulation, what is? Open to hearing something better for sure.
>And yet we did see commercial banks taking massive risk and going bankrupt because of it
The depositors were insured, so the depositors didn't care. The bank shareholders had a free call option from the federal government in the form of an an implicit bailout guarantee, so they were incentivised to take as much risk as possible.
> I don't know what you mean by that. Do you mean ibanks can buy publicly traded commercial bank stocks?
Without Glass-Steagall: commercial bank takes 90$ from Joe's 100$ deposit and invests it in leveraged CDO^2 on Bhutanese real estate.
With Glass-Steagall: commercial bank takes 90$ from Joe's 100$ deposit and buys 30-day debt from an ibank. The ibank use the money to invest in leveraged CDO^2 on Bhutanese real estate.
Yeah that all makes sense, but if we aren't going to prevent commercial banks from buying high risk securities, it also seems like the FDIC shouldn't be insuring them.
- There's no checks in place to see if the account transferring the money actually has enough funds. The money is moved and rolled back once the bank finds out
- It's legitimately difficult to move or accept non-cash payments through a bank (without Stripe/Braintree etc.)
- Checks are still valid
- Banks charge for incoming transfers (I don't understand this still)
It's more like it has had to do well; it's all we have had. Compared to Europe, it's really not great.
There is a much better alternative out there now. And it's tenable.
Yep, I think that's totally fair. European banking infrastructure is definitely superior. I work in payments, believe me I know about the short comings of the ACH system :)
A lot of my main comment was more about how the Fed/Govt handled/handles the fiat currency of the US and the bailout. On those fronts I think we are doing significantly better than the Euro and Europe's response to the financial crisis.
You're right, but I think they are, unfortunately, part of the capital T capital G, scare quotes "The Goverment" when talking about regulating fiat currency.
It sounds like you're saying that if I create something I can simply declare it to be exempt from any laws I don't like. The whole point of laws is that they're not voluntary.
As for torrents, there is that thing called copyright law.
Yes, and how has copyright law been faring on the face of torrents?
What I'm saying is that it's silly to try and regulate things that are mathematically designed to withstand any regulation. I do not believe unenforceable laws are the way to go. If the government prefers that we do things differently then it should lead by example, convince by arguments, etc, just like anyone else. Instead they're acting childishly by passing laws that regulate something they don't even understand, and that ultimately are not amenable to regulation.
Bitcoin is not "mathematically designed" to withstand regulation. The mathematical aspect of the system involves only its technical operation; it's designed to avoid certain classes of technical attacks on the system. If anything, it's more amenable to certain types of regulation than cash is—paying someone in cash doesn't make an entry in a public blockchain.
the government has effectively 0 control over bitcoin. They can control the population in the US (or in this case, NY state) that uses it. But outside of that they can get bent.
http://www.reddit.com/r/Bitcoin/comments/2aycxs/hi_this_is_b...