SHARING AMERICA'S TECH NEWS FROM THE VALLEY TO THE ALLEY
by John Matonis, courtesy Forbes.com
[Disclosure: Author serves on Board of Directors for Bitcoin Foundation.]
The Bitcoin Foundation is a nonprofit corporation registered in Washington, D.C. with mailing address in Seattle, WA. As a nonprofit, its mission is to standardize and promote the open source Bitcoin protocol and they receive generous support from individuals and corporations to advance those objectives. The foundation also boasts significant international membership.
One activity that the foundation does not engage in is the owning, controlling, or conducting of money transmission business. Furthermore, that activity would also be against the original charter of the foundation. As general counsel for the Bitcoin Foundation, Patrick Murck has lead responsibility for corresponding with the California Department of Financial Institutions.
At this stage, it’s difficult to tell whether or not it was a general blanket action and if other bitcoin-related entities received cease and desist letters from California. If Bitcoin Foundation was not the only recipient, then expect other companies to come forward in the days and weeks ahead.
The issued letter was signed by State of California Senior Counsel Paul T. Crayton and the letter was copied to Department of Financial Institutions Deputy Commissioner Robert Venchiarutti, who also serves on the Board of Directors of the Money Transmitter Regulators Association, ironically a national nonprofit organization dedicated to the efficient and effective regulation of the money transmission industry.
Recently, the State of Illinois also issued a cease and desist letter to mobile payments processor Square for failing to have the proper licensing in accordance with the state’s Transmitters of Money Act. Prepaid card provider NetSpend and six other payments companies also received Illinois cease and desist orders. If this practice grows among states, it could have a potentially significant “chilling effect” on financial services innovation, especially upon lawful businesses that are designing infrastructure to support and grow the Bitcoin technology. Freedom of choice in currencies is probably the most important free speech issue of our time.
For similar but not wholly unrelated reasons, the Electronic Frontier Foundation and several law school clinics established the collaborative archive Chilling Effects Clearinghouse in 2001 to protect lawful online activity from harassing legal threats related to intellectual property.
Harkening back to the saga of FaceCash and Aaron Greenspan, this new far-reaching action from California’s financial regulator apparently now scoops up nonprofit scientific and educational organizations. California, the cradle of technological innovation and home to the inspiring Silicon Valley venture capital community, is now focusing its sights on the futuristic Bitcoin.
The cease and desist order is included below:
Thank you, TiA