Appendix 1: How Enter into Circulation and Are Used in Transactions

© The Author(s) 2018 253 R. Girasa, Regulation of and Technologies, Palgrave Studies in Financial Services Technology, https://doi.org/10.1007/978-3-319-78509-7 254 Appendix 1: How Bitcoins Enter into Circulation and Are Used…

*Government Accountability Office,Virtual Currencies: Emerging Regulatory, Law Enforcement, and Consumer Protection Challenges, Report to the Committee on Homeland Security and Governmental Affairs, U.S. Senate, GAO-14-496 (May, 2014), at 42, ­https://www.gao.gov/ assets/670/663678.pdf  Appendix 2: SEC Commissioner Jay Clayton’s List of Questions Investors Should Ask Before Engaging in Cryptocurrencies1

Who exactly am I contracting with?

• Who is issuing and sponsoring the product, what are their back- grounds, and have they provided a full and complete description of the product? Do they have a clear written business plan that I understand? • Who is promoting or marketing the product, what are their back- grounds, and are they licensed to sell the product? Have they been paid to promote the product? • Where is the enterprise located?

Where is my money going and what will be it be used for? Is my money going to be used to “cash out” others? What specific rights come with my investment? Are there financial statements? If so, are they audited, and by whom? Is there trading data? If so, is there some way to verify it? How, when, and at what cost can I sell my investment? For example, do I have a right to give the token or coin back to the company or to receive a refund? Can I resell the coin or token, and if so, are there any limitations on my ability to resell?

© The Author(s) 2018 255 R. Girasa, Regulation of Cryptocurrencies and Blockchain Technologies, Palgrave Studies in Financial Services Technology, https://doi.org/10.1007/978-3-319-78509-7 256 Appendix 2: SEC Commissioner Jay Clayton’s List of Questions…

If a digital wallet is involved, what happens if I lose the key? Will I still have access to my investment? If a blockchain is used, is the blockchain open and public? Has the code been published, and has there been an independent cybersecurity audit? Has the offering been structured to comply with the securities laws and, if not, what implications will that have for the stability of the enter- prise and the value of my investment? What legal protections may or may not be available in the event of fraud, a hack, malware, or a downturn in business prospects? Who will be responsible for refunding my investment if something goes wrong? If I do have legal rights, can I effectively enforce them and will there be adequate funds to compensate me if my rights are violated?

Note

1. Jay Clayton, Statement on Cryptocurrencies and Initial Coin Offerings (Dec. 11, 2017), SEC Public Statement, https://www.sec.gov/news/ public-statement/statement-clayton-2017-12-11 Index1

A Anti- Act on Settlement of Funds, 241n70 regulations, 228 Active Mining Corp., 129 Appleberg, S., 241n66 Adams, D. W., 107n16 Application Specific Integrated Airbitclub, 232 Circuits (ASICs), 37, 40 Airbnb, 39, 42 Apte, P., 22n7 Alabama, 116 Apuzzo, M., 165n26 Alabama Securities Commission, 105 Aragon Jurisdiction Network, 60 Alajandro Gomez de la Cruz, 244n96 Argentina, 208, 209 Alaska, 127 Arizona, 123 AlphaBay, 145–146 Armenia, 246n124 Altcoins, 47, 48 Arkansas, 127 Althauser, J., 241n64, 242n76, 251n7 Asahi Metal Industry Co. v. Superior Amended Settlement Act, 221 Court, 59, 67n3 American Express, 44 ASICs, see Application Specific American Institute of Certified Public Integrated Circuits Accountants (AICPA), 184–186 Association of Commodity Anti-money laundering regulations, Exchange Firms, 111n63 209, 231 Athwal, N., 193n6

1 Note: Page numbers followed by ‘n’ refer to notes.

© The Author(s) 2018 257 R. Girasa, Regulation of Cryptocurrencies and Blockchain Technologies, Palgrave Studies in Financial Services Technology, https://doi.org/10.1007/978-3-319-78509-7 258 Index

Australia, 209–210 , 11, 30, 71–72, 81, 82, 84, Australian Securities and Investments 85, 150, 159, 184, 185, Commission, 210 189–191, 207–214, 217–219, Austria, 210 221, 222, 224–226, 228, 230, Autonomous Machine Economy, 41 232–235, 247, 250 bubble, 249 CFDs in, 204 B community banks and Bahu, M., 221 exchanges, 232 Banco Santander, 34 vs. , 40–41 Bangladesh Bank, 232 illegal and fraudulent use of, 215 Bangladesh, virtual currencies interpretation, banning in, 232 authority over, 89–90 Bank for International Settlements mining machines, 142 (BIS), 23n23, 199–200, 236n1 as money, 151 Bank Indonesia, 219, 241n63 purchase and trade of, 215 Banking Act, 221 regulation of, 208 Banking Regulation and Supervision transactions in, 228 Agency (BRSA), 230 wallet, 224 Bank of America, 44 working of, 35–36 Bank of Finland, 215 See also specific entries Bank of Lithuania, 222 Bitcoin ATM, 121, 214 Bank of New York Mellon, 83 Bitcoin Ban Notice, 234 Bank of Portugal, 225 Bitcoin-based payment system, 149 Bank of Thailand, 230 , 213 Bank of the Netherlands, 223 Bitcoin Co. Ltd., 230 Bank Secrecy Act (BSA), 93, 97–99 Bitcoin Forum, 61 Barclays Bank, 34, 248 Bitcoinmania, 214 Barlin, R., 196n60 Bitcoin Ponzi scheme, 157 Barter system, 3–4 , 129 Bassok, M., 241n66 , 14 Beattie, A., 53n35 BitKingdom, 232 Belarus, 211, 246n124 BitLicense, 118–120 Belgium, 210 Bitpay, 43 Beltran, L. G., 244n100 Bitsewa Bensonoff, K., 125, 126 exchange, 234 Benthall, B., 149 Bittrex, 14 , 14 Blake, A., 165n27 Binded, 65 Blockai, see Binded Index 259

Blockchain and Virtual Currency C Regulation, 218 California, 116–117 Blockchain digital transformation Canada, 212–213 process, 249 Canadian Securities Administrators Blockchain technology, 25n38, (CSA), 212 29–32, 72, 78, 192, 206, Canadian securities laws, 154 218, 248, 249 Canepa, F., 240n49 banks and, 34 Capaccioli, S., 241n67 types of, 32–33 Caspar algorithm, 32 uses of, 33–34 Caviar, 125, 126 See also specific entries CBOE, see Chicago Board Bloomberg, J., 106n3 Options Exchange Blundell-Wignall, A., 237n23 CBOE Futures Exchange (CFE), 87 BNP Paribas, 34 CDOs, see Collateralized debt Boehm, J. L., 106n9, 106n13 obligations Bohannon, J., 166n34 Central Bank of Hungary, 218 Bolivian Supervisory Authority of Central Bank of Ireland, 219 the Financial System, 232 Central Bank of Jordan, 221–222 Bolivia’s Central Bank (BCB), 232 Central Bank of the UAE, 230 Bolivia, virtual currencies Centralized virtual currency, 10 banning in, 232 Central Processing Unit (CPU), Bolton, N., 251n4 37, 47 Borge, D., 245n107 CEX.IO, 14 Boylan, D., 106n4 CFDs, see Contracts for difference Braun, S., 238n33 CFPB, see Consumer Financial Brazil, 211 Protection Bureau BRICS Interbank Cooperation Chainalsis Inc., 72, 190–191 Mechanism, 235 Charitable contributions, 187 Bridges, S. W., 150 Charitable crowdfunding, 180 Brokers, 173–176 Charity-based model, 180 Brown, T., 133n3 Chicago Board Options Exchange Bruins, K., 237n21 (CBOE), 13, 87–90 Budovsky, A., 145 Chicago Mercantile Exchange Bulgaria, 211 (CME), 13, 87 Business model sustainability, 200 Chino v. New York Dept. Buterin, V., 12, 39, 41 of Financial Services, 134n15 Butterfly Labs, 142 Chou, P., 86 Buyback, 4 Chung, F., 26n47 Byrne, P., 48 Citibank, 34 260 Index

Claasen, L., 130, 131 self-certification announcement, Clayton, J., 78, 80, 108n35, 154, 90–92 255–256, 256n1 Community banks, 232 Clearing arrangement, 4 Compensation, 4, 82, 125, CME, see Chicago Mercantile 173–175, 177 Exchange Concurrent jurisdiction, 58 , 12, 14, 100, 120, 125, Conference of State Bank Supervisors 189–190, 213 (CSBS), 130–132, CoinCorner, 12 137n57, 137n58 Coinfy, 12 Congressional bill, 191 CoinMama, 14 Congressional Blockchain Coin.mx, 143, 151 Caucus, 191 Collectibles Club, 143 Connecticut, 117 Collective investment schemes, Consortium blockchain, 33 204, 226 Consumer education, 90, 92 Colorado, 127 Consumer Financial Protection Columbia, 213 Bureau (CFPB), Committee on Payments and 17, 102, 113n96 Market Infrastructures, Consumer Ombudsman, 214 199, 236n2 Consumer protection Commodity Exchange Act (CEA), resource page, 92 83, 84, 109n47, 159 Contracts for difference (CFDs), 204 Commodity Futures Trading Convertible virtual currency, 10, 13, Commission (CFTC), 16–17, 24n31, 94–96, 98, 126, 127, 62, 83–84, 87, 110n62, 183, 186, 189 111n67, 111n68, 111n70, Copyright, 65–66 111n71 Corda, 35, 248 v. Bitfinex, 85–86 Costa Rica, 32 civil enforcement, 157 Counterfeiting, 162n2, 163n3 v. Dean, 159, 167n47 Counter purchase, 4 v. Gelfman, 157–158, 167n44 Countertrade, 4 v. LedgerX, LLC and Cox, J., 197n69 TeraExchange, 86–87 CPU, see Central Processing Unit v. McDonnell, 158–159, 167n46 Crater, R., 160 v. My Big Coin Pay, Inc., Credit Suisse, 34 160–161, 167n48 Criminal prosecutions principle-based approach, 90 United States v. BTC-e, 143–144 prohibited activities, 84 United States v. Murgio, 143 Index 261

Croatia, 213 D Croatian National Bank, 213 Dáil Éireann Crowdfunding, 74, 76, 78, (Assembly of Ireland), 219 170–171, 217, 222 DAO, see Decentralized congressional proposals to tax Autonomous Organization virtual currency transaction, Darkcoin, 43 191–192 Darknet prosecutions, 144 debt-model, 180 , 35, 43, 48 FATCA, 187–188 Davidson, K. A., 244n102 platforms of, 179–181 DCMs, see Designated Contract SEC Final Rule, 171–179 Markets Cryptocurrencies, 9, 11, 24n31, 73, DCO, see Digital Clearing 80, 82, 105, 170, 185, 191, Organization 211, 212, 214, 217, 219, D-Colorado, 191 228, 230 DC POS, 12 anonymous use of, 207 Dean, D. M., 159 exchanges, 217 Decentralized Autonomous future of, 247–250 Organization (DAO), nature and valuing of, 207 45, 76–79 offerings, 212 Decentralized model, 71 purchase and trade of, 223 Decentralized virtual currency, risks of, 217 10, 11, 35 trading, ban of, 228 Defcon, 149 types of, 35–50 Delaware, 123, 162 variations of, 41–44 Deloitte, 2 See also specific entries Denmark, 214 Tax Fairness Derivabit, 84, 85 Act of 2017, 191 Designated Contract Markets Cryptofraud, 210 (DCMs), 84, 87, 109n49 Cryptography, 29 Digital Clearing Organization Cummings, D., 245n113 (DCO), 87 Customer Identification Program, Digital currencies, 8, 9, 101, 210, 132, 152 211, 248 Cyber Unit of the SEC’s benefits of, 14–15 Enforcement Division, 74 exchange services of buying and Cyprus, 144, 213–214 selling, 210 Czech Republic, 214 risks of, 15–16 262 Index

Digital technology Enforcement of securities laws, 74 legal issues, 57–66 ENISA, see European Union Agency key actors in, 11–14 Network and Information See also specific entries Security Digital tokens, 45–50, 217, 226, 233 Enterprise Ethereum Alliance, 39 Digital transformation, 1–21, 249 Equities Rule, NYSE, 83 Dimon, J., 247–249 Equity-based model, 180 Distributed technology Espinosa, M., 124 (DLT), 2, 18, 19, 29, 30, 34, Esposito, A., 252n15 63, 74, 88, 103, 125, 169, 186, Estonia, 214–215 203–205, 208, 231, 247, 248 Ethereum, 11, 12, 31, 32, 35, 39, Dmitriev, K., 235 46–49, 170, 189, 228 Dodd-Frank Act, see Dodd-Frank blockchain, 76, 78, 248 Wall Street Reform and comparison with Bitcoin, 40–41 Consumer Protection Act Ettinger, A. T., 108n32 Dodd-Frank Wall Street Reform and EU, see European Union Consumer Protection Act, EU Blockchain Observatory and 101, 102, 113n95 Forum, 206 , 47, 48 EU Fourth Anti-Money Laundering Dong He, 23n25, 192n2 Directive, 231 Dragonchain, 12 Eurasian Economic Union (EEU), Dread Pirate Roberts, 148, 150 235, 246n124 Dutch auction, 47 European Banking Authority, 226 Dynamic Coalition on Blockchain European Central Bank (ECB), Technologies, 203 25n33, 201, 214, 215, 220, 236n4, 236n5 European Commission, 202, 236n8, E 237n11, 237n17 eBay, 39 European Court of Justice Ruling, Economist, The, 5, 88 206–207 Ecuador, virtual currencies European Parliament, 23n22, 27n54, banning in, 234 203, 236n7 E-krona, 229 European Securities and Markets “Electronic” currency exchange Authority (ESMA), 203–205, offices, 202 237n14, 237n15 Electronic money (e-money), 8, 9, European Union (EU), 59 214, 216, 230, 234 ECB, 201 Elver, E., 244n104 ESMA, 203–205 Index 263

EU Blockchain Observatory and Fiat currencies, 7–10, 14, 74, 86, Forum, 206 102, 117, 119, 120, 122, 131, European Court of Justice Ruling, 159, 183, 190, 202, 206, 208, 206–207 211, 212, 217, 229, 231, 234 Fourth Anti-Money Laundering Field Programmable Gate Array Directive, 202–203 (FPGA), 37 European Union Agency for Fields, C., 132n1 Network and Information Fiennes, T., 224 Security (ENISA), 20, 24n31 Financial Action Task Force, Eyber, E., 196n63 24n29, 220 Exclusive jurisdiction, 58 Financial Crimes Enforcement Network (FinCEN), 62, 93–94, 111n72, 112n74, 130, 188 F application of money Faiella, Robert, 149 transmission to virtual Falvey, D., 241n61 currency mining, 97–98 FDIC, see Federal Deposit convertible virtual currency Insurance Corporation trading and booking Feathercoin, 48 platform, 96–97 FED, see Federal Reserve Board virtual currency software Federal Deposit development, 95–96 Insurance Act, 111n73 Financial crisis, 101, 218 Federal jurisdiction, 58 Financial Industry Regulatory Federal regulation, 105 Authority (FINRA), of virtual currencies, 71–105 82, 173, 176 Federal Reserve Board (FED), 2, 8, Financial Market Authority of 19, 29, 101–102 Austria, 210 Federal Rules of Criminal Financial market participants Procedure, 101 (FMPs), 222 Federal Trade Commission (FTC), Financial regulators, 88, 89, 222 82, 103–104, 114n101, Financial regulatory authority 163n5, 181 (CSSF), 222 v. BF Labs, Inc., 114n100 Financial Services and Treasury v. Erik Chevalier, 181 Bureau, 217 Federal Trade Commission Act, 82, Financial Stability Oversight Council 103, 114n99, 142, 181 (FSOC), 90, 101 Federated blockchain, 33 Financial Supervisory Authority, Felt, M., 35 Denmark, 214 264 Index

Financial Technology Gdax, 213 Experimentation Act, 229 Gelfman Blueprint, Inc., 157 FinCEN, see Financial Crimes Gelfman, N., 157 Enforcement Network “General public benefit,” 194n42 Finland, 215 Georgia, 117 Finley, K., 108n29 Giancarlo, J. C., 87, 88, 92, 111n66 FINRA, see Financial Industry Gillespie, M., 160 Regulatory Authority Girasa, Roy J., 66n1, 113n93, 192n1 FinTech, 88, 89, 208, 213, 250 GitHub, 41 Florida, 124, 151 Goldman, Z. K., 106n6 Florida Money Laundering Act, Goldman Sachs, 34 135n32, 166n31 Golem, 42, 46 Force, C. M., 150, 151 Gordon, M., 107n17 Ford, S., 156 Gordon v. Dailey, 61 Foreign Account Tax Compliance Gorman, J., 247 Act (FATCA), 187–188 Government Services Foreign Exchange Administration (GSA), 18 Act No. 87/1992, 218 Government-wide coordination, 90 FOREX, 14 GPU, see Graphics Processing Unit Forks, 47 Graphics Processing Unit (GPU), Fourth Anti-Money Laundering 37, 40 Directive, 202–203 Greece, 20, 216 FPGA, see Field Programmable Green, D., 244n101 Gate Array G20 (Group of Twenty), France, 215–216 208, 238n25 Frauenfelder, M., 26n48 Gurkaynak, G., 244n104 Froelings, L., 242n72 FSOC, see Financial Stability Oversight Council H FTC, see Federal Trade Commission Haber, Stuart, 31 FTC v. Chevalier, 195n48, 195n51 Haig, S., 240n55, 242n80 Funding portals, 173–176, 178 Hajdarbegovic, N., 239n35, 243n90 Futures Industry Hakimi, N., 219 Association, 111n63 Hall, G., 155 Hansen, J. D., 106n9, 106n13 Hard , 47 G Harvard Business Review, 31 Galvin, W., 125 Hawaii, 124–125 Gatti, S., 107n17 Hayek, Friedrich, 35 Index 265

Hello Group, 213 Intellectual property, 65–66 Higgins, S., 27n51, 109n48, Intel Sawtooth, 35 165n28, 246n119 Internal Revenue Code, 141, 182 Hiring Incentives to Restore Internal Revenue Service (IRS), 62, Employment (HIRE) 151, 182–185 Act of 2010, 188 Chainalsis Inc., 190–191 Hofberberg, E., 243n82 subpoenas, 188–191 Hong Kong, 216–217 International Monetary Fund (IMF), Hong Kong-based exchange, 216 5, 169, 248–249 House, M., 246n115 International Organization of House bill, 191 Securities Commissions Howey test, 170 (IOSCO), 208–209 Howitt, P., 245n107 International organizations, Hubbard, B., 146 5, 199–209 Hughes, S. J., 163n7 See also specific entries Hungary, 218 International Shoe Hybrid blockchain, 33 Co. v. Washington, 59 Fabric, 35 Internet Financial Risks Rectification Working Group, 233 I Internet Governance Forum, 203 IBM, 2 Internet of things, 33, 42 ICC v. Hubbard (PDXBlack), 146 Investment Advisers Iceland, 32, 218 Act of 1940, 81 ICOs, see Initial Coin Offerings Investment commitment, Idaho, 117 173, 175–178 Illinois, 125 Investopedia, 24n31 IMF, see International Monetary Fund Investors, 77 Immigration and Customs IOTA, 41–42 Enforcement (ICE), 19, 146 Iowa, 127 India, 218 Iran, 219 Indiana, 127 Ireland, 219–220 Indonesia, 219 Islamic terrorists, 72 Initial Coin Offerings (ICO), 18, 40, Israel, 220 43, 45, 46, 48, 73, 125, 126, Issuers, 172–174 208, 209, 212, 217, 222, Italy, 220 223, 229 itBit Trust Company, 119 In re Coinflip, Inc., 84–85 ITOs, 212 266 Index

J Laundering of money Japan, 221 instruments, 140 Jenner, S., 197n77 Law enforcement prosecution Jobs Act, 174, 194n23 difficulties, 152 Title III of, 172 Law on Foreign Exchange Jordan, 32, 221 Operations, 226 Joshi, D., 251n10 Law on Payment Transactions, 226 JP Morgan Chase, 247 Laxmicoin, 218 Jumpstart Our Business Lea, T., 251n11 Startups Act, 76, 170 Lebanon, 221–222 Jurisdiction, 57–61, 84, 101, Lebedev, Y., 143 208, 217, 233 Lee, Charlie, 41 See also specific entries Lee, J., 245n114 Legal authority, assertion of, 90 LEGO, 2 K Lego Digital Designer, 2 Kansas, 127, 128 Lego Mindstorms, 2 Kats, V., 145 Leising, M., 108n30 Kazakhstan, 246n124 Le Maire, B., 208 Kentucky, 127 Leung, J., 217 Kickstarter, 180 Levitt, H., 250n1 Kierner, T., 163n7 Lewis, T. K., 196n62 Kim, C., 244n94 LexShares, 181 Kita, M. H., 107n18 Liberty Reserve, 145 Klasing, D., 196n58 Lifshitz, L. R., 166n37 Kodak, 1 Limassol, 213 Kohen, M. E., 132n1, 133n9 , 35, 41, 47, 48, 159, Koo, W., 229 189, 214 Koslov, H. F., 107n18 CFDs in, 204 Kyrgyzstan, 246n124 Lithuania, 222 virtual currencies banning in, 234 Litigation model of crowdfunding, 181 Little, K., 113n94 L Localbitcoins.com, 99 Lacroix, D., 153 Lord, M., 99, 100 Lagarde, C., 248, 251n8 Lord, R., 99, 100 Lambert, E. E., 196n56 Louis, B., 250n1 Larsen, Chris, 44 Louisiana, 127 Larsen, K. S., 107n18 Louisiana law, 100 Index 267

Lukashenko, A., 211 Microsoft, 2, 42 Lukken, W., 87, 111n64 Middlebrook, S. T., 163n7 Lulu Yilun Chen, 246n118 Millennials, 22n7 Luxembourg, 222–223 Millet, J., 241n59 Miners, 12 Mining, 36–38 M Minnesota, 127 McCaleb, Jed, 44 Mississippi, 127 McCoy, O., 106n5 Missouri, 127, 129 McDonnell, Patrick K., 158 Mittal, T., 241n62 Macheel, T., 240n51 , 32, 44 Machine Zone Inc., 128 Monetary Authority of Singapore McKinney, R. E, 163n3 (MAS), 226, 243n89 McNealy, Scott, 6 Money, 77, 80, 93, 94, Madeira, A., 26n50 97–100, 201, 207, MaiCoin, 229 209, 212, 216, 219 Maine, 127 bitcoin as, 151 Malaysia, 223 paper and metallic, 247 Malaysian Central Bank, 223 Money instruments, Manero, 35, 48 laundering of, 140–141 Manning, J., 192n4 Money laundering, 17, 71, 93, 99, Manzoor, M., 243n85 124, 143, 145, 148, 150–151, Markowitz, E., 195n44 155, 202, 205, 215, 222, 225, Marckx, C., 244n103 226, 229, 231, 248 Marinc, M. L., 237n21 Money services businesses (MSBs), Market intelligence, 90 93, 94, 99, 112n76 Martin, E., 108n39 Money Transmission Act, 116, 117, Maruyama, E., 106n6 124, 128 Maryland, 127, 128 Money transmitter, 93 Massachusetts, 125–126 Montana, 127, 129 Memoria, F., 243n86 Morocco, virtual currencies Meola, A., 25n38 banning in, 234 Merchant, virtual currency Morgan Stanley, 247 nature held by, 187 MUN “ecosystem,” 79 Meta coins, 48 Munchee Order, 80 Mexico, 223 Murck, P., 242n75 Michael, L., 100 Murgio, A. R., 143 Michigan, 127 My Big Pay, Inc. (MBP), 160 268 Index

N Non-resident funding portal, Nader, J., 242n74 177–178 Nam Hyun-woo, 244n95 North American Free Trade , 47, 48 Agreement, 249 NASAA, see North American North American Securities Securities Administrators Administrators Association Association (NASAA), 105, 114n102 National Bank of Belarus, 211 North Carolina, 120 National Bank of Poland, 225 North Dakota, 127 National Bank of Serbia, 226 Norway, 224 National Bank of the Kyrgyz Norwegian Skandianbanken, 224 Republic, 234 National Futures Association (NFA), 87 O NDF, see Non-deliverable forward Obama, B., 102 Nebraska, 127 Obeidat, O., 242n71 Nepal, virtual currencies OCC, see Office of Comptroller banning in, 234 of the Currency Nepal Rastra Bank, 234 OECD, see Organisation for Netherlands, 223–224 Economic Co-operation Nevada, 118 and Development New Hampshire, 129 Offering Memorandum New Jersey, 126–127 (OM), 212 New Mexico, 127 Office of Comptroller of the New York, 118 Currency (OCC), New York Business Corporation 102–103, 113n97 Law, Article 17 of, 195n42 Offsets, 4 New Zealand, 224 Ohio, 127 NiceHash, 13 Oklahoma, 127 Nigh, B., 166n33 Ontario Securities Non-convertible virtual Commission, 154 currencies, 10, 14 Orcutt, M., 106n7 Non-deliverable forward (NDF), Oregon, 127 110n59 Organisation for Economic Non-fiat currencies, 3–5 Co-operation and cryptocurrencies, 11 Development (OECD), currency types and, 7–9 207, 237n22 digital currencies, 9 Ou, E., 155 See also Virtual currencies Overstock, 48 Index 269

P Price, R., 165n30 Paradis-Rogers, S., 153 PricewaterhouseCoopers, 42 Patel, S., 245n107 Private blockchain, 32 Patent, 65 Private litigation, 161–162 Pauley, J., 245n107 Processing service providers, 12 Payment Services Act, 214 Product pre-order model, 181 Paypal, 43 Property transaction rules, 186 , 48 Proportionate regulatory Peer-to-peer (P2P) transactions, 169 approach, 203 Pelker, C. A., 166n33 Pseudonymity, 200 People’s Republic of China (PRC), Public benefit virtual currencies corporation, 194n42 banning in, 233 Public blockchain, 32 PerfectMoney, 10 Permissioned ledger, see Private blockchain Q Permissionless ledger, Quantum computing, 250 see Public blockchain Quarles, R. K., 101, 113n92, Peterffy, T., 88 248, 251n5 Pham, S., 105n1 Quora, 26n43 Philippines, 224–225 Platform, definition of, 194n40 PlexCoin Tokens, 153 R Pohjanpalo, K., 240n50 Rand, Ayn, 35 Poland, 225 Ransomware, 144, 152 Polaroid, 1 R-Arizona, 191 Polis, J., 191, 197n75 Rase, N., 242n74 Polish Financial Supervision Raymond, N., 164n20 Authority, 225 Real-Time Settlement system, 231 Ponzi schemes, 92 REcoin, 75 Popov, Serguei, 42 Redman, J., 245n111 Popper, N., 246n123 Registered funding portals, 176–177 Portugal, 225 Relief, request for, 160 Position Paper on Virtual Republic of Indonesia, 219 Currencies, 227 Request Network, 42–43 Powell, J. H., 17, 247, 251n3 Reserve Bank of Australia, 210 President’s Council of Advisers on Reserve Bank of India, 218 Science and Technology Retail commodity transactions, 89 (PCAST), 162 Retail payment systems, 201 270 Index

Rewards-based crowdfunding Schwartz, M. J., 106n8 model, 179 Schweikert, D., 191 Reyes, C. L., 106n13 Scriptural money, 222–223 Rhode Island, 127 algorithm, 41 Rice, Jared, Sr., 156 SDRs, see Special drawing rights Ripple, 35, 44, 47 SEC, see Securities and Exchange Ripple Foundation, 44 Commission Ripple labs, 161–162 Securities Act of 1933, 61, 75–77, Ripple Labs Inc. 79, 80, 154, 155, 170 v. R3 LRC LLC, 167n51 Section 302 of Title III Rizzo, P., 251n6 amended §4 of, 170 Roberts, J. J., 197n73 Securities Act of 1934, 80, 156, Robins, J. L., 108n33 172, 194n22 Robust enforcement, of CTFC, 90 Securities and Exchange Roman, J. A., 195n55 Commission (SEC), 18–19, Rosenberg, E., 106n6 73–74, 107n22, 166n41, Rosenblatt, B., 67n3 166n42, 213 Rosenblatt, J., 197n71 v. Arisebank, 156–157, 166n43 Rosenlieb, Jr., 163n3 brokers and funding portals, Ross, M., 196n59 173–176 Ross Intelligence, 2 Chairman’s Commentary, 80–81 Royal Bank of Canada, 2 civil enforcement, 153 R3 Holdco LLC v. Ripple and Crypto Co., 82 Labs, Inc., 167n52 disapproval of NYSE proposed R3 technology, 248 rule change, 83 Rubix, 2 funding portals provisions, 178 Rule 3b-16(a), 78 v. Howey, 73 Russia, 235, 246n124 issuers, 172–173 limitations on investments, 171–172 S v. Munchee Inc., 78–80 Salameh, R., 221 non-resident funding portal, Santander, 44 177–178 Saravalle, E., 106n6 offerings and cancellations, 178 , 11, 31, 35, 41 v. PlexCorps, 153–154, 166n35 Saudi Arabia, 225–226 v. REcoin Group Foundation, Saudi Arabia Monetary 74–75, 107n15 Authority, 225–226 registered funding portals, Scalping, 81 176–177 Index 271

resales restriction and U.S. v. Shrem and Faiella, disqualification provisions, 179 149–150 v. Sand Hill Exchange, 155 U.S. v. Ulbricht (Computer v. Shavers, 60–61 Hardware Bitcoins), 147–148 v. UBI Blockchain Internet, Silver, D., 107n17 Ltd., 156 Singapore, 226–227 v. Voorhees, 154 Skorobogatova, Olga, 235 warnings to social media, 81–82 Slaughter, Kenneth E., 129 v. Willner, 155–156, 166n40 Slovenia, 227 Securities and Futures Act, 226 Smart contracts, 63–64, 76, 123, Securities and Futures Commission 204, 248 (SFC), 217 Société Générale, 34 Securities and Futures Ordinance Soft fork, 47 (SFO), 217 Son, H., 250n1, 250n2 Securities Exchange Act of 1934, 61, South Africa, 227 75, 77, 83, 109n46, 155, South African Reserve Bank, 227 193n21 South African Reserve Section 5 of, 78 Bank Act, 227 Securities market, 73, 204 South Dakota, 127 Securities registration, 74 South Korea, 227–228 Self-employment tax, 183, 185 Southurst, J., 246n121 Self-regulatory organization, 194n22 Spain, 228 Selig, M., 107n18 Special drawing rights (SDRs), Serbia, 226 5, 22n15 Shao, D. H., 163n3 “Specific public benefit,” Shao, H., 246n115 194–195n42 Shao, L. P., 163n3 Srinivasan, Balaji, 31 SHA-265 algorithm, 250 Standard Charter Bank, 34 Sheetz, M., 109n43 Statutory prohibitions, 139–142 Shiller, Robert J., 20, 21 Stempel, J., 163n7 Shrem, Charlie, 149, 150 Stiglitz, Joseph, 21 Sidechain, 49–50 Stornetta, W. S., 31 Sidecoin, 49 Strauss, J. S., 106n6 Silk Road, 146, 149 Stripe, 43 Silk road prosecutions Subpoenas, 188–191 Tor Project, Inc., 147 Sweden, 228–229 U.S. v. Benthall, 149 Swiss National Bank, 229 U.S. v. Force and U.S. v. Switch trade, 4 Bridges, 150–151 Switzerland, 229 272 Index

Systemically Important Derivatives U Clearing Organization, 91 Uber, 39 Szabo, Nick, 35, 63 UBS, 34, 44 Ulbricht, R. W., 147–150, 152 Uniform Law Commission, 129, T 137n50 Taiwan, 229 Uniform Regulation of Virtual-­ Tax returns, electronic filing of, 191 Currency Business Act, 129–131 Tax virtual currency transaction United Arab Emirates (UAE), 230 congressional proposals to, United Kingdom (UK), 231–232 191–192 United Nations (UN), 208 Teffer, P., 240n48 United Parcel Service, 34 Tennessee, 127 United States TeraExchange, 86, 87 economy of, 101 Terrorist financing, 222, 226 federal and state agencies, 73 Limited Reserves, 26n50 government agencies concerned Texas, 120–121 with virtual currencies, 73 Thailand, 230 government agencies’ risk Thappar, N., 26n43 advisories, 16 Tidebit, 216 payment system, 101 Time-honored technique, 152 securities, 76 Token offerings, 47, 233 See also specific entries Tokens, 74–77, 79, 81, 105, 212, University of Luxembourg, 72 213, 226 U.S. Bureau of Investigation, Tools for the Investigation of 164n17 Transactions in Underground U.S. Commodity Futures Trading Markets (TITANIUM) Commission, see Commodity project, 202 Futures Trading Commission Tor Project, Inc., 147 U.S. Consumer Financial Protection Trade secret, 65 Bureau, see Consumer TradeBlock XBX Index, 83 Financial Protection Bureau Trademark, 2, 30, 65 U.S. Copyright Office, 66 Trading platform, 14, 92, U.S. Department of Justice, 164n12 95, 232 U.S. Department Traditional payment systems, 200 of the Treasury, 112n74 Trump, D., 249 USDT (tether), 16, 26n50 Trust company, 83, 119 U.S. Federal Blockchain, 18 Tulipmania, 53n35 U.S. Federal Trade Commission, Turkey, 230 see Federal Trade Commission Index 273

U.S. Immigration and Customs Venezuela, 6, 235 Enforcement, 164n14 Vermont, 121–122 U.S. Office of the Comptroller of the Vietnam, 232 Currency, see Office of the Vinnik, Alexander, 143, 144 Comptroller of the Currency Virginia, 122 U.S. Securities and Exchange Virtual currencies, 8–10, 84, Commission, see Securities and 159, 169–171, 210, Exchange Commission 211, 219, 220, 223, U.S. Treasury Department, 224, 226, 230, 249 Financial Crimes Enforcement BIS, implications of, 200 Network, 111n72 businesses, 117, 118 U.S. v. Benthall, 149, 164n19 as commodity, 187 U.S. v. Bridges, 150–151, 165n25 custodian wallets, 202 U.S. v. BTC-e, 143–144 decentralized nature of, 200 U.S. v. Budovsky definition of, 24n28 (Liberty Reserve), 144–145 and DLT, 203 U.S. v. Cazes, 145–146, 164n13 enforcement, 181–182 U.S. v. Coinbase, 189–190, 196n67 exchange platforms, 202 U.S. v. Faiella, 149–150, 165n22 exchanges, guidelines for, 224 U.S. v. Force, 150–151, 165n24 FATCA, 187–188 U.S. v. Lord, 99–101, 113n90 as money, 62–63 U.S. v. Murgio, 143, 151, 163n6 multi-functionality risk of, 215 U.S. v. Shrem, 149–150 as property for tax purposes, U.S. v. Ulbricht, 147–148, 183–187 164n18, 165n23 reasons for rise of, 5–7 U.S. v. Vinnik, 162n1 risks of, 227 SEC Final Rule, 171–179 states’ regulation of, 115–132 V transactions of, 210 Valentine, E. M., 196n66 websites, 74 Value Added Tax (VAT) Directive See also specific entries Article 2, 206 Virtual Currency Act, 116, 221 Article 14(1), 206, 207 Virtual Mining Corp., 129 Article 24(1), 207 Vondrackova, A., 236n5 Vance, G., 246n115 Voorhees, Erik T., 154 van de Berg, R., 237n21 Vanderbilt Law, 2 van Goor, E., 237n21 W Vannik, A., 143 Wales, J. S., 132n1, 133n9 Van Valkenburgh, P., 113n89 Wall Street Journal, 31 274 Index

Wallet X provider, 13 xCurrent, 44 virtual currency, 13 Walt Disney Company, 12 Warren, Elizabeth, 102 Y Washington, 122 Yashu, G., 243n87 “Watch out for Yellen, Janet, 101 cryptocurrencies” website, 225 Yildez, C., 244n104 WebMoney, 10, 23n24 Yuji Nakamura, 246n118 Weiser, B., 165n26 Yulu Yilun Chen, 245n114 Wellens, V., 242n74 West Virginia, 127 Weydert, J., 242n74 Z Wikipedia, 30 Zaharewicz, E. J., 107n16 Willner, Joseph P., 155 Zaslavskiy, Maksim, 74, 75 Wisconsin, 127 , 35 Wiseman, S. A., 196n57 Zeldin, W., 242n79 Wood, Gavin, 39 Zippo Mfr. Co. v. Zippo Dot World Economic Forum, 20 Com, Inc., 59 World of Warcraft gold, 10 Zuckerberg, Jeff, 44 Wyoming, 122–123 Zwilling, M., 194n41