A Laissez Faire Club Update

This was also a widely-discussed issue at last weekend's conference in San Jose. It did not have the kind of chilling effect that might have been expected. Lots of people expected the exchange price to plunge, but it remained fairly stable throughout, thanks to many more alternative exchanges launching in recent months and new ways to convert fiat money into bitcoins. In fact, on the same day that Yahoo bought Tumblr for $1.1 billion, it was announced that legendary libertarian investor and co-creator of Paypal Peter Thiel has made a substantial investment in BitPay, one of the leading bitcoin merchant services companies. Thiel is one of the most forward-thinking venture capitalists in the world, and has an uncanny knack for picking winning investments (e.g., Facebook). When he puts money into a bitcoin venture, you know something important is happening.

As for the Department of Homeland Security's actions against Mt. Gox, it is simply a paperwork issue. The new FINCEN rules were also dissected and analyzed extensively by conference speakers. In short, there are no new rules, and bitcoin businesses won't have much of a problem complying. The real problem is the government breaking its own rules. Any administrative changes such as those announced by FINCEN must be announced 30 days in advance of implementation, and FINCEN didn't comply with this rule, which would allow sufficient time for non-compliant businesses to re-write their software code to be acceptable. Without such advance notice, FINCEN cannot legally enforce the change of regulations.