Re: e$: Cypherpunks Sell Concepts

[rah@shipwright.com (Robert Hettinga)]

At  7:09 PM 8/6/94 -0700, Hal wrote:
>There are two legal problems that I could see being used against digital
>cash.  The first is the civil war era prohibition on banks issuing private
>bank notes.

Where you stand on this one depends on where you sit. ;-). It seems to me
that one could just as easily treat digicash as securities denominated in
dollars, just like shares in a money market mutual fund, or more to the
point, the actual money market instruments, repos, for instance. It's going
to take a sophistical titan to get this through the courts, but if there's
a market for digicash, hey, it can happen.  It won't happen if this titan's
employers never hear about it, though.

>The second problem is the regulation of "scrip" and barter systems.  This
>was pointed out on the list last year by someone who had actually been
>involved in a private barter or scrip system which was shut down by the
>government, at great cost to all concerned.  These regulations can be
>found at 26 CFR 1.6045-1.  From subsection (f)(5)(ii), "Scrip is a token
>issued by the barter exchange that is transferable from one member or
>client, of the barter exchange to another member or client, or to the
>barter exchange, in payment for property or services".  I think this one
>will eventually get the "NetBank" people in trouble.  (You call a 900
>number and in exchange for a charge on your phone bill they give you a
>digital token you can exchange for property or services by participating
>merchants.)  Barter exchanges are required to get the names and SS numbers
>of all participants and report their transactions to the IRS.  This would
>be inconsistent with the privacy we seek from ecash.

Indeed. This is probably where we have a problem.  The only thing I can
think of here is that the technology of the internet and it's limitless
opportunity for regulatory arbitrage.  When you make the possession of a
medium of exchange illegal you get the same problems that all closed
economies have.  With the internet, enforcement is half next to useless (an
expression I picked up in Albuquerque a while back...).  Like I said to
Eric in the last post, it may be the threat of regulatory arbitrage that
wins the day here, like it has in the past.

To plug the thread a bit here, who should chair the afternoon
business-heavy session? *Email* me your suggestions, please...

Cheers,
Robert Hettinga


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