Are there legal requirements for developers who "fork" bitcoin?
The idea of changing the common image of bitcoin into something else is not against protocol, and falls rather into a technical arena, according to bitcoin law expert Marco Santori. The legal world of everyone's favorite digital currency is still being fleshed out, and while many are concerned about the number of regulatory practices that have taken effect in recent years, Santori explains that these laws apply mainly to administrators rather than creators... So if you're a bitcoin developer or practitioner, take comfort in the fact that your daily routine isn't likely to land you in hot water.
Read the full story below.
Does “forking” bitcoin subject one to MSB (money service business) regulations?
According to Marco Santori, an expert on bitcoin law, the answer is a relieving “no.” In a recent Coindesk article, Santori opened up about what one can and can’t get away with in the world of digital currency.
First of all, what does “forking bitcoin” mean? Prodding it with eating utensils? Not exactly. Mike Hearn explained that Satoshi, the founding father of America’s favorite digital currency, had a vision for bitcoin’s future that some feel didn’t take all necessary factors into account. Now that the elusive figure is allegedly gone, many are trying to make big changes, such as “networks of payment routing hubs, sharp rises in fees, ending support for mobile P2P wallets, giving up on unconfirmed transactions, and many other things that never appeared in any of our project’s founding documents.”
Hearn believes that should these changes ever be implemented, they would be a serious departure from the coin that many digital currency lovers know and trust, and many of these followers would likely walk away disappointed. This is a case of bitcoin being “forked”; changed and twisted into an alternate figure that many people simply wouldn’t recognize or understand.
While this idea may turn some people off to the notion of cryptocurrency, it doesn’t violate any serious protocols. Santori explains the idea falls into a technical realm, rather than a legal one. The Financial Crimes Enforcement Network, otherwise known as FinCEN, has also spoken about the issue, saying:
“The production and distribution of software, in and of itself, does not constitute acceptance and transmission of value, even if the purpose of the software is to facilitate the sale of virtual currency.”
The New York State Department of Financial Services (NYDFS) also mentions that their regulatory practices do not apply to software developers, and that while administrators of certain digital currency systems may be subject to certain laws, they would be so only under specific circumstances. These administrators must both issue and redeem the said currency in order to qualify as regulated MSBs. In other words, they must be able to put the currency into circulation, while also possessing the power to remove it.
Money services laws have to do with administrators rather than creators, and even then only if the administrator in question is in charge of a centralized system. Anything decentralized falls outside the specified jurisdiction.
Miners are also not likely to experience legal issues for mining certain chains, as civil liability usually requires a duty to another person. Unless the miner willingly or knowingly commits a reckless act, criminal liability is difficult to pinpoint in mining situations.
With all this in mind, while bitcoin is still being contemplated and has a knack (in many heads) for attracting illegal activity, the lawful world of the digital currency is still being fleshed out. With this knowledge in hand, practitioners and developers in the universe of virtual money may take a rest knowing that their common, daily practices aren’t likely to land them in a confined cell.