We’ve all heard the news: Mt. Gox is down and has declared bankruptcy. This means Bitcoin is in trouble, and in fact, this could be the end.
Except, like always, don’t believe the hype. This is not the first series of “the end of Bitcoin” articles sprayed about the Internet. Just patrolling the cyberspace of Forbes, there’s an article in June 2011, another from the end of that year, one from 2013, and, of course, one from the day after Mt. Gox went dark. So is this the end of Bitcoin? Almost certainly not. Will governments be looking a mite closer at it now, and, perhaps—to suffer a cliché for a moment—throw the baby out with the bathwater? Quite possibly.
The heightened attention is likely bad for Bitcoin, as regulators, scared of a new industry, overreact to the perceived dangers. This could mean more, faster, and messier regulations. Sadly, as anyone following Bitcoin’s legality with moderate determination can see, the laws governing bitcoins are already shockingly disordered. This chaos is partly due to the United States government not really knowing what bitcoins are or how they work. A greater part of the confusion stems from the bifurcated nature of our regulations and criminal laws.
Let’s attempt to summarize what we know about the three types of current regulation: federal, state, and taxation. While we’ll base any judgments on the law and my experience, it’s worth noting that given the dearth of institutional prescriptions, any analysis contains some guesswork.
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