Bitcoin Series 20: The Fool-Proof Bitcoin Press Release Kit for [Fill In Your Country Here]
Last week, we discussed that cash also presents challenges that society was able to handle, so perhaps cryptocurrencies won’t be so unmanageable after all. This week, I am happy to announce our effort to lighten the research burden of harried public administrators worldwide regarding bitcoin and other cryptocurrencies with this Fool-Proof Bitcoin Press Release Kit – Sovereign Nation Edition.
Use of this kit will generate the following benefits for Your Country:
(1) Attract innovative technology businesses to implement a ‘tech hub’ strategy
(2) Give consumers the benefit of increased competition while protecting them from fraud
(3) Focus law enforcement resources efficiently on the biggest risks to Your Country
(4) Avoid embarrassing gaffes that your robotic overlords (aka: your grandchildren) will snicker at
(5) Procure interviews for your previously unknown Finance Minister with Bloomberg, the Wall Street Journal, Reuters and Reddit
(6) Finally get that long-deserved invitation to Davos to discuss ‘innovation’
Even better, you can capture all these benefits without ever having to look up or know what a “dogecoin” is – simply fill-in-the-blanks on our handy kit below.
Note: This strategy might be somewhat less effective if you have a centrally managed economy that jails people for moving capital across borders.
While you can pick and choose from any of the five templates below, for maximum effectiveness, release all five at the same time in a coordinated assault against your [regional competitors] [Switzerland] [Singapore] [Mountain View][those guys that invaded you 400 years ago].
Part 1: Trade Minister press release
Part 2: Central Bank press release
Part 3: Financial regulator press release
Part 4: Tax authority press release
Part 5: Law-enforcement agency press release
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Part 6: BONUS Tourism Board press release (for small island nations only; use with care)
Note: Start now! If you do this after 75 other countries implement the kit, it might be too late to convert your empty warehouses into a ‘FinTech’ hub.
Concerned citizens: Please feel free to forward this template to your local authorities. The material below is licensed for use by public entities as donation-ware; optional donations from National Treasuries or patriotic citizens (bitcoin only please) are always appreciated at:
17LBdguZxFuAyDYtqu2Y3USSQBtjFTosVK
Improvements/suggestions/translations to other languages are welcome in the comments.
Part 1: Minister of [Trade] [Economy] [Development] of [Our Country] Press Release
[Our Country] believes in free markets and innovation and welcomes entrepreneurs from around the world. We want to be the preferred jurisdiction in [our region][the world] for the innovators building the [tech][financial services][fintech] companies of the future.
In this regard, we are excited to be announcing a comprehensive and coordinated regulatory and policy framework for cryptocurrencies such as Bitcoin and other related currencies. These private currencies are an interesting new form of decentralized digital currencies that many believe will lead to significant technical innovation in financial services. We would be thrilled if these innovators chose [Our Country] as their base of operations and believe our framework is among the best in [our currency zone][our continent][the world] in this regard.
This framework is designed:
(1) To be consistent with our existing regulatory and tax principles
(2) To provide appropriate consumer and law-enforcement protections
(3) To provide a predictable and rational environment for entrepreneurs
We think the combination of our advanced financial and professional services industry, well-educated workforce, investor-friendly policies and [low tax rates] [nice climate] [convenient location] [fast broadband] [good-looking population] [great restaurants] make [Our Country] the perfect destination for the financial services firms of tomorrow.
Part 2: Central Bank of [Our Country] Press Release
We have followed the emergence of decentralized [digital currencies] [private money][commodity money] (also known as ‘cryptocurrencies) with some interest. The best known currency of this type is Bitcoin but there are hundreds of other currencies organized along similar principles.
Our assessment is as follows:
1. Cryptocurrencies, as currently structured, do not fall under the remit of the Central Bank of [Our Country].
2. The Central Bank of [Our Country] will not (and cannot, according to its Charter) provide “Lender-of-Last-Resort” support to financial institutions denominated in cryptocurrencies.
3. Cryptocurrencies, in aggregrate, represent less than 0.03% of global money supply and present no systemic risks to our monetary and banking system at this time.
4. We remind users of and investors in cryptocurrencies that they are not legal tender in any nation, that no merchant is required to accept them and that their value historically has been volatile. Detailed guidance on this topic, as with all investment topics, is best addressed by [Financial Services Regulator of Our Country].
This is the last statement we will be making on this topic unless circumstances change.
Part 3: Financial Regulator of [Our Country] Press Release
Cryptocurrencies, a new form of digital currencies, have taken the media by storm in the last year, as they potentially herald an opportunity for innovation in financial, contractual and asset registration services. We want [Our Country] to be a leader in this field, so we are highlighting our guidance to consumers, businesses and financial services firms, in an effort to balance the needs of consumers, businesses and law enforcement.
1. Ownership and use of digital currency by individuals or business is legal. Individuals should note that cryptocurrencies have no guaranteed value, have historically been very volatile in price and, if lost or stolen, provide no recourse to the owner.
2. Businesses that use digital currency to accept payments or make payments do not require any special registration. This includes buying, selling, investing, hedging or related activities that are in support of their operating business.
3. We are happy to announce a voluntary industry initiative for cryptocurrency custodial services. These are services that hold digital currency ‘wallets’ on behalf of customers. This voluntary certification includes a commitment: (a) to maintain segregated consumer funds, auditable on the ‘block chain’ in the case of bitcoin and with a bank in the case of cash, (b) follow a set of standardized security practices and (c) offer a $50,000 insurance policy that is funded by fees from the industry and underwritten by Lloyd's of London.
While this initiative is voluntary, we do believe many consumers will choose services that undergo this certification.
4. “Exchanges” or “Money Transmission” businesses (in other words, businesses that convert cryptocurrencies to traditional currencies or vice-versa) will be subject to the same Anti-Money-Laundering, Know Your Customer and Suspicious Transactions Reporting requirements as traditional financial institutions.
More specifically
a. Each of these businesses must register by [date] with [relevant regulator]
b. Each of these businesses must have implemented the relevant requirements by [date]
c. We have certified several third party KYC and AML services as ‘pre-approved’ for meeting our guidelines in this regard, though their use is not required
d. We will not prosecute businesses that did not register before we had issued guidance, so long as there is no evidence of willful attempts to facilitate money laundering
e. We are also implementing a ‘safe harbor’ rule for startups in this space to allow business model experiments to flourish. For the next three years, startups of this type that conduct less than [$1][$3][$5] million per month in transaction volume, need only register with [relevant regulator] but do not have to implement the full suite of KYC/AML activities for the first [12][24][36] months of their operation.
f. Exchanges or other services that work solely with cryptocurrencies and do not facilitate conversion to and from traditional currencies are currently exempt from this regulation. We will review this topic again in 24 months.
We are also excited to announce that we are in the process of discussions with [our main stock market][our main commodities exchange] about the possibility of it providing exchange services to exchanges operating in [Our Country]. Their [25][50][100] years of experience in this area and high liquidity could be very valuable on the wholesale side.
5. Many cryptocurrency firms will still require traditional banking services.
Given this, it is important that our existing banks serve these firms while, while knowing what is required from them in terms of compliance. We see tremendous value in these businesses having strong local banking relationships with our safest banks rather than having to pursue awkward work-arounds for integration to the existing financial system.
We have issued a set of guidelines in this regard and the first five banks have completed their training. We are happy to announce that: Bank of [Our Country], Bank of [Our Capital City], Cooperative Bank of [Our Country], International Bank of [Our Country] and Royal Bank of [Our Country] are ready to provide banking services to businesses and consumers operating in the cryptocurrency area. Other banks will be completing the training over the upcoming months.
6. One of the more interesting developments in cryptocurrencies has been the development of stock exchanges and other markets based solely on cryptocurrencies. Our initial assessment is that these exchanges are best addressed by our existing frameworks relating to crowd-funding. As they are still in a rudimentary stage, we will be studying them further and releasing guidance by [some date later this year], noting that we recognize the opportunity for greater efficiency in this sector.
7. We have established a commission to further study the concept of ‘Digital Autonomous Corporation’, a form of distributed cooperative without central leadership. The commission will be making recommendations about the correct legal structure, if any, for such entities. I look forward to their findings.
Overall, we are excited and intrigued by the possibilities offered by cryptocurrencies. We note that the field is still in its early days and not all service providers in this field are ready for the average consumer. We believe and hope that with the appropriate frameworks, we can help businesses in this arena mature, develop new, cost-effective services to market and drive innovation worldwide.
Part 4: Tax Authority of [Our Country] Press Release
We have conducted our initial review of cryptocurrencies (a new form of digital currencies) and are offering the following tax guidance, consistent with the general principles underlying our system of taxation. As a general rule, transactions using digital currencies should be treated in the same way as transactions using foreign currencies, including, but not limited to, the principles delineated by IAS 21 – The Effects of Changes in Foreign Exchange Rates (IFRS).
(1) Payments received with cryptocurrencies will be treated as ordinary income or revenue as appropriate
(2) Business expenses paid with cryptocurrencies will be treated as expenses
(3) Purchases of cryptocurrencies with traditional currencies are not taxable and not VAT-able
(4) Changes in currency rates (between the cryptocurrency and your presentation currency) in non-trading operating businesses should be treated as exchange rate gains/losses (ordinary income and ordinary losses)
(5) Trading/investing gains or losses from realizations (sales) of cryptocurrencies shall be treated as capital gains or losses.
We remind all taxpayers that [Our Country] has a principles-based* accounting and taxation system and their individual circumstances should be taken into account when assessing their tax liabilities.
* IFRS countries only. Special GAAP template available on request.
[Optional bonus section for low-tax jurisdictions]
In order to stimulate the development of cryptocurrency-based businesses and demonstrate our superiority as a jurisdiction to [our regional competitors] [Switzerland] [Singapore] [New York] [London], we are implementing a five year special tax holiday (2014-2019) during which capital gain rates on the trading of cryptocurrencies will be [5.0%] [2.5%] [0%].
Part 5: Law Enforcement Agency of [Our Country] Press Release
We have a long-standing commitment in [Our Country] to fighting money laundering, terrorism financing, and other financial crimes and this commitment extends to new innovations such as cryptocurrencies.
Our long-standing principle in these matters is to use a standard of risk-weighted enforcement by which we target our efforts against the highest-risk situations. According to the United Nations, over $1 trillion is currently laundered through the traditional financial system, a value that is 100 times higher than the total money supply of cryptocurrencies. This means that the bulk of our enforcement efforts must stay focused on the traditional banking sector, where our main exposure and risk lies.
That said, we have developed a Cryptocurrency Task Force with a team of agents well-versed in these matters that will be responsible for law enforcement relating to cryptocurrency. Criminals, money launderers and terrorists should understand that cryptocurrencies are not a safe haven for them and we intend to prosecute them to the fullest extent of the law. Our agents are already infiltrating cryptocurrency money laundering networks and establishing undercover positions in this domain.
We do not intend to prosecute entrepreneurs who might have inadvertently violated compliance-oriented banking regulations during the period before it was clear how cryptocurrencies would be regulated, unless there is clear evidence that they were turning a blind eye to criminal activity.
We will be working closely going forward with the [Financial Regulator of Our Country] to help ensure every firm is in compliance with their obligations. We recognize that this is a complex topic and even the largest banks, with decades of experience and large compliance teams, have room for improvement in this regard. It is only by working together that we will best ensure that we win the fight against criminals and terrorists.
Part 6: BONUS – Tourism Board Press Release (not suitable for all countries)
This release should only be used if (a) you are very small island country that (b) could plausibly have a tourism industry. Use with great care!
You will need to first visit all 500 of your merchants to explain to them what a “bitcoin” is, namely that it is a way for rich tourists to pay for painted conch shells with their cell phones, so long as the WiFi is working and their battery hasn’t died. Then proceed as follows.
Title: Bitcoin now legal tender in [Our Country]
Text: [Our Country] is happy to announce that Bitcoin is now legal tender in [Our Country] for any purchases and is also accepted for any and all payments toward governmental services, including taxes. While nothing will replace the warm hospitality, coconut daiquiris and crystalline beaches that are the heart of our nation and economy, we welcome [Bitcoiners][Litecoiners][Dogecoiners] of all nations to visit, move to or invest in the most Bitcoin-friendly country in the world.
1 week vacation packages to [Our Country] from New York, Silicon Valley and London are available, on an all-inclusive basis, for only $3,995 (payable in Bitcoins). 1 week vacation packages and a puppy are available for only $4,300 (payable in Dogecoin). Permanent residency in [Our Country] is available to anyone who purchases at least $300,000 in real estate (payable in Bitcoins). Citizenship in [Our Country] is available to anyone who invests at least $2,000,000 in a new business (again, payable in Bitcoins).
Good luck regulators - see you in the Wall Street Journal soon!
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