EFF Drops Bitcoin Over Concerns About Legality

from the is-that-reason-good? dept

I have to admit to being both skeptical and fascinated about Bitcoin. I think it's a very interesting experiment worth following, but I'm just not sure it can really succeed (though, I think it may create some lessons that others can build on). However, it has been growing, getting attention and popping up as an acceptable currency in some surprising places, and not surprisingly, there's been some significant backlash, with some folks pointing out its problems, and even some (mostly clueless) politicians threatening Bitcoin.

Making things interesting is the news that the EFF will no longer accept Bitcoin. It had started accepting Bitcoin donations a little while ago, but has since rethought the concept for a few reasons. The key point is that they're not entirely sure of the legality of Bitcoin and its uses, and want to avoid getting mixed up in a lawsuit over that as a subject, rather than as an advocate:
We don't fully understand the complex legal issues involved with creating a new currency system. Bitcoin raises untested legal concerns related to securities law, the Stamp Payments Act, tax evasion, consumer protection and money laundering, among others. And that's just in the U.S. While EFF is often the defender of people ensnared in legal issues arising from new technologies, we try very hard to keep EFF from becoming the actual subject of those fights or issues. Since there is no caselaw on this topic, and the legal implications are still very unclear, we worry that our acceptance of Bitcoins may move us into the possible subject role.
Some, such as Jim Harper, find this reasoning to be weak, saying that this is a bogus excuse, since lots of technologies that the EFF uses are legally ambiguous at the start:
Bitcoin is legally novel. But every new technology is legally novel. EFF didn't shy away from publishing commentary online while publisher liability was legally ambiguous.

Accepting a Bitcoin donation is like accepting a donation in kind, in contract rights, or in cat food. If it's worth taking, you go figure out how to accept the donation and square it with existing law. If it's clearly illegal, you don't accept the contribution. (EFF would have said so if they felt it was.) If it's in the middle, a defender of rights to use technology should be inclined toward accepting Bitcoin and clarifying the law, not away from accepting Bitcoin in deference to legal ambiguity and free-ranging government power.
I recognize both arguments, and I think that the EFF is basically saying it's interested in these issues, and certainly willing to get involved in a potential legal dispute down the road -- but it would prefer to do it as an advocate, rather than as the subject of a lawsuit -- and it still doesn't fully understand the legal implications (and, likely, technical situation) of Bitcoin itself, so it doesn't have a firm position on the issue that makes it worth fighting for. I respect that, though, I do wonder why the EFF didn't consider this originally and simply not use Bitcoin in the first place.

Filed Under: bitcoin, legality, money
Companies: eff

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  1. icon
    Lauriel (profile), 21 Jun 2011 @ 5:11pm

    Re: Meh.

    It's a solid move. It's not so much not walking the walk as protecting their ability to advocate for others. Having cases brought against them as the subject of a lawsuit seriously undermines their legitimacy. Think about it - when looking for lawyers, do you choose the one who you feel confident can speak for you, or the one who is defending himself against allegations? Which one would you most be able to trust? To be an effective advocate, they need to present as legitimate, and lawsuits undermine that, whether baseless or not.

    >>"I do wonder why the EFF didn't consider this originally and simply not use Bitcoin in the first place."

    Lol. I guess everyone can be blindsided from time to time. You can't see everything coming.

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