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Hong Kong Journal of Legal Studies – Volume 9 (2015) HONG KONG JOURNAL OF LEGAL STUDIES Volume 9 Selected and edited by Lung Yat Cheung Sam Wong Emily Ling Tiffany Tam Joshua Chan Tiffany Wu Randa Leung Eldon Chan Arthur Chan Allan Wan Cecilia Choi Natalie Jennifer Chan Kwan Ping Kan Johnny Han Pak Hei Li Rosa Lee Patrick Jiang Erica Li Bryan Wan Angel Cheng Jonathan Ng Marius Chan Peter Lau Koe Cheng Jane Li Wilson Lui Jonathan Lam 2015 Hong Kong Journal of Legal Studies Address: Room 403, Cheng Yu Tung Tower, Centennial Campus, The University of Hong Kong, Pokfulam Road, Hong Kong Email: email@example.com Website: http://www.law.hku.hk/hkjls/ This publication may be cited as (2015) 9 HKJLS Editorial arrangement © Hong Kong Journal of Legal Studies 2015 Individual articles © the several contributors 2015 Cover design © Bryan Wan 2015 All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, without the prior permission in writing of the author(s) concerned and the Hong Kong Journal of Legal Studies, or as expressly permitted by law, or under terms agreed with the appropriate reprographics rights organisation. Enquiries concerning reproduction outside the scope of the above should be sent to the Editorial Board of the Hong Kong Journal of Studies, at the address above. CONTENTS Foreword by Professor Michael Hor i Preface iii 1 1 The Tree That Was Not Meant to Be - The Quistclose Trust Moving on from the Twinsectra Model and Why It May Never Be an Established Transactional Arrangement Arthur Chan 2 A Comparative Analysis of Bitcoin and Other Decentralised Virtual Currencies: Legal Regulation in the People’s Republic of China, Canada, and the United States 29 Matthew P. Ponsford 3 From Paper Promises to Real Remedies: the Need for the South African Constitutional Court to Adopt Structural Interdicts in Socio-economic Rights Cases 51 Emily Ling 4 Revisiting Kong Yunming: Enforcing Social Welfare Right for People in Need 71 Harry Hey Chan 5 The Umbrella Movement: Language and Power 97 Josephine Wong 6 Televising Hong Kong Courts: a Study on Its Legitimacy and Practicability Tze Chi Ho 121 FOREWORD The lawyer has two skills - the spoken word and the written word. Of the written word, the crown jewel of legal academia is the law journal article. Good articles identify a real societal problem, describe how the existing law governs the area, and then provide suggestions on how the law should be developed or reformed to deal better with the problem. Great articles do all that so well that the collective conscience is stirred and legislatures and judges are spurred on to effect the desired changes. Often the real world effects of academic articles are not direct. Yet they push new ideas and perspectives into the marketplace of knowledge, only to be taken from the shelf sometime in the future when it’s time has come. Since 1994 the student body of the Law Faculty of the University of Hong Kong has worked to produce an annual issue of the Hong Kong Journal of Legal Studies, a journal run and written by students, and a publication which has become a provider of good and great articles to Hong Kong and to the world. In this 2015 issue, you will find contemporary and pressing problems and cutting edge perspectives - from regulation of virtual currencies to the enforcement of socio-economic rights, and from a semantic analysis of the Umbrella Movement to the case for the televising of court proceedings. Exciting stuff. Enjoy! Professor Michael Hor Dean, Faculty of Law The University of Hong Kong i PREFACE 2015 is a special year for the Hong Kong Journal of Legal Studies as it celebrates its twentieth birthday! The Journal started off under the name of the Hong Kong Student Law Review, and has remained the only academic law journal fully edited, managed and published by students in Hong Kong. Since its establishment, the Journal has provided a platform for law students to present their academic research endeavours and discuss legal issues in a professional manner. Serving as an editor for the past years and judging from the article submissions we have received, we observe that there is a trend of the broadening of legal interest among law students, and their growing awareness in multi-jurisdictional and global issues. Although this volume is not a particularly thick one, it covers topics which are most current and inspiring, including: the Umbrella Movement; Bitcoin regulation; Quistclose trusts; the protection of socio-economic rights in South Africa; the right to social welfare in Hong Kong; and the televising of court proceedings. We take this opportunity to thank all who have made this volume a huge success. First of all, we are most grateful to our senior editors, Joshua Chan, Tiffany Tam, Emily Ling and Tiffany Wu for their excellent work throughout the year. Their dedication to the Journal has enabled our work to progress smoothly, and their comments have always been insightful and constructive. We must also give a round of applause to our team of associate editors for contributing to the Journal with professionalism and passion. Thank you for bearing with us especially when working on rather mundane tasks. iii We would also like to thank all past authors for their contribution to the Journal and their consent for allowing the articles to be placed on HeinOnline, the world’s largest image-based legal research database. This surely boosts the readership base of the Journal, and is a milestone for the Journal in the digital era. Before we conclude this Preface, we would like to express our gratitude to our new Dean, Professor Michael Hor, who has kindly written the Foreword for this volume. Thanks must also be given to the Faculty of Law of the University of Hong Kong and our generous patrons for their continual support throughout the years. Yat Cheung Lung and Sam Wong Editors-in-Chief iv A Comparative Analysis of Bitcoin and Other DVCs 29 A COMPARATIVE ANALYSIS OF BITCOIN AND OTHER DECENTRALISED VIRTUAL CURRENCIES: LEGAL REGULATION IN THE PEOPLE’S REPUBLIC OF CHINA, CANADA, AND THE UNITED STATES Matthew P. Ponsford* Bitcoin, also known as a decentralized virtual currency (DVC), is regulated differently in the People’s Republic of China (PRC), Canada, and the United States, and represents a vastly underdeveloped area of the law. No country has currently backed Bitcoin. Launched in 2009, and founded by Satoshi Nakamoto, Bitcoin is a ‘decentralized peer-to-peer virtual currency.’ Other virtual currencies include Litecoin, Namecoin, Auroracoin, Peercoin, and Dogecoin – about 500 varieties in total – but this research study primarily focuses on Bitcoin. This paper serves as a comparative analysis to help discern how these respective countries classify Bitcoin (e.g., a virtual object, currency, or potential security), and how three unique jurisdictions regulate, or intend to regulate, DVCs. Bitcoin is identified as a ‘currency,’ throughout the paper, but the classification is heavily contested. Questions for analyses include: are there appropriate existing legal frameworks to regulate Bitcoin? What securities regulation challenges does Bitcoin pose? What are the consumer and investor protection concerns associated with Bitcoin compared to traditional financial exchanges? What are the cross-jurisdictional challenges of virtual currency transactions that operate over the Internet (e.g., money laundering, or fraudulent activities)? Research incorporates securities commission reports, social and political commentary from secondary sources, relevant jurisprudence and legislation. Findings help situate the current climate of Bitcoin globally, and assess how its regulation differs relative to technological, economic, social, financial, and political forces. 30 Hong Kong Journal of Legal Studies (2015) Vol 9 INTRODUCTION Bitcoin, also known as a decentralized virtual currency (DVC), 1 is regulated differently in the People’s Republic of China (PRC), Canada, and the United States, and represents a vastly underdeveloped area of the law. No country has currently backed Bitcoin. Launched in 2009, and founded by Satoshi Nakamoto,2 Bitcoin is a ‘decentralized peer-to-peer virtual currency.’3 Other virtual currencies include Litecoin, Namecoin, Auroracoin, Peercoin, and Dogecoin – about 500 varieties in total – but this research study primarily focuses on Bitcoin.4 This paper serves as a comparative analysis to help discern how these respective countries classify Bitcoin (eg a virtual object, currency, or potential security), and how three unique jurisdictions regulate, or intend to regulate, DVCs. Bitcoin is identified as a ‘currency’ throughout * 1 2 3 4 Matthew P. Ponsford is currently an LL.M. (Master of Laws) Candidate at McGill University’s Faculty of Law in Montréal, Québec, Canada. Previously he worked with a global law firm. He holds a J.D. (Juris Doctor) from the University of Ottawa/Université d’Ottawa in Ottawa, Ontario, Canada and completed an exchange at the University of Hong Kong’s Faculty of Law. He also holds a B.Sc. (Bachelor of Science, Distinction) from Queen’s University in Kingston, Ontario, Canada, where he studied as a Queen’s Chancellor’s Scholar and Millennium Excellence Award National Laureate (awarded by the Government of Canada). He is the recipient of several awards and honours, including the Governor General of Canada’s Bronze Academic Medal and the Nova Scotia Lieutenant Governor’s Medal. He is a member of the Canadian Bar Association and the Ontario Bar Association. A sincere thank you is extended to the entire HKJLS editorial team for their feedback, revisions, and professionalism. Joseph Cook, ‘Bitcoin: Technological Innovation or Emerging Threat?’ (2014) 30(3) John Marshall Journal of Information Technology & Privacy Law 535, 536. Austin Hill, Bitcoin: Is Cryptocurrency Viable? (CMC Thesis, Claremont McKenna College, 2014) 1-2. James Vincent, ‘What is Bitcoin? A quick guide to the virtual currency, how it works, and its possible future’ (The Independent, 22 April 2014) <www.independent.co.uk/life-style/gadgets-and-tech/what-is-bitcoin-a-quickguide-to-the-virtual-currency-how-it-works-and-its-pssible-future-9274495.html> accessed 18 May 2015. United States Government Accountability Office (USGAO), Report to the Committee on Homeland Security and Governmental Affairs, U.S. Senate, Virtual Currencies: Emerging Regulatory, Law Enforcement, and Consumer Protection Challenges (May 2014) 10. The total value of each of these additional virtual currencies was estimated at less than USD$400 million. A Comparative Analysis of Bitcoin and Other DVCs 31 the paper, but the classification is heavily contested. Questions for analyses include: Are there appropriate existing legal frameworks to regulate Bitcoin? What securities regulation challenges does Bitcoin pose? What are the consumer and investor protection concerns associated with Bitcoin compared to traditional financial exchanges? What are the cross-jurisdictional challenges of virtual currency transactions that operate over the Internet (eg money laundering, or fraudulent activities)? The paper begins with an overview of the regulation of Bitcoin in the People’s Republic of China, including new rules for commercial banks. Next, Canada’s regulation is highlighted, including new legislation (Bill C-31) that will regulate Bitcoin as a money services business. The United States is the final jurisdiction analysed, which includes discussion of the infamous Silk Road website, and the role of Bitcoin as in-kind contributions in the electoral process. Finally, Canada and the US are the primary jurisdictions used in a comprehensive and comparative discussion related to money laundering, criminal activity, and terrorist financing, and the European Commission and European Union are discussed in the context of attempts toward the international coordination of the regulation of DVCs. Research incorporates securities commission reports, social and political commentary from secondary sources, relevant jurisprudence, and legislation. Findings help situate the current climate of Bitcoin globally, and assess how its regulation differs relative to technological, economic, social, financial, and political forces. I. BACKGROUND AND INTRODUCTION TO BITCOIN There are two types of e-money: one denominated in a national currency, such as PayPal balances and pre-loaded store-value credit cards (eg MasterCard or Visa), or the ubiquitous Octopus card in Hong Kong, all managed by a third party. The second, cryptocurrency (eg Bitcoin), is not denominated by any national currency.5 Transactions also occur without 5 Carolyn Wilkins, ‘Money in a Digital World’ (Speech delivered by the Senior Deputy Governor of the Bank of Canada at Wilfrid Laurier University, Waterloo, Ontario, 13 November 2014) <http://news.gc.ca/web/article-en.do?nid=904419> accessed 18 May 2015. 32 Hong Kong Journal of Legal Studies (2015) Vol 9 validation from a third party.6 As of August 2014, there were only 21 million Bitcoins in the world; 12 million were in circulation. 7 One inherent risk is the volatile fluctuation of Bitcoin, which is ten times more volatile than typical currencies.8 For instance, in 2013 price per Bitcoin went from USD$13 to USD$1000, and as of April 2014, the price was around USD$300, with a total estimated worth of USD$3.5 billion. 9 Bitcoin’s price fluctuates rapidly, and a limited population owns the vast majority of the currency: estimates suggest 47 people own 30% of all Bitcoins. 10 A May 2014 report estimated 12.6 million Bitcoins in circulation with an exchange rate of USD$458 each, for a total value of USD$5.6 billion.11 In addition to its speculative value, there remains debate if Bitcoin is a currency at all. No central authority controls Bitcoin, and there are currently no transaction fees during the payment process. Computer experts use the blockchain method of verifying transactions in the absence of a central authority. Trades tend to be secure, but the storage of Bitcoin is not, posing concerns if there are valid securities interests in the digital currency.12 For instance, 740,000 stored Bitcoins were lost on Mt. Gox (a Japanese Bitcoin exchange system). A Bitcoin hacking incident also occurred in Edmonton, Alberta, Canada (March 2014), when Flexcoin, a Bitcoin bank, was robbed of roughly USD$654,000 worth of currency. Flexcoin subsequently announced it was shutting down.13 Generally, virtual currencies raise larger consumer protection issues, especially because of greater anonymity in Bitcoin and other 6 7 8 9 10 11 12 13 ibid. Vincent (n 3). Sandra Appel, ‘Can you take a security interest in bitcoin?’ (Davis LLP Banking & Financial Services Bulletin, 7 May 2014) <www.dlapiper.com/en/canada/insights/publications/2014/05/can-you-take-asecurity-interest-in-bitcoin/> accessed 18 May 2015. Vincent (n 3). Hill (n 2) 30-33. USGAO Report 2014 (n 4) 9. Appel (n 8) 1. Armina Ligaya, ‘After Alberta’s Flexcoin, Mt. Gox hacked, bitcoin businesses face sting of free-wheeling ways’ (Financial Post, 5 March 2014) <http://business.financialpost.com/2014/03/05/after-albertas-flexcoin-mt-goxhacked-bitcoin-businesses-face-sting-of-free-wheeling-ways> accessed 18 May 2015. A Comparative Analysis of Bitcoin and Other DVCs 33 virtual currency transactions as compared to traditional financial exchanges.14 A May 2014 report reiterated concerns: Because peer-to-peer bitcoin transactions do not require the disclosure of information about a user’s identity, they give participants some degree of anonymity. In addition, computer network communication can be encrypted and anonymized by software to further hide the identity of the parties in transactions.15 Note transactions are not perfectly anonymous—sometimes referred to as ‘pseudonymous’—because the time and amount of each transaction is recorded in the blockchain. 16 The US Department of Homeland Security (including the Secret Service), the Department of Justice, and the Securities Exchange Commission (SEC), have paid particular attention to these currencies because of potential money laundering activity, and cross-border criminal financing. 17 Other associated issues with Bitcoin include: difficulty in reversing transactions, vulnerability of virtual wallets (including irrecoverable theft),18 lengthy time to process transactions (requiring Bitcoin validation of the blockchain sequence), computer hacking of the private component of the blockchain, and potential fraud where consumers are promised a high per cent interest rate of return on a Bitcoin investment. In the US, SEC enforcement extends to virtual-currency-related securities transactions which require companies offering and selling virtual currencies, such as Bitcoin, to register an offering with the SEC or qualify for registration exemption. On the other hand, tracking money laundering and other criminal activity is also challenging. The increased anonymity of Bitcoin and other virtual currency transactions means no personally identifiable information is disclosed prior to, during, or following a transaction.19 Consumer and investor protection is another risk. Many users are unaware of the dangers, which include: (1) lack of bank involvement (eg no Canada Deposit Insurance protections as per most banks); (2) limits on recourse (ie no consumer liability for 14 15 16 17 18 19 USGAO Report 2014 (n 4) 1. ibid 6. ibid. ibid 11. Hill (n 2) 10. ibid 21. 34 Hong Kong Journal of Legal Studies (2015) Vol 9 fraudulent activity as per credit and debit cards); and (3) volatile prices of virtual currencies. The SEC’s Office of Investor Education and Advocacy has issued two investor alerts on virtual currencies.20 The agency has started to review a registration statement from a company looking to conduct a public offering of virtual-currency-related securities. 21 In Canada, an internal Finance Department memo also surfaced, which warned: ‘Virtual currencies such as Bitcoin have been criticised for their potential to fund illicit activity, such as money laundering and terrorist financing.’22 The memo was addressed to Jim Flaherty, the former Minister of Finance. Although Bitcoin transactions will align with current anti-money laundering laws, containing a duty to report suspicious activity, Canadian regulation will be limited to ensure innovative development.23 Presently, the Bank of Canada considers Bitcoin and other cryptocurrencies an investment product and not money. The Canada Revenue Agency also considers cryptocurrencies a commodity that suggests buying and selling Bitcoin is taxable income. Concerns were raised again recently (13 November 2014) in a speech from Carolyn Wilkins, Senior Deputy Governor of the Bank of Canada, in which she outlined several jurisdictions’ plans for developing a new legal framework: Canada has introduced legislation to require cryptocurrencies to register and to report suspicious transactions that may be linked to money laundering and terrorist financing. Regulators in the state of New York are proposing to issue a ‘BitLicense’ to protect consumers, prevent money laundering, and enforce cyber security. Some countries, like China, have ruled that financial institutions cannot handle any Bitcoin transactions.24 20 21 22 23 24 US Securities and Exchange Commission, ‘Investor Alert: Bitcoin and Other Virtual Currency-Related Investments’ (7 May 2014) <http://investor.gov/newsalerts/investor-alerts/investor-alert-bitcoin-other-virtual-currency-relatedinvestments#.VHrRTqSUdAh> accessed 18 May 2015. USGAO Report 2014 (n 4) 29. Jim Bronskill, ‘Internal Finance memo warns of potential for Bitcoin related crime’ (Investment Executive, 29 July 2014) <www.investmentexecutive.com/-/internalfinance-memo-warns-of-potential-for-bitcoin-related-crime> accessed 18 May 2015. ibid. Wilkins (n 5). A Comparative Analysis of Bitcoin and Other DVCs 35 Globally, it is estimated over 2.5 billion people lack access to bank accounts. Cryptocurrencies offer these individuals a means to process transactions and micropayments. This convenience and innovation improves global socioeconomic equality, and narrows the digital divide, but digital currencies also pose many legal challenges, including cybercrime. II. DIGITAL CURRENCIES AND LEGAL REGULATION IN THE PEOPLE’S REPUBLIC OF CHINA (PRC) Before analysing Bitcoin regulation or deregulation in three country examples, a chart below summarises several regulatory and tax management approaches:25 Jurisdiction China (PRC) Canada United States Regulated Yes No Unclear Taxed Yes Yes Taxed Commodity as Banned Yes No No China is currently the second-largest economy in the world. China initially attempted to regulate digital currencies, including Q coin, a currency which originated from an online video game and transitioned to real-world exchange of goods and services. 26 Later China issued a complete ban in the wake of the popularity arising from Q coin use.27 Most recently, Bitcoins remained outlawed and the ban was extended to Bitcoin transactions processed through financial institutions and third parties.28 The People’s Bank of China does not provide Bitcoin with any 25 26 27 28 Andrew B Macurak, ‘Regulating Bitcoin’ (1 April 2014) 20-21 <www.abastonier.com/stonier/wp-content/uploads/2014-Macurak-Andrew.pdf> accessed 18 May 2015. Cook (n 1) 560-561. Wu Yiyao and Gao Changxin, ‘Banks not allowed to use Bitcoin’ (China Daily USA, 5 December 2013) <http://usa.chinadaily.com.cn/business/201312/05/content_17157648.htm> accessed 18 May 2015. Cook (n 1) 560-561. 36 Hong Kong Journal of Legal Studies (2015) Vol 9 legal status, refuses to recognise Bitcoin use as a currency, and remains concerned Bitcoin is not protected by a central authority. Before the ban, China accounted for the most Bitcoin exchanges, but now comprises only 7% of all transactions.29 Alibaba has also complied with the ban on DVCs in January 2014.30 Even though the actions of the Chinese government substantially curbed the worldwide virtual currency base,31 shutting down Bitcoin use entirely has proved difficult. China is lagging behind other jurisdictions that are taxing Bitcoin exchanges without a wide scale ban. China is missing the opportunity to help develop and control a rapidly developing area of the law some have dubbed ‘smart contracts’.32 This concept refers to written virtual script, or the blockchain, of the Bitcoin network. As a condition to validating a transaction, the script is computed, read, and verified—an emerging and developing area of information technology and contract law. The blockchain history is also stored, which reduces litigation and facilitates any necessary dispute resolution.33 The strict outlawing of Bitcoin in China has also created large and volatile Bitcoin price fluctuations in other jurisdictions and markets. The banning of Bitcoin has created heightened scepticism that influences the value of Bitcoins globally. 34 For example, in October 2013, an announcement that Baidu, a large online shopping platform in China, would accept Bitcoin payment created a large surge in Bitcoin value; two months later, in December 2013, the Chinese government banned Bitcoin payments, which conversely saw a huge drop in value.35 In other words, the US Bitcoin market valuation is directly correlated to the Chinese Bitcoin regulatory regime. It is suggested that new laws, regulations, and policies be devised to meet the demands of the innovative technology of Bitcoin.36 29 30 31 32 33 34 35 36 ibid. ibid 565. Hill (n 2) 29. ibid 37-38. ibid 38. PH Farmer Jr, ‘Speculative Tech: The Bitcoin Legal Quagmire & the Need for Legal Innovation’ (2014) 9(1) Journal of Business & Technology Law 85, 104-105. Ladislav Kristoufek, ‘What are the main drivers of the Bitcoin price? Evidence from wavelet coherence analysis’ (2014) Institute of Economic Studies 11 <http://arxiv.org/pdf/1406.0268v1.pdf> accessed 18 May 2015. Farmer (n 34) 105. A Comparative Analysis of Bitcoin and Other DVCs 37 One criticism of China’s strict crackdown on Bitcoin is the state’s desire to control freedom of speech via the Internet. Bitcoin users who are also bloggers, outspoken activists, or ‘revolutionaries’ can sometimes use Bitcoin as a means to fund web publishing or coordinated message broadcasting. 37 This new technology thus protects users’ identities while challenging the state’s policies and laws. In other words, dissidents have found Bitcoin payments convenient and safe from the ‘Internet police’ when voicing anti-government views. 38 WordPress, a popular web-publishing platform hosting sixty million blogs, has recently announced acceptance of Bitcoin payments. This allows Chinese citizens challenging authorities to protect their identity via a secure payment method. However, the Chinese government has quickly adapted to these new regulatory and tracking challenges. The government is improving and prioritizing its oversight of websites utilising Bitcoin as a payment method.39 The neutral position of the People’s Bank of China related to Bitcoin has quickly become hostile, with the Central Bank threatening to ‘censure’ banks that do not cooperate with requests to crackdown on Bitcoin. Strict regulatory controls have also created a turbulent and contentious relationship between the Central Bank and the country’s top five financial institutions. After the Bitcoin ban, Industrial & Commercial Bank of China Ltd, China Construction Bank Corp, Agricultural Bank of China Ltd, Bank of China Ltd, and Bank of Communications Co Ltd allowed Bitcoin accounts in spite of the government’s previous warnings. 40 A May 2014 meeting coordinated by the Central Bank scolded senior executives of the big-five banks for their lack of oversight and cooperation. The banks were instructed to setup special groups to monitor potential Bitcoin account transactions. According to The Wall Street Journal, a notice sent to commercial banks on December 4, 2013 stated: […] the People’s Bank of China said that domestic financial institutions couldn’t conduct settlement or 37 38 39 40 Jonathan Turpin, ‘Bitcoin: The Economic Case for a Global, Virtual Currency Operating in an Unexplored Legal Framework’ (2014) 21(1) Ind J Global Legal Stud 335, 344. ibid 360. ibid 363-364. Grace Zhu, ‘China Central Bank Warns Banks on Bitcoin’ (The Wall Street Journal, 7 May 2014) <http://online.wsj.com/articles/SB100014240527023046553045795472515524909 62> accessed 18 May 2015. 38 Hong Kong Journal of Legal Studies (2015) Vol 9 payments related to bitcoin. It also barred trust companies and fund-management firms from making bitcoin-related investments and advised insurers not to insure bitcoins.41 Commercial banks were also instructed to notify clients by 10 May 2014 of the new Bitcoin prohibitions. Despite these warnings, digital currency exchange companies are already identifying creative avenues to circumvent the government’s strict regulations. One example is BTC China’s installation of a Bitcoin ATM in Shanghai and the company’s launch of an online buy-and-sell app. BTC’s ATM is not connected to China’s commercial banks.42 Although financial institutions are strictly forbidden in engaging with Bitcoin, as of June 2014, no Chinese laws explicitly state that a citizen is unable to own Bitcoin.43 The Chinese government’s conflicting positions has caused great frustration and confusion for Bitcoin users both within and outside the country. For instance, on 3 December 2013, the People’s Bank of China defined Bitcoin as a ‘virtual good.’ Financial and payment companies, as well as third-party processors, were forbidden from supporting Bitcoin. Bitcoin exchanges were also required to register with the Ministry of Industry and Information Technology. In addition to the Ministry of Industry and Information Technology, the December Bank Notice  No. 289 was jointly released by the People’s Bank of China, China Banking Regulatory Commission, China Securities Regulatory Commission, and the China Insurance Regulatory Commission. The statement read (in part): It is required that, at this stage, financial and payment institutions may not use Bitcoin pricing for products or services, may not buy or sell Bitcoins, may not act as a central counterparty in Bitcoin trading, may not offer insurance products associated with Bitcoin, may not provide direct or indirect Bitcoin-related services to customers, including: registering, trading, settling, clearing or other services; accepting Bitcoin or use of Bitcoin as a clearing tool; trading Bitcoin with CNY or 41 42 43 ibid. ibid. Armand Tanzarian, ‘Legal Basics: Bitcoin in China’ (CoinTelegraph, 10 June 2014) <http://cointelegraph.com/news/111753/legal_basics_bitcoin_in_china> accessed 18 May 2015. A Comparative Analysis of Bitcoin and Other DVCs 39 foreign Bitcoin-related financial products; and using Bitcoin as a means of investment for trusts and funds.44 Websites serving as Bitcoin trading platforms were also instructed to register with the Telecommunications Bureau, in accordance with the Telecommunications Regulations of the People’s Republic of China and the Internet Information Services Managing Guidelines, and to comply with PRC’s Anti-Money Laundering Law.45 A spokesperson for the People’s Bank of China commented on the possibility of additional regulatory measures, stating (in part): […] ordinary people have the freedom to participate [in buying and selling Bitcoin], provided they assume the risks themselves. Next, the People’s Bank will work with the relevant ministries to supervise the financial institutions, payment institutions and websites that provided Bitcoin registration, trading and other services […] the People’s Bank will continue to pay close attention to the movements of Bitcoin and associated risks […]46 On 31 January 2014, BTC China, the largest global Bitcoin exchange, continued to accept yuan deposits. Later, on 21 March 2014, following many rumours circulating in the media, all banks were instructed to close Bitcoin exchanges. Outlawing Bitcoin entirely, as China has rapidly done, is not a recommended approach for three reasons.47 First, the vast majority of countries globally have not made Bitcoin illegal through legal regimes. 44 45 46 47 BTC China, ‘The People’s Bank of China and Five Associated Ministries Notice: “Prevention of Risks Associated with Bitcoin”’ Bank Notice  No 289 (3 December 2013) <https://vip.btcchina.com/page/bocnotice2013> accessed 18 May 2015. ibid. The Notice also instructed: ‘In order to prevent the use of Bitcoin and other “virtual currencies” for use in excessive speculation, posing a risk to the public interest and the legal status of the Renminbi, “Notice” requires that financial institutions and payment institutions should, in their daily work, employ the concept of proper money, focus on strengthening public knowledge of currency, maintain a proper understanding of currency and of virtual goods and commodities, practice rational investment, reasonably limit investment risk, safeguard individual property, and other concepts included in financial literacy activities, and guide the public to establish a firm understanding of concepts related to currencies and investment.’ ibid. Turpin (n 37) 367. 40 Hong Kong Journal of Legal Studies (2015) Vol 9 This is important because in order for each country to participate in the global economy, micropayments must be made as widely available as possible. For instance, citizens residing in developing countries are ensured access to banking services through Bitcoin and other DVCs, which has various socio-economic advantages, including access to the marketplace and the expansion of local business practices. Second, there are significant economic benefits to regulating Bitcoin use for both the financial market and consumers. This includes innovations in investing, business practices, banking, and retail services, which would not occur in the absence of DVCs. Consumers benefit from alternative forms of payment such as Bitcoin processing at in-store cash registers, albeit lengthy transaction times remain a concern. The financial market and economy also improves through tax revenues depending on the jurisdiction. For example, the US taxes Bitcoin as a commodity, and Canada and China tax Bitcoin as well. Third, the Bitcoin network is very difficult to target, and most governments, including China, do not have the capability to mitigate this challenge. Outlawing DVCs is not the most effective approach to combating potential crime associated with this new technology because Bitcoin will become both less understood and driven underground, further supporting and contributing to problems associated with illicit activities. Legislation can assist the Chinese government in regulating Bitcoin without the need to outlaw DVCs entirely. Existing legal frameworks could also be adapted to control new and rapidly expanding DVCs without the need to devise new laws. For example, the province of Québec, Canada, has recently mandated licenses for virtual currency trading platforms. Licenses are regulated through the Autorité des marchés financiers (AMF), which amended the Policy Statement to the Money-Services Business Act.48 It is clear that the Chinese government’s evolving position on Bitcoin regulation continues to be a very timely and recent development. In 2015 the government may propose other measures if the current crackdown is not effective. In the meantime, little information beside the 5 December 2013 news release and 21 March 2014 ban is available to the public, nor are governments of other countries interested in China’s regulatory position. 48 Pete Rizzo, ‘Québec Mandates Bitcoin ATMs, Trading Platforms Obtain Licenses’ (CoinDesk, 13 February 2015) <www.coindesk.com/quebec-province-bitcoinregulation> accessed 18 May 2015. A Comparative Analysis of Bitcoin and Other DVCs 41 III. CANADIAN REGULATION OF DVCs AND FEDERALLY PROPOSED LEGISLATION As discussed in the introductory remarks, Canada considers Bitcoin more of a commodity than a currency, and has a similar tax approach to China before the countrywide ban. The Canadian mint has recently prepared to test Canada’s own digital currency, coined MintChip.49 In this project, unlike Bitcoin, the Royal Canadian Mint had the direct support of the federal government. MintChip creators have lauded the new digital currency, dubbing the creation of the ‘future of money’, for its potentially low-cost operations and innovative alternative to traditional currencies. The need to replace physical coins and bills is reduced. Another advantage is lower costs for consumers, who pay USD$5 billion per year in a 3% credit card use fee.50 Additionally, consumers avoid the need for a bank account or impressive credit score rating. 51 The success of the MintChip project seems premised on businesses’ and merchants’ acceptance levels of the new digital currency, the public’s perception, and consumer demand. A major milestone was reached with MintChip’s first ‘proof-of-concept implementation’,52 but the mint has now decided to sell the business to the private sector.53 Canada was also the first jurisdiction in the world to introduce concrete legislative measures to regulate Bitcoin under the larger umbrella of virtual currencies. Bill C-31 legislation received royal assent on 19 49 50 51 52 53 John Greenwood, ‘Canadian mint ready to test its own digital money project’ (Financial Post, 19 September 2013) <http://business.financialpost.com/2013/09/19/canadian-mint-pushes-ahead-inmurky-world-of-crypto-currency-with-mintchip-project> accessed 18 May 2015. ibid. ibid. Michael Oliveira, ‘Royal Canadian Mint’s digital MintChip passes new milestone’ (The Globe and Mail, 13 January 2014) <www.theglobeandmail.com/report-onbusiness/royal-canadian-mints-digital-currency-system-mintchip-passes-newmilestone/article16311103> accessed 18 May 2015. David George-Cosh, ‘Canada Puts Halt to MintChip Plans; Could Sell Digital Currency Program’ (The Wall Street Journal, 4 April 2014) <http://blogs.wsj.com/canadarealtime/2014/04/04/canada-puts-halt-to-mintchipplans-could-sell-digital-currency-program> accessed 18 May 2015. 42 Hong Kong Journal of Legal Studies (2015) Vol 9 June 2014, which included sections establishing reporting requirements of DVCs and Bitcoin, similar to the regulation requirements of other financial transactions. 54 The new laws regulate Bitcoin as a money services business, requiring registration with the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC), suspicious activity report submission, record keeping, and strict compliance protocols. The Bitcoin regulations apply to domestic and international Bitcoin operators. Controversy exists as new reporting requirements may prove onerous and hinder innovation, especially at a time when the Royal Canadian Mint is attempting to sell off MintChip for further private-sector development. The summary of Bill C-31 stated (in part): Division 19 of Part 6 amends the Proceeds of Crime (Money Laundering) and Terrorist Financing Act to, among other things, enhance the client identification, record keeping and registration requirements for financial institutions and intermediaries, refer to online casinos, and extend the application of the Act to persons and entities that deal in virtual currencies and foreign money services businesses [emphasis added].55 Legislation that specifically altered the definition of money services business stated: (4) If subsection 256(2) comes into force, then on the latter of January 1, 2015 and the day on which that subsection comes into force, […] ‘money services business’ means an entity […] (a)(iv) dealing in virtual currencies, as defined by regulation […]56 Other legislative provisions 57 incorporated virtual currency language, including foreign businesses directing services at a Canadian 54 55 56 57 Bill C-31, An Act to Implement Certain Provisions of the Budget Tabled in Parliament on February 11, 2014 and Other Measures, 2nd Session, 41st Parliament, 2014 (assented to 19 June 2014). ibid Summary, Part 6, Division 19. ibid s 244.7(4)(a)(iv). ibid ss 256(2)(iv), 294(3). A Comparative Analysis of Bitcoin and Other DVCs 43 person or entity. Overall, the enacted legislation is a significant development because: (a) it regulates DVCs as a money services business; (b) does not specify the meaning of ‘dealing in virtual currencies’; (c) imposes FINTRAC registration, subsequently requiring an anti-money laundering regime after successful registration; (d) extends to entities both inside and outside Canada, or services directed at individuals in Canada (but does not extend to services directed at entities outside Canada); and (e) prevents banks from managing money service businesses not registered with FINTRAC. IV. UNITED STATES REGULATORY CHALLENGES FOLLOWING CHINA’S BITCOIN BAN 77% of all conversions of Bitcoin to a denominated currency are for the US dollar. Federally, the US does not officially consider Bitcoin a currency, although a Federal District Court in Texas and the US Department of Treasury has.58 Thus much regulatory inconsistency exists amongst states and between state and federal authorities. The country also has a constitutional guarantee to monopolize the production and management of its national currency. The trend appears to be defining Bitcoin as a currency given the wide Internal Revenue Service (IRS) tax implications associated with its use. 59 Like other jurisdictions, tax evasion, along with money laundering, and buying and selling contraband, remain concerns. The Silk Road website was an infamous case of an online black market which sold narcotics, forged documents, and other illegal services, using Bitcoin currency. 60 The US FBI arrested the mastermind and uncovered almost one million registered users who used approximately 58 59 60 SEC v Shavers, No 4:13-CV-416, 2013 US Dist. LEXIS 110018, 5 (E.D. Tex. 6 August 2013). Internal Revenue Service, ‘IRS Virtual Currency Guidance: Virtual Currency Is Treated as Property for US Federal Tax Purposes; General Rules for Property Transactions Apply’ (25 March 2014) <www.irs.gov/uac/Newsroom/IRS-Virtual-Currency-Guidance> accessed 18 May 2015. Cook (n 1) 557-558. 44 Hong Kong Journal of Legal Studies (2015) Vol 9 9.5 million Bitcoins (worth USD$1.2 billion at the time).61 In order to solve the many complex legal issues associated with Bitcoin, the author of a recent article suggests outlawing the currency entirely, similar to China’s approach, and devising a virtual currency regulated by a central authority. 62 It is estimated over 75% of all Bitcoin-to-US currency transactions occur through three main Bitcoin exchanges. If those exchanges were shut down, the volume of transactions would decline substantially, as experienced in China. Removing intermediaries who exchange Bitcoins for goods, and prosecuting individuals similar to what was done to combat illegal music sharing, is also proposed as a viable solution. Disintermediation also poses significant consumer risks, such as fraud, in the absence of a functional regulatory legal regime.63 The challenges Bitcoin poses for the US is akin to the case of A&M Records v Napster Inc,64 where Napster users took advantage of a decentralized network of users to disseminate illegal, copyrighted works. The court quickly shutdown the site and found Napster liable for contributory and vicarious infringement with respect to A&M Records copyrights, a subsidiary of Universal Music Group. 65 The case was pivotal because it was the first time copyright law was applied to peer-topeer (P2P) file-sharing services in a significant way. The peer-to-peer service required certain downloadable software and access to a network that is similar to accessing Bitcoin’s virtual wallet and address. Although A&M Records v Napster dealt with intellectual property rights and Bitcoin involves financial transactions, the technological architecture is similar: music-sharing users were able to freely communicate with each other, and upload or download music files through a centralized system. Similarly, Bitcoin users can disburse or receive payments to and from other virtual wallets, except the process is decentralized. Napster had a central authority which made it easier to track specific users violating copyright agreements. Napster’s contributory and negligent oversight was also easily detected whereas Bitcoin operations are more challenging given the currency’s use of decentralized online networks. 61 62 63 64 65 ibid 558. ibid 559-560. Isaac Pflaum and Emmeline Hateley, ‘A Bit of a Problem: National and Extraterritorial Regulation of Virtual Currency in the Age of Financial Disintermediation’ (2014) 45 Geo J Int’l L 1169, 1193-1194. A&M Records v Napster Inc, 239 F (3d) 1004 (9th Circuit 2001). Cook (n 1) 562-563. A Comparative Analysis of Bitcoin and Other DVCs 45 Although music and file sharing services have now utilized the decentralized system post-Napster, a large crackdown ensued and the most egregious copyright infringers have been prosecuted. Press releases were also issued to deter illegal behaviour. A similar approach could be implemented for Bitcoin by investigating intermediaries that facilitate Bitcoin payment transfers and exchanges despite the absence of a central authority.66 However, in order for this to be feasible, the US needs to establish consensus on what constitutes a decentralized virtual currency. A clear definition should be constructed in order to enforce the ban through one of the federal agencies.67 In the interim, the US government has stated those engaging in Bitcoin transactions must comply with the US Bank Secrecy Act, 1970 (BSA),68 the country’s anti-money laundering legislation. Similar to Canada’s FINTRAC registration requirements, the Financial Crimes Enforcement Network (FinCEN) 69 has issued an interpretive guidance, clarifying the applicability of the BSA to moneyservices businesses.70 Child exploitation may seem a surprising implication of the prevalence of DVCs, but US authorities and the International Centre for Missing and Exploited Children (ICMEC) have expressed concern that the new digital economy, including DVCs, has contributed to the commercial exchange of sex abuse images, child pornography,71 and sex and human trafficking.72 DVC payments sometimes facilitate access to child pornography. The US has also held numerous Congressional hearings 73 and, in early 2012, the FBI formed the Virtual Currency Emerging Threats Working Group (VCET). The VCET coordinates and 66 67 68 69 70 71 72 73 ibid 563-564. ibid 564. Bank Secrecy Act, 1970, 31 USC 310. US Treasury Department, ‘Application of FinCEN’s Regulations to Persons Administering, Exchanging, or Using Virtual Currencies’ (18 March 2013) <www.fincen.gov/statutes_regs/guidance/html/FIN-2013-G001.html> accessed 18 May 2015. Hill (n 2) 27-28. Lawrence Trautman, ‘Virtual Currencies: Bitcoin and What Now After Liberty Reserve, Silk Road, and Mt. Gox?’ (2014) 20 Rich JL & Tech 13, 16. Stephen Middlebrook and Sarah Jane Hughes, ‘Regulating Cryptocurrencies in the United States: Current Issues and Future Directions’ (2014) 40(2) Wm Mitchell L Rev 813, 816. Matthew Kien-Meng Ly, ‘Coining Bitcoin’s “Legal-Bits”: Examining the Regulatory Framework for Bitcoin and Virtual Currencies’ (2014) 27 Harv JL & Tech 587, 605. 46 Hong Kong Journal of Legal Studies (2015) Vol 9 helps combat other crimes associated with DVCs across a number of state and federal government departments, and international law enforcement agencies.74 Another unexpected implication of Bitcoin’s popular use centres on the US political process, campaign contributions, and election laws.75 In November 2013, the Federal Election Commission (FEC) originally released a decision declaring Bitcoins were not considered money and could not be accepted as campaign contributions.76 Since then, in May 2014, the FEC77 announced Bitcoin contributions could be reported as ‘inkind’ contributions toward political action committees (PACs).78 A FEC memo also provided in-depth legal analysis and strict reporting requirements for Bitcoin donations, including rules about receipts, Bitcoin deposits, investments, and refunds.79 Concerns remain that the use of Bitcoins in the political process could mean certain donations are untraceable, given the anonymous nature of DVCs. The FEC allows individuals a maximum donation of USD$100 worth of Bitcoins per political campaign, the current maximum equivalent to cash donations. Other in-kind donation limits, in the forms of cheques, bonds, office supplies, computers, and other types, are much higher.80 74 75 76 77 78 79 80 Trautman (n 71) 29-31. Farmer (n 34) 96. Myles Martin, ‘Alternative Disposition of Advisory Opinion Request 2013-15 (Conservative Action Fund)’ (Federal Election Commission, 25 November 2013) <www.fec.gov/pages/fecrecord/2013/december/aor2013-15.shtml> accessed 18 May 2015. Julian Hattem, ‘FEC allows bitcoins in campaigns’ (The Hill, 8 May 2014) <http://thehill.com/policy/technology/205611-fec-allows-bitcoins-in-campaigns> accessed 18 May 2015. See also Federal Election Commission, ‘AO 2014-02 (Make Your Laws PAC) – Draft C’ (7 May 2014), 5 <www.fec.gov/agenda/2014/documents/mtgdoc_14-24b.pdf> accessed 18 May 2015. ibid. Hattem (n 77). A Comparative Analysis of Bitcoin and Other DVCs 47 V. MONEY LAUNDERING, CRIMINAL ACTIVITY AND TERRORIST FINANCING Information technologies such as the Bitcoin exchanges, which facilitate virtual currency transactions and exchange from Bitcoin to denominated currencies, have posed unprecedented challenges for law enforcement personnel. Canada seems to be a leader in this area with the enactment of Bill C-31.81 After all provisions come into force, DVCs will be considered money service businesses. This means suspicious financial transactions – or attempted suspicious transactions – potentially involving money laundering or terrorist activities, must be reported, irrespective of the transaction amount. Single transactions involving USD$10,000 or more must also be reported. Businesses must confirm funding sources from money transfers sent or received internationally for USD$100,000 or more, to or from a suspected ‘politically exposed person’ (PEP). PEPs comprise one of three categories: foreign, domestic, or the head of an international organization. Money service businesses must complete regular risk assessments to identify anti-money laundering control weaknesses and help mitigate those risks and vulnerabilities. A compliance regime is mandated, including a designated compliance officer, adequate financial resources and staff, client identification procedures, terrorist financing and property identification protocols, a procedure for reviewing the compliance regime, and a comprehensive record-keeping system.82 The US remains particularly concerned that Bitcoin will pose added challenges to combating terrorism. The exchange of money via the Bitcoin network is seen to attract cybercriminals which makes the detection of illicit funding difficult. 83 If adequate controls are not implemented, terrorist groups may successfully finance their illegal operations in the US or elsewhere.84 81 82 83 84 Bill C-31 (n 54). Christine Duhaime, ‘Canada implements world’s first national digital currency law; regulates new financial technology transactions’ (Duhaime Law, 22 June 2014) <www.duhaimelaw.com/2014/06/22/canada-implements-worlds-first-nationalbitcoin-law> accessed 18 May 2015. Jared Kleiman, ‘Beyond the Silk Road: Unregulated Decentralized Virtual Currencies Continue to Endanger US National Security and Welfare’ (2013) 4(1) American University National Security Law Brief 59, 74. ibid 74-75. 48 Hong Kong Journal of Legal Studies (2015) Vol 9 VI. INTERNATIONAL COORDINATION OF DVCs REGULATION Bitcoin and DVCs pose jurisdictional challenges in the context of transnational crime.85 Law enforcement often faces difficulty in obtaining customer transaction records. The process is slow even with cooperative jurisdictions. The personal jurisdiction of defendants accused of illegal activity associated with DVCs will also continue to present difficulties in combating this new form of cybercrime.86 The challenges of regulating Bitcoin are larger than the separate domestic regulations discussed previously in China, Canada, and the US. In fact, inconsistencies in regulation have posed many challenges for jurisdictions currently attempting to mitigate regulatory deficiencies. For example, Germany does not currently require registration for buying, selling, or exchanging Bitcoin. 87 US regulation through the Treasury Department and between states means there are state-level inconsistencies in regulation, which may drive users to possess and exchange Bitcoin in states with the lowest regulatory burden(s).88 Germany and Canada also do not collect information about users engaged in Bitcoin transactions, which means the US cannot benefit from the data nor can other interested jurisdictions. Revenue and taxing implications have also exposed inconsistencies. For instance, the European Commission and European Union have not clearly established the legal status of Bitcoin,89 although the European Central Bank released a preliminary report in October 2012. 90 The European Commission’s E-money Directive does not 85 86 87 88 89 90 Joel Reidenberg, ‘Technology and Internet Jurisdiction’ (2005) 153 U Pa L Rev 1951. ibid 1961-62. Pflaum and Hateley (n 63) 1195-96. ibid 1197. Niels Vandezande, ‘Between Bitcoins and mobile payments: will the European Commission’s new proposal provide more legal certainty?’ (2014) 22 Int’l JL & Info Tech 295. Pflaum and Hateley (n 63) 1200. A Comparative Analysis of Bitcoin and Other DVCs 49 encompass Bitcoin currency.91 The United Kingdom issued a Revenue & Customs Brief on 3 March 2013, outlining levied taxes for Bitcoingenerated income.92 Canada, Germany, and the US seem united with the UK93 in emphasising Bitcoin transactions are taxable. It is thought that prosecuting Bitcoin users for tax evasion may be the best and most effective international approach to combat and regulate DVCs.94 CONCLUSION AND FUTURE DEVELOPMENTS As one scholar stated: ‘the international regulatory landscape for Bitcoin is a patchwork of inconsistent and incomplete attempts to counter criminal abuse of the technology.’95 Governments such as China should not prematurely ban open access technologies like Bitcoin. Jonathan Zittrain, writing for the Harvard Law Review, states: Cyberlaw’s challenge ought to be to find ways of regulating — though not necessarily through direct state action — which code can and cannot be readily disseminated and run upon the generative grid of Internet and PCs, lest consumer sentiment and preexisting regulatory pressures prematurely and tragically terminate the grand experiment that is the Internet today.96 Technological progression and Internet governance has left many countries conflicted in how best to manage Bitcoin and other DVCs. In China, Canada, and the US, a growing consensus is that DVCs pose many economic and criminal regulatory concerns, despite venture capitalist investments in Bitcoin was expected to total USD$300 million by the end of 2014. Currently, the US and Canada are the primary investment platforms. China could once again become a large investment centre for Bitcoin if the government reverses its decision to outlaw the currency and 91 92 93 94 95 96 Vandezande (n 89) 307. Pflaum and Hateley (n 63) 1200-01. Middlebrook and Hughes (n 72) 847. Thomas Slattery, ‘Taking A Bit out of Crime: Bitcoin and Cross-Border Tax Evasion’ (2014) 39 Brook J Int’l L 829, 857-860. Pflaum and Hateley (n 63) 1215. Jonathan Zittrain, ‘The Generative Internet’ (2006) 119 Harv L Rev 1974, 1979. 50 Hong Kong Journal of Legal Studies (2015) Vol 9 instead strategically regulate DVCs. Taking a hostile approach toward regulation is not recommended since the anonymity of the network poses challenges in identifying users.97 A creative approach to regulation is much more effective, which may include the implementation and regulation of a state’s uniquely owned DVC, such as the now-cancelled plan to implement MintChip in Canada. DVCs also offer an opportunity to explore the ‘burgeoning alterative financial sector’, as an ongoing study in the United Kingdom illustrates.98 Creative regulation of Bitcoin and DVCs will lower business costs, cut red tape, and enable financial loans to small companies or individuals. However, tax liability and enforcement, as well as DVCs introducing competition with national, centrally regulated currencies, will remain major concerns. No standard or internationally coordinated framework regulating DVCs exists, and regulation is unlikely to quickly overcome interjurisdictional challenges. Political, financial, social, and economic forces in China, Canada, and the US also contribute to the countries’ regulatory and legal frameworks. The approach taken to regulate Bitcoin and other DVCs must be tailored to the circumstances and challenges of each jurisdiction. Unfortunately, today, political agendas can mask otherwise innovative technological development, under the guise of national security,99 and attempts to combat money laundering,100 terrorism, and cybercrime. Reducing anti-money laundering and other criminal activities Bitcoin technology facilitates will remain a priority. Areas requiring further knowledge include: potential for ongoing theft of virtual currencies compared to physical currencies; counterfeiting of Bitcoin and other DVCs; the possibility of Bitcoin loans; and whether Bitcoin threatens global currency markets. 101 Over the next decade, a more coordinated regulatory effort may be necessary, which could include discussions at the World Economic Forum or the United Nations. The challenge is striking a balance between developing comprehensive and effective criminal and financial regulatory regimes and policies, while limiting impediments to technological innovation and growth. 97 98 99 100 101 Turpin (n 37) 367. Williams James, ‘Britain eyes regulation for virtual currencies’ (Reuters, 6 August 2014) <http://uk.reuters.com/article/2014/08/06/uk-britain-banking-osborneidUKKBN0G52J120140806> accessed 18 May 2015. Kleiman (n 83). Danton Bryans, ‘Bitcoin and Money Laundering: Mining for an Effective Solution’ (2014) 89 Ind LJ 441, 447, 455-463. Trautman (n 71) 83-84.