
Yellen on Bitcoin: Fed Doesn’t Have Authority to Regulate It in Any Way - rajbala
http://blogs.wsj.com/moneybeat/2014/02/27/yellen-on-bitcoin-fed-doesnt-have-authority-to-regulate-it-in-any-way/
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Eliezer
Three cheers for not overreaching one's mandate. I know we rag a lot on
Federal Reserve chairpeople for not doing NGDP level targeting, but in a lot
of ways it's one of the most sensible branches of government.

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endersshadow
The Fed isn't a branch of government. They also typically target 2% inflation,
a la the ECB. The difference being that the Fed doesn't have a specific
requirement to target it, whereas the ECB does.

Edit: They do the targeting through a variety of ways--and none of them touch
Bitcoin or in any way are influenced by Bitcoin. Just like the Fed has no
authority nor mandate to regulate any other currency than the USD.

~~~
Eliezer
Of course the Fed is a branch of the government, and one of the more powerful
ones. Next you'll be telling me that the Supreme Court doesn't legislate civil
rights because someone painted a word saying "judiciary" above it. I go by
what things are, not by what they're called.

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lugg
I can't tell if sarcasm or severely misinformed.

The fed, is anything but federal. They are a group of private corporations
owned by groups of banks within each reserve banks district. They can be
somewhat controlled by congress by way of statute but rarely are and currently
answer to no one but themselves. There is a lot of conspiracies around who or
what group really owns the majority shares. I'm not going to go into the
theory here as they are just that, theories.

In response to going by what they are not what they are called they very much
are not a branch of government. They say this very plainly on their own
website:

[http://www.federalreserve.gov/faqs/about_14986.htm](http://www.federalreserve.gov/faqs/about_14986.htm)

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peteretep
> I can't tell if sarcasm or severely misinformed

* Describes itself as "within government"

* Subject to congressional oversight

* Governors and Chair appointed by POTUS with oversight from the Senate

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ZenoArrow
They aren't part of the government elected by the public, that's what many
people class as important.

As for subject to congressional oversight, seems like pretty loose oversight
if you ask me...
[https://www.youtube.com/watch?v=CY8xz3Q7aig](https://www.youtube.com/watch?v=CY8xz3Q7aig)

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SeanLuke
This is an amazingly misleading article. What Yellen said was: the Fed only
has the authority to regulate banks, and if Bitcoin stays extra-bank, then it
has no authority to regulate it. However, she said, the Department of Treasury
_does_ have the authority to regulate it.

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larrik
Some people may think "Fed" means "US Government", but it's explicitly stated
in the article that “The Federal Reserve simply does not have authority to
supervise or regulate bitcoin in any way.”

It's just jurisdiction, and the Federal Reserve Chairwoman says they don't
have it.

As for the rest of the government? Well, there's literally nothing they can't
try to regulate.

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argumentum
> Well, there's literally nothing they can't try to regulate.

You did say _try_ , but according to the constitution they aren't allowed to
regulate speech, religion or the press. (Congress "shall make no law .."
abridging these rights).

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logfromblammo
The Constitution also says that the states cannot coin money, issue paper
money, or make anything but gold and silver coin tender in payment of debts.
(Article I, sect. 10, clause 1)

Technically, they shouldn't be accepting Federal Reserve Notes as payment for
any state taxes, including sales taxes.

Note that this clause does not authorize the federal government to declare a
legal tender or issue paper money; it simply prohibits the states from doing
those things. Thanks to the 10th Amendment, those are reserved exclusively to
the people. The wording is a bit tortured, but a logical parse is that powers
not delegated to the federation are reserved to the states, and that powers
prohibited to the states are reserved to the people. Legal tender, and paper
money are not delegated to the federation, but prohibited to the states,
therefore they remain the province of the people.

There should be no problem with the Federal Reserve printing its own notes,
but there's no way in hell that making them legal tender or accepting them for
payment on state or federal debts is constitutional. They do it anyway. Hardly
anyone cares. Those who do are ignored.

As usual, they will do as they please, damn the consequences, and hang it all
up under the interstate commerce clause.

Edit: Article I, section 8, clause 5 does give the federation the power to
coin money and standardize its value. It still doesn't give them the power to
accept those coins as payment for debts unless they are gold or silver.

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dailyrorschach
I mean there’s likely no convincing you - but there’s plenty of scholarship to
disagree. The Constitution quite clearly gives Congress the power to “coin
Money and regulate the value thereof.” It of course makes no additional
statement as to how that should be done. It’s a pretty tortuous reading in my
opinion and one that would basically be invalid going back to McCulloch v.
Maryland to say that coin Money, must only mean metallic alloy coins.

Between Expressed Powers and Necessary and Proper there’s certainly enough
justification - it relies even less on the Commerce clause.

~~~
logfromblammo
Unfortunately, it doesn't matter one little bit if you can convince me or not,
as I am neither a federal circuit court judge, appellate judge, or supreme
court justice.

I think it is less important that our money be a particular commodity than it
is that the government lack the power to manipulate its value for its own
convenience.

In my opinion, it is clear that the power to "coin money and regulate the
value thereof" is to standardize the exchange rates between coins, probably by
weight of the metal, but not necessarily. It is also clear that the coins need
not be metal, but also that no one could be forced to accept coins other than
gold or silver coins.

Thus, they could stamp out wooden nickels, but that wouldn't make them worth
anything to anybody, except possibly for payment of federal taxes. As long as
we have those, it is only a short hop to rectangular paper "coins". They can
do it, but nobody has to accept them.

But since nobody is trying to pay taxes with Bitcoin yet, and the federal
government isn't mining them, as far as we know, there is no justification for
them to be standardized or otherwise regulated whatsoever. It might arguably
be _authorized_ under whatever clause, but it certainly isn't _justified_.

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Crito
What would be done if massive deposits of precious metals were found,
rendering those metals little more valuable than perhaps copper or aluminum?
You could still make coins with the same value of course, but they would be a
bit impractical to carry around.

A copper coin worth $20 in todays USD would weight nearly 3 kilograms!

Surely at least paper gold and silver certificates would be a reasonable
concession.

~~~
logfromblammo
Gold and silver certs are negotiable debt instruments, covered by the
government's power to borrow. You lend them a gold or silver coin, and they
write you a note promising to repay the bearer of the note one gold or silver
coin of equal weight on demand.

It's sort of a bogus loan, with a variable term and zero interest rate, but
it's still allowed, and certainly makes things more convenient for a lot of
people. And the government can still profit from the seignorage from the mint.

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acjohnson55
It's kind of funny, but on one hand, that statement is probably the best thing
a libertarian reader could imagine hearing from Yellen. That's how I read it
at first, and was thinking, "wow, that's pretty radical for the government to
intentionally take itself out". Yet, upon second reading, I think the
intention was probably more to cast Bitcoin as a wild-west, do-at-your-own-
risk, good-luck-to-ya type of asset to work with. I think the message was
meant more for banks and investors. The real subtext being, "if you lose your
shirt, get defrauded, or there's large scale tampering, don't come crying to
the Fed".

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jljljl
Proponents of Bitcoin tend to view the lack of regulation as a feature, not a
bug. With that lack of regulation comes higher risk of losing everything in
the event of a catastrophe. It's hard to have it both ways.

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zecho
Governments don't regulate technologies, they regulate people. There are a
million ways governments (who are also made up of people) can and will
regulate bitcoin and the like. The persistent belief among some cryptocurrency
proponents that they're invincible to the powers of government is really
naive.

Just because there isn't regulation now means jack squat. It's not a feature,
it's a side effect of newness and reactionary politics.

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tptacek
Fair warning: she means the Federal Reserve doesn't have the authority to
regulate Bitcoin. The Federal Reserve is not the nexus of financial regulation
in the US Government, and Congress can delegate additional authority to the
Fed any time it wants.

~~~
abruzzi
Yup, no mention of the Treasury Department, the Securities and Exchange
Commission, and for that matter the US Congress. And it certainly seems the
SEC would have some authority over entities that seek to act like banks or
exchanges.

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devindotcom
The letter Manchin wrote was not to the Fed but to the secretary of the
Treasury and a few other Treasury-related officials. They haven't responded,
as far as I know. This is a separate (and very dumb) line he is pursuing. I
consider myself fairly ignorant of government issues like this but even I
could tell you the Fed would be the wrong institution to ask about regulating
Bitcoin (already a foolish notion).

