At 7:09 PM 8/6/94 -0700, Hal wrote:

There are two legal problems that I could see being used against digital cash. The first is the civil war era prohibition on banks issuing private bank notes.

Where you stand on this one depends on where you sit. ;-). It seems to me that one could just as easily treat digicash as securities denominated in dollars, just like shares in a money market mutual fund, or more to the point, the actual money market instruments, repos, for instance. It's going to take a sophistical titan to get this through the courts, but if there's a market for digicash, hey, it can happen. It won't happen if this titan's employers never hear about it, though.

The second problem is the regulation of "scrip" and barter systems. This was pointed out on the list last year by someone who had actually been involved in a private barter or scrip system which was shut down by the government, at great cost to all concerned. These regulations can be found at 26 CFR 1.6045-1. From subsection (f)(5)(ii), "Scrip is a token issued by the barter exchange that is transferable from one member or client, of the barter exchange to another member or client, or to the barter exchange, in payment for property or services". I think this one will eventually get the "NetBank" people in trouble. (You call a 900 number and in exchange for a charge on your phone bill they give you a digital token you can exchange for property or services by participating merchants.) Barter exchanges are required to get the names and SS numbers of all participants and report their transactions to the IRS. This would be inconsistent with the privacy we seek from ecash.

Indeed. This is probably where we have a problem. The only thing I can think of here is that the technology of the internet and it's limitless opportunity for regulatory arbitrage. When you make the possession of a medium of exchange illegal you get the same problems that all closed economies have. With the internet, enforcement is half next to useless (an expression I picked up in Albuquerque a while back...). Like I said to Eric in the last post, it may be the threat of regulatory arbitrage that wins the day here, like it has in the past. To plug the thread a bit here, who should chair the afternoon business-heavy session? *Email* me your suggestions, please... Cheers, Robert Hettinga ----------------- Robert Hettinga (rah@shipwright.com) "There is no difference between someone Shipwright Development Corporation who eats too little and sees Heaven and 44 Farquhar Street someone who drinks too much and sees Boston, MA 02331 USA snakes." -- Bertrand Russell (617) 323-7923