Re: ecash, cut & choose and private credentials (Re: Jim Bell)
Adam Back wrote:
I think the thing that killed MT / digicash for this application was MT at the time was reported to be closing accounts related to pornography -- they apparently didn't want the reputation for providing payment mechanisms for the porn industry or something.
James Donald replied:
Payee traceability made it possible to close accounts related to pornography. Ecash is not truly cash like if the issuer can prevent it from being used by tax evaders, child pornographers, money launderers and terrorists.
Payee traceability had nothing to do with it. Every customer of MTB, whether an end user or a merchant, had to fully identify himself to the bank, including SSN and for merchants, type of business, etc. This is SOP for other payment systems like credit cards. It was on this basis that MTB was able to screen their merchants. No payee tracing was necessary. A fully untraceable cash system would have been equally amenable to merchant screening. Any vendor has the right to control whom it does business with, and MTB chose to exercise its discretion in this way. The Texas couple in the news recently made a different choice and decided to provide payment services for child pornographers, as James Donald recommends. Now MTB is still in business (after merging with MTL and then FSR) and the Texans are in jail. Which made a better choice?
On Tue, Dec 05, 2000 at 06:40:08PM -0000, lcs Mixmaster Remailer wrote:
Payee traceability had nothing to do with it. Every customer of MTB, whether an end user or a merchant, had to fully identify himself to the bank, including SSN and for merchants, type of business, etc. This is SOP for other payment systems like credit cards.
It was on this basis that MTB was able to screen their merchants. No payee tracing was necessary. A fully untraceable cash system would have been equally amenable to merchant screening. Any vendor has the right to control whom it does business with, and MTB chose to exercise its discretion in this way.
I don't know if MTB had a lot of discretion - banks are subject to the federal "know your customer" regulations. You can't get depositor anonymity from a bank chartered in the US, at least not without at least one level of corporate indirection (e.g., the bank "knows its customer" who is a domestic or foreign closely-held corp, who does the bidding of its unidentified-to-the-bank-and-FINCEN shareholders).
The Texas couple in the news recently made a different choice and decided to provide payment services for child pornographers, as James Donald recommends. Now MTB is still in business (after merging with MTL and then FSR) and the Texans are in jail. Which made a better choice?
Sounds like the Texans knew too much about their customers - if they operated a content-neutral service which had many, many customers, one of whom happened to be a child-porn service, they'd be doing fine, especially if they shut off the child porn people if/when notified by law enforcement of the activity. Does the FBI shut down AOL and Earthlink when their subscribers traffic in child porn? -- Greg Broiles gbroiles@netbox.com PO Box 897 Oakland CA 94604
A minor clarification: The formal proposal known as "Know Your Customer" was withdrawn (see my back articles on that topic). But other regulations in the same vein require banks to require ID. -Declan On Tue, Dec 05, 2000 at 11:18:53AM -0800, Greg Broiles wrote:
On Tue, Dec 05, 2000 at 06:40:08PM -0000, lcs Mixmaster Remailer wrote:
Payee traceability had nothing to do with it. Every customer of MTB, whether an end user or a merchant, had to fully identify himself to the bank, including SSN and for merchants, type of business, etc. This is SOP for other payment systems like credit cards.
It was on this basis that MTB was able to screen their merchants. No payee tracing was necessary. A fully untraceable cash system would have been equally amenable to merchant screening. Any vendor has the right to control whom it does business with, and MTB chose to exercise its discretion in this way.
I don't know if MTB had a lot of discretion - banks are subject to the federal "know your customer" regulations. You can't get depositor anonymity from a bank chartered in the US, at least not without at least one level of corporate indirection (e.g., the bank "knows its customer" who is a domestic or foreign closely-held corp, who does the bidding of its unidentified-to-the-bank-and-FINCEN shareholders).
The Texas couple in the news recently made a different choice and decided to provide payment services for child pornographers, as James Donald recommends. Now MTB is still in business (after merging with MTL and then FSR) and the Texans are in jail. Which made a better choice?
Sounds like the Texans knew too much about their customers - if they operated a content-neutral service which had many, many customers, one of whom happened to be a child-porn service, they'd be doing fine, especially if they shut off the child porn people if/when notified by law enforcement of the activity. Does the FBI shut down AOL and Earthlink when their subscribers traffic in child porn?
-- Greg Broiles gbroiles@netbox.com PO Box 897 Oakland CA 94604
On Wed, Dec 06, 2000 at 12:07:57PM -0500, Declan McCullagh wrote:
A minor clarification: The formal proposal known as "Know Your Customer" was withdrawn (see my back articles on that topic). But other regulations in the same vein require banks to require ID.
I'm not a banking law geek, but I believe that there are federal regs in place known as "know your customer" rules which apply to depository institutions like banks, credit unions, etc - the regs which were withdrawn would have required NBFI's (non-bank financial institutions) to comply with similar rules, as they're sometimes used instead of banks to avoid the KYC rules. Or am I thinking of something else? -- Greg Broiles gbroiles@netbox.com PO Box 897 Oakland CA 94604
At 9:04 AM -0800 on 12/6/00, Greg Broiles wrote:
Or am I thinking of something else?
You're thinking of something else, but you're close enough. For instance, there are laws in most jurisdictions about requiring a social security number to open a bank account, for any of a number of reasons including credit checks, and checks on how many, um, negative-funded, bank accounts you might have hanging out there before you opened this one. More to the point, since interest is taxable income for individuals, and a tax deductible expense for corporations, social security numbers are required in order to pay you interest. [And, yes, Duncan may be right, you might be able to spoof an SSN at them somehow, but I don't know anyone who's actually done it, admitted it in any public detail, and not been somehow razzed legally for it.] Kind of reminds me of TEFRA, in 1993 or so, which outlawed bearer bonds by making interest payable on them "non-tax-deductible" (taxable, for those in Palm Beach County). [The answer to this "lie to the government, don't get a bank account" problem, which any persistent cypherpunk subscriber knows, is, of course, to have payment systems which don't *need* physical identity for non-repudiation of transactions and the subsequent requirement of the force of a nation-state to make settlement risk manageable: bearer certificates based on cryptographic protocols like blind signatures, which will, frankly, only *really* be possible, soup-withdrawl to nuts-deposit, when a bearer currency issue is *itself* reserved by other digital bearer assets, instead of just a book-entry account somewhere.] Cheers, RAH -- ----------------- R. A. Hettinga <mailto: rah@ibuc.com> The Internet Bearer Underwriting Corporation <http://www.ibuc.com/> 44 Farquhar Street, Boston, MA 02131 USA "... however it may deserve respect for its usefulness and antiquity, [predicting the end of the world] has not been found agreeable to experience." -- Edward Gibbon, 'Decline and Fall of the Roman Empire'
At 09:04 12/6/2000 -0800, Greg Broiles wrote:
I'm not a banking law geek, but I believe that there are federal regs in place known as "know your customer" rules which apply to depository institutions like banks, credit unions, etc - the regs which were withdrawn would have required NBFI's (non-bank financial institutions) to comply with similar rules, as they're sometimes used instead of banks to avoid the KYC rules.
Or am I thinking of something else?
You're thinking of something slightly different. The Fed-Treasury-FDIC action that caused so much fuss would have made "suggested" KYC rules that apply to banks mandatory. Here's the federal register notice abandoning the propsed KYC regs: http://www.politechbot.com/p-00315.html -Declan
-- Adam Back wrote:
I think the thing that killed MT / digicash for this application was MT at the time was reported to be closing accounts related to pornography -- they apparently didn't want the reputation for providing payment mechanisms for the porn industry or something.
James Donald replied:
Payee traceability made it possible to close accounts related to pornography. Ecash is not truly cash like if the issuer can prevent it from being used by tax evaders, child pornographers, money launderers and terrorists.
Anonymous wrote:
Payee traceability had nothing to do with it. Every customer of MTB, whether an end user or a merchant, had to fully identify himself to the bank, including SSN and for merchants, type of business, etc. This is SOP for other payment systems like credit cards.
Ecash is not supposed to be like credit cards. Had the coins been cashlike, joe pornographer could have sold them under the table to the flying nun, who would then cash them in her very respectable account, and pay Joe pornographer under the table.
It was on this basis that MTB was able to screen their merchants. No payee tracing was necessary. A fully untraceable cash system would have been equally amenable to merchant screening. Any vendor has the right to control whom it does business with, and MTB chose to exercise its discretion in this way.
Payee traceability made it possible for the vendor to control who used his ecash. With truly untraceable cash, the vendor can no more control who uses his coins than can an issuer of physical coins. --digsig James A. Donald 6YeGpsZR+nOTh/cGwvITnSR3TdzclVpR0+pr3YYQdkG 1888xf3dGOa7E0/VKdf5i8BViiT/hrOp51IW5PzN 4SxTFltcoKTQc4eFab8ZoF0byDe9qzXOqtQUqYWwc
participants (5)
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Declan McCullagh -
Greg Broiles -
James A. Donald -
lcs Mixmaster Remailer -
R. A. Hettinga