An interesting post has surfaced online not too long ago, discussing how the potential Bitcoin hard fork could lead to legal implications down the line. Keeping in mind mow how a hard fork is not backwards compatible and brings a new set of rules to this decentralized system, the implications could be far more severe than most people anticipate. Whether or not the developers of Bitcoin Classic and Bitcoin XT would ever face jail time, remains to be seen, though.
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Regulatory Implications for Bitcoin Hard Fork
A post made by Daniel S. Friedberg talks about how Bitcoin Classic and Bitcoin XT can be seen as a new form of virtual currency, for which no official regulatory framework exists. Granted, Bitcoin has certain regulatory guidelines, but they only apply to Bitcoin core as it preserves the digital currency in the form for which these regulations were drawn up in the first place.
As a side result, if either Bitcoin XT or Bitcoin Classic – or both – would go ahead as planned and gain any traction, its developers would need to register with FinCEN as money transmitters. After all, the bitcoins generated on these hard fork blockchains would be traded against other financial tools at some point. Keeping in mind how the developers of both projects have their information publicly listed on the Internet, it would not be all that hard to pin them down.
But there are other worries as well, as both Bitcoin XT and Bitcoin Classic would need to include some form of anti-money laundering protocol in their source code. As neither of these software solutions has any idea as to who their users are, they would be unable to comply with this requirement. While Bitcoin was never designed to keep tabs on its users’ personal details, both hard fork solutions could change the world of digital currency as we know it.
Bitcoin miners would not be safe from legal harm either though, as those people mining either hard fork of Bitcoin would be liable by association. The main purpose of a miner is to facilitate network transactions and generate new coins, both of which would be deemed illegal by law and could lead to jail sentences for money laundering attempts.
Last but not least, the biggest threat comes in the form of a major disruption in Bitcoin liquidity across exchanges and wallet providers. All online bitcoin service providers would need to distinguish between Bitcoin, Bitcoin XT, and Bitcoin Classic as supported digital currencies. It goes without saying a hard fork would lead to a lot of unnecessary complications, as well as pose a risk for future investments in the digital currency space.
Source: Riddell Williams
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