95 Ind. L.J. Supp. 1 (2019)

handle is hein.journals/spplmntinlj95 and id is 1 raw text is: 













                       A Coffee Break for Bitcoin

                              MARGARET RYZNAR*

For many, the appeal of bitcoin is in its detachment from government regulation.
However, the Coffee bonding theory, which initially arose in the context offoreign
stocks, suggests certain benefits of regulation for bitcoin, including increased
legitimacy. By invoking the Coffee bonding theory, this Article offers another
perspective on the regulation of bitcoin.

                                 INTRODUCTION

   As bitcoin has become more mainstream, it has drawn the attention of regulators.
Transactions in bitcoin have received scrutiny from the United States Securities and
Exchange Commission (SEC), the Commodity Futures Trading Commission
(CFTC), the Financial Crimes Enforcement Network (FinCEN), the Internal
Revenue Service (IRS), and the federal courts.1 These agencies have differed in their
treatments of virtual currency, and confusion continues over whether the law
considers bitcoin to be securities, commodities, currency, or property.'
   Thus far, comprehensive regulation has been unsuccessful. Not only have many
bitcoin users resisted regulation, but regulation has also stalled because it is unclear
how to regulate virtual currency.3 The challenges to regulation include bitcoin's
rapid growth and the anonymity surrounding bitcoin.4





     * Professor of Law, Indiana University McKinney School of Law.
     1. Christopher Burks, Bitcoin: Breaking Bad or Breaking Barriers?, 18 N.C. J.L. &
TECH. ONLINE 244 (2017). Most recently, the IRS issued warning letters to over 10,000
cryptocurrency holders regarding possible back taxes. See, e.g., Laura Saunders & Britton
O'Daly, IRS Sending Warning Letters to More Than 10, 000 Cryptocurrency Holders, WALL
STREET J. (July 26, 2019, 6:39 PM), https://www.wsj.com/articles/irs-sending-waring-
letters-to-more-than- 10-000-cryptocurrency-holders- 11564159523 [https ://perma.cc/VS4H-
MU5V].
    2. Burks, supra note 1.
    3. Nakamoto's writings acknowledge the attractiveness of Bitcoin to libertarians, but
they do not specifically support any view of his own politics. Shawn Bayerr Of Bitcoins,
Independently Wealthy Softw are, and the Zero-Member LLC, 108 Nw. U. L. REV. ONLINE 257,
260 n. 13 (2014) (citing Posting of Satoshi Nakamoto to cryptography gmetzdowd.com (Nov.
14,   2008),  http://www.mail-archive.com/cryptographygmetzdowd.com/msgl0001.html
[https://perma.cc/R73A-SBDH]).
    4. See, e.g., Kevin V. Tu & Michael W. Meredith, Rethinking Virtual Currency
Regulation in the Bitcoin Age, 90 WASH. L. REV. 271 (2015); Misha Tsukerman, The Block Is
Hot. A Survey of the State of Bitcoin Regulation and Suggestions for the Future, 30 BERKELEY
TECH. L.J. 1127 (2015).

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