Bench & Bar

SEP 2018

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| SEPTEMBER/OCTOBER 2018 12 oversight. Many popular cryptocurrency exchanges are headquar- tered in other countries also struggling to fit cryptocurrencies into their existing regulatory framework. Utilizing ICOs or other cryptocurrencies to raise capital could subject entrepreneurs to federal banking regulations and securities laws. e regulatory environment of simply trading cryptocurren- cies like Bitcoin is expected to be regulated in the near future, but until then, caveat emptor ("buyer beware"). CONCLUSION Bitcoin and the blockchain technology are changing our world. As lawyers, we must recognize these changes and be prepared for them. Even if we aren't quite ready to dive into the world of cryptocurrencies ourselves, understanding that clients or opposing parties may be using Bitcoin as an investment or as "money" is important for us to best do our job effectively. ABOUT THE AUTHOR R. MORGAN SALISBURY is an associate attor- ney in the Fort Wright, Ky., office of Lewis Brisbois Bisgaard & Smith. He is licensed in both Indiana and Kentucky and his practice focuses on civil litigation. Salisbury earned his law degree from the Salmon P. Chase College of Law at Northern Kentucky Uni- versity, where he graduated cum laude. While in law school, he served on the editorial board of the Northern Ken- tucky Law Review. He also holds a Bachelor's degree in history from Morehead State University, where he graduated magna cum laude. Salisbury closely follows innovative technological trends, including the recent rise of cryptocurrencies such as Bitcoin. Features: CRYPTOCURRENCY ENDNOTES 1. See De Souza v. Kerley, Breathitt Circuit Court Case No. 15-CI-055; see also Cyrus Farivar, After Bitcoin loan goes south, judge rules man must repay over $67,000, ArsTechnica June 19, 2015 available at https://arstechnica.com/ tech-policy/2015/06/after-bitcoin-loan-goes-south-judge-rules-man-must- repay-over-67000. 2. U.S. Commodity Futures Trading Commission, "CFTC Orders Bitcoin Options Trading Platform Operator and its CEO to Cease Illegally Offering Bitcoin Options and to Cease Operating a Facility for Trading or Processing of Swaps without Registering," Sept. 17, 2015, available at http://www.cftc.gov/PressRoom/PressReleases/pr7231-15. 3. See Board of Governors of the Federal Reserve System, "FAQ," available at https://www.federalreserve.gov/faqs/currency_12773.htm (last accessed April 25, 2018). 4. Edmund DeMarche, Mayor, police chief in struggling Kentucky coal town to donate salary in Bitcoins to spur economy, FoxNews Dec. 5, 2013 available at http://www.foxnews.com/us/2013/12/05/struggling-kentucky-coal-town- looks-to-bitcoin-to-spur-economy.html. 5. Eric Lichtblau, In accepting Bitcoins, Rand Paul Raises Money and Ques- tions, New York Times April 9, 2015 available at https://www.nytimes. com/2015/04/10/us/politics/in-accepting-bitcoin-rand-paul-raises-money- and-questions.html?_r=0. 6. See De Souza v. Kerley, Breathitt Circuit Court Case No. 15-CI-055; Cyrus Farivar, After Bitcoin loan goes south, judge rules man must repay over $67,000, ArsTechnica June 19, 2015 available at https://arstechnica.com/ tech-policy/2015/06/after-bitcoin-loan-goes-south-judge-rules-man-must- repay-over-67000. 7. Cyrus Farivar, After Bitcoin loan goes south, judge rules man must repay over $67,000, ArsTechnica June 19, 2015 available at https://arstechnica.com/ tech-policy/2015/06/after-bitcoin-loan-goes-south-judge-rules-man-must- repay-over-67000. 8. Read more at Kevin Palley's website at https://www.kevinpalley.com. 9. See IRS Notice 2014-21. 10. Ky. Dep't of Rev. Sales Tax Facts ( June 2014) available at http://revenue. ky.gov/News/Publications/Sales%20Tax%20Newsletters/SalesTaxFacts- June2014.pdf. 11. Nathaniel Popper, Bitcoin Users Who Evade Taxes Are Sought by the I.R.S., New York Times Nov. 18, 2016 available at https://www.nytimes. com/2016/11/19/business/dealbook/irs-is-seeking-tax-evaders-who-use- bitcoin.html?_r=1. 12. Jeff John Roberts, Only 802 People Told the IRS About Bitcoin-Lawsuit, Fortune, March 19, 2017 available at http://fortune.com/2017/03/19/ irs-bitcoin-lawsuit/. 13. See Justin Pot, "e U.S. government is selling $1.6 million worth of seized bitcoins this month" Digital Trends (Aug. 9, 2016) available at https:// www.digitaltrends.com/computing/us-government-auctions-off-2700-bit- coin/. 14. Many cryptocurrency users have accounts with private third-party exchang- es to buy and sell cryptocurrencies that operate much like stock trading websites – but without the regulation. Popular exchanges to be mindful of when investigating include Coinbase, GDAX, Kraken, BitStamp, CEX.io, LocalBitcoins, Bittrex, Binance. and many more. 15. Suzanne Barlyn, "AIG teams with IBM to use blockchain for 'smart' insur- ance policy", Reuters ( June 15, 2017) available at http://www.reuters.com/ article/us-aig-blockchain-insurance-idUSKBN1953CD. 16. Laura Shin, "e First Government To Secure Land Titles On e Bitcoin Blockchain Expands Project" Forbes (Feb. 7, 2017) available at https:// www.forbes.com/sites/laurashin/2017/02/07/the-first-government-to-se- cure-land-titles-on-the-bitcoin-blockchain-expands-project/#772cd36e4d- cd. 17. Peter J. Henning, "Should Congress Create a Crypto-Cop?," New York Times (Feb. 14, 2018) available at https://www.nytimes.com/2018/02/14/ business/dealbook/bitcoin-cryptocurrency-regulation.html?module=Ar- rowsNav&contentCollection=DealBook&action=keypress®ion=Fixe- dLeft&pgtype=article (last access April 25, 2018). 18. U.S. Senate Committee on Banking, Housing, and Urban Affairs, "Virtual Currencies: e Oversight Role of the U.S. Securities and Exchange Commission and the U.S. Commodity Futures Trading Commission," available at https://www.banking.senate.gov/hearings/virtual-curren- cies-the-oversight-role-of-the-us-securities-and-exchange-commis- sion-and-the-us-commodity-futures-trading-commission (last accessed April 25, 2018). 19. Kim, Robert, "FinCEN's ICO Letter: Not FinCEN's, Not ICO Focused, and Not Surprising," Bloomberg (April 6, 2018), available at https://www. bna.com/fincens-ico-letter-n57982090869. This article has been placed on the KBA website under the Hot Topics page. A Little Party Never Killed Anybody: How Courts Should Abandon Partisan Gerrymandering Claims to Allow a Political Solution B Y C O R E Y T H O M A S 2 0 1 8 K B A S T U D E N T W R I T I N G C O M P E T I T I O N W I N N E R Bench & Bar

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