The Bitcoin Foundation today released a primer on the law of jurisdiction [pdf]to help its small-business and start-up members manage their regulatory obligations. It is also publicly available on the foundation’s Resources page on the website.
A global Internet protocol that holds out great promise for global financial inclusion, Bitcoin easily allows people and businesses to conduct cross-border transactions. “But doing so may place Bitcoin users and businesses under the authority of unfamiliar or burdensome foreign laws,” the report says. Bitcoin businesses face “the prospect of defending themselves in regulatory proceedings and lawsuits in far-away places.”
Commissioned by Robert A. McFarlane, a partner in Hanson Bridgett LLP’s San Francisco office and chair of the firm’s technology law practice, the brief primer details steps companies may take to avoid making themselves subject to burdensome regulations or lawsuits in states that are unfriendly to Bitcoin.
The report discusses several protective options: “IP blocking (also known as ‘geofencing’), screening based on user-entered address data, electing not to display ads to audiences in undesirable jurisdictions, and providing less interactivity to users in undesirable jurisdictions may demonstrate that a company does not intend to conduct business in a particular state.”
“No Bitcoin business wants to exclude any jurisdiction,” said Jim Harper, Global Policy Counsel for the Bitcoin Foundation, “but it is important to have that option. When regulations are unjustified by consumer protection benefits, the better course will be to conduct business in the jurisdictions that embrace innovation, the consumer benefits of Bitcoin, economic growth, and job creation.”