U.S. states' attitudes toward Bitcoin

AUSTIN — Michael Cargill was doing his usual business at his Austin gun shop, giving tips on how to conceal a gun, when he had no idea the FBI was targeting his online store because buyers from other states were using bitcoin to conduct transactions.

He said that supporting Bitcoin payments has increased sales by 50%.

“There are two things we’re proud of in Texas: financial freedom and gun freedom,” Cargill said, pointing to a wall of guns at the Central Texas Armory. “That’s people’s self-protection, and that’s the same with Bitcoin.”

In Texas, countless businesses accept Bitcoin, including Cargill's Arms Store, which has spawned the world's largest Bitcoin economic zone and set up the first Bitcoin ATM in the United States this year. The economic growth is mainly due to the state government's protection of Bitcoin instead of taking a strict regulatory attitude. Texas has become a test base for the development of emerging economies in the United States.

A complex struggle

The popularity of Bitcoin has spawned a philosophical battle between supporters and other states outside Texas and federal agencies, with opponents seeking to establish a regulatory system for Bitcoin, which they see as a hotbed for money laundering and illegal trafficking.

"To prevent money laundering, we need to have several key points in place so that financial intermediaries throughout the economic ecosystem know they are under supervision and do not do whatever they want," said Benjamin Lawsky, head of financial services in New York.

Since its introduction in 2009, Bitcoin has taken off and provided a new way to buy and sell goods that no longer relied on government-issued fiat currencies. Merchants and individuals can freely exchange Bitcoin for dollars or other currencies through online exchanges and self-service devices, rather than third-party institutions such as banks.

Such warnings have not been able to curb the popularity of Bitcoin in Texas and other states that have adopted loose regulations. Texas now has nine Bitcoin self-service facilities, and now sits firmly on the throne of the world's fourth largest Bitcoin economy with California. Relevant information can be found on the open source website CoinMap, where comments are all from companies that accept Bitcoin.

Texas leads the way

California has adopted a wait-and-see attitude towards the Bitcoin economy. However, in April of this year, Texas took the lead and its banking department adopted a largely relaxed policy towards Bitcoin, determining that Bitcoin is not only a currency but also has property value.

"As long as the operator sells bitcoin to individuals or transfers bitcoin ownership through personal wallets at the ATM, this behavior is no longer a simple money transaction, but more like buying something through a self-service after-sales machine," said Daniel Wood, assistant legal counsel for the department.

These policies in Texas have led to hundreds of billions of dollars of funds flowing into the payment market and the trust market, including fees, collection bill fees and remittances. Wedbush Securities analysts have estimated that Bitcoin will capture $650 billion of business.

Bitcoin kiosks are already available in several Texas stores, including gun shops, bars and restaurants, and the Texas Food and Beverage Commission has approved bitcoin payments for food and alcohol.

New Mexico and Kansas have opted for a similar laissez-faire approach, while a Colorado entrepreneur has developed potcoin — a marijuana vending machine that accepts Bitcoin.

Supporters and opponents

Bitcoin supporters say it is more difficult to manipulate than mainstream government-issued currencies because there are only 21 million bitcoins in existence.

However, opponents point out that Bitcoin is difficult to track and collect evidence when facing fraud and theft. At the same time, the U.S. Consumer Financial Protection Bureau has issued a warning: Bitcoin users will face severe challenges if they participate in market competition.

The world's largest bitcoin exchange, Mt. Gox in Tokyo, Japan, filed for bankruptcy in Dallas in February, reporting a loss of $470 million in bitcoin, some of which may have been stolen. In another high-profile case, an Austin entrepreneur who operated the online Silk Road was accused and is awaiting trial in New York on charges including money laundering, drug smuggling and hacking.

Bitcoin entrepreneurs claim they know the risks of operating bitcoin are great, but they don't think they can avoid the so-called risks through strict regulation, which is exactly why Albert Mata moved from Austin to Washington in December - away from lax regulation and accepting the federal government's security warnings.

The former astrophysicist and founder of BitHouse said: "Every day, there are Bitcoin geeks gathering here. It is obvious that the Bitcoin community here is thriving."