Published on: 2015-01-20T21:49:52+00:00
The concept of custodial relationship in financial laws is defined as having the ability but not the right to dispose of an asset. This means that if someone leaves their window open and cash on the desk visible from the street, every passerby now has a custodial relationship with them. However, the example of a malicious software update seems more like theft rather than a true custodial relationship.The email thread discusses the concerns about the jurisdiction of wallet providers and the challenges faced in doing business. The writer urges people to move away from web wallet businesses due to constant demands for information by governments. They argue that this is no longer viable, citing the extra financial surveillance provisions passed on third party matters post-cromnibus. Instead, the author recommends moving towards peer-to-peer solutions like Core, Electrum Wallet, Mycelium, Local Trader, and Open Bazaar which avoid centralizations and do not collect user data or require identification. They also suggest auto-notifications for updates rather than auto-updating itself.Tamas Blummer suggests that the legal hurdle to force confiscation through a wallet provider might be lower if the target user is not domestic. Depending on the threat model, the incentive to force confiscation might also be lower. The email is signed by Justus Ranvier, with his public key ID provided, and includes an attachment named 0xEAD9E623.asc which is an application/pgp-keys file with a size of 17528 bytes.The discussion revolves around the difference between ownership and the ability to deal with an asset. Tamas Blummer points out that knowing the private key and owning the linked coins is not necessarily the same in front of a court as, at least in German law, there is a distinction between ‘Eigentum’ (ownership) and ‘Besitz’ (ability to deal with it). This means that being able to deal with an asset does not make one the owner. Matt Whitlock questions the common belief that Bitcoins have an owner independent from the parties who have access to the private keys that control their disposition; this notion is difficult to reconcile from a technological perspective.In a discussion on /r/bitcoin, Tamas Blummer stated that owning the private key and owning linked coins are not necessarily the same in court. He explained that in German law, "Eigentum" means ownership, while "Besitz" means the ability to deal with an asset - being able to deal with an asset does not make you its owner. Matt Whitlock responded, saying that this contradicts what is often told to newcomers in the Bitcoin community, as it suggests that Bitcoins have an owner independent of parties with access to their private keys. Peter Todd clarified that Bitcoin technology does not have a concept of "ownership," as this is a legal notion rather than a mathematical one. In other words, the law concerns itself with what should be done, not what can be done.The discussion is centered around how to prevent losses through malicious auto-updates in the wallet business. The best advice given is to create systems where as many people as possible have to sign off and review an update before it has the opportunity to spend user funds. It’s also suggested that companies should not be located in the same country as their users, or users should strongly be encouraged to get their wallet software from companies not located in the same country as them. Furthermore, one of the consequences of a custodial relationship is that some legal authority might try to force you to seize user funds. Authorities may use that power in the future if it’s made easy for them to meet those demands. Thus, it’s important to make sure that the process by which an update happens is controlled by more than one person and there are mechanisms in place to create good audit logs of how exactly an update happened. Finally, StrongCoin made it 100% clear to authorities that they and sites like them are able to seize funds at will.Tamas Blummer, a blockchain developer, highlighted the difference between ownership and ability to deal with an asset in German law. He explained that knowing the private key and owning linked coins is not necessarily the same in front of a court. In other words, being able to deal with an asset does not automatically make one the owner. This contradicts what many people believe about Bitcoin. The idea that Bitcoins have an owner independent from the parties with access to the private keys controlling their disposition, is difficult to reconcile from a technological perspective. Therefore, what newbies in the /r/bitcoin community are being told may be incorrect.In German law, there is a distinction between "Eigentum" (ownership) and "Besitz" (ability to deal with it). Having the private keys for someone else's bitcoins does not necessarily make you the owner of those coins. Possessing the ability to deal with an asset does not equate to ownership. Thus, possessing a private key does not automatically grant ownership of the associated bitcoins.
Updated on: 2023-08-01T11:11:15.798222+00:00