On Tue, Jan 20, 2015 at 12:23:14PM -0500, Matt Whitlock wrote: > On Tuesday, 20 January 2015, at 10:46 am, Peter Todd wrote: > > I was talking to a lawyer with a background in finance law the other day > > and we came to a somewhat worrying conclusion: authors of Bitcoin wallet > > software probably have a custodial relationship with their users, > > especially if they use auto-update mechanisms. Unfortunately this has > > potential legal implications as custodial relationships tend to be > > pretty highly regulated. > > > > Why is this? Well, in most jurisdictions financial laws a custodial > > relationship is defined as having the ability, but not the right, to > > dispose of an asset. If you have the private keys for your users' > > bitcoins - e.g. an exchange or "online" wallet - you clearly have the > > ability to spend those bitcoins, thus you have a custodial relationship. > > If you have the private keys for your users' bitcoins, then you are every bit > as much the owner of those bitcoins as your users are. There is no custodial > relationship, as you have both the ability and the right to spend those > bitcoins. Possession of a private key is equivalent to ownership of the > bitcoins controlled by that private key.
Posessing a private key certainly does not give you an automatic legal right to anything. As an example I could sign an agreement with you that promised I would manage some BTC on your behalf. That agreement without any doubt takes away any legal right I had to your BTC, enough though I may have have the technical ability to spend them. This is the very reason why the law has the notion of a custodial relationship in the first place. Don't assume the logic you'd use with tech has anything to do with the logic courts use. -- 'peter'[:-1]@petertodd.org 00000000000000001a5e1dc75b28e8445c6e8a5c35c76637e33a3e96d487b74c
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