From: hughes@ah.com (Eric Hughes)
Date: Tue, 9 Aug 94 09:57:22 PDT
To: cypherpunks@toad.com
Subject: legal hacking
In-Reply-To: <9408091043.AA27965@ininx>
Message-ID: <9408091629.AA22518@ah.com>
MIME-Version: 1.0
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   Such a person doesn't gladly
   suffer any legal technicality standing between him and the pound of your
   flesh to which he thinks he's entitled.  

On the other hand, if you can convince them that they don't have to
contribute their pound of flesh likewise, they'll take that
opportunity.

   I wonder how he would respond to Perry here.

Well, Perry's right too, in that the amount of arbitrariness is
enormous and that makes it _extremely_ challenging.

I point out that one outlet for legal hacking is the legislature.

Some things are cut and dried.  Many more aren't.  For example, the
SEC has no jurisdiction on commercial paper of duration nine months or
less, by statute.  So that gets rid of one hurdle, if you can ensure
that your devices are considered commercial paper.  Using wording and
agreements which are close analogues of commercial paper will help.

[Aside: This is a practical failing with Chaum's digicash, is that it,
being relatively uninterpreted mathematics, can be _called_ all sorts
of stuff, some of which fall under more regulation than others.  The
regulators, of course, will pick the interpretation which gives them
the most control.]

So perhaps now you don't have to worry about the SEC.  There are four
regulators of banks in the USA, plus general regulation of commerce.
Lots and lots of obstacles to avoid.  And it's easy, easy, easy to
overlook something.

In addition, much regulatory power has be statutorily ceded to the
regulators.  In don't think I can stress this enough, because the
regulators make rules which have the statutory force of law.  The
regulators can change or extend these rules _at will_.  You won't get
much warning, if you get any at all.

Therefore, you want to avoid the purview of the regulators entirely,
if possible.  Moving offshore is one way.  Performing substantive
activity in another way also works, but that usually just means
switching regulators.  You can, for example, transfer value by moving
stocks and bonds, that puts you under the SEC; you could also transfer
value by moving real estate, and that's another set of law.

Legal hacking is not easy.  Syntactic hacks, for example, don't work.
The whole bit with "self-incriminating pass phrases" is a syntactic
hack; it doesn't work because it does not touch upon the substance of
the law.  Moving activity to another jurisdiction is not a syntactic
hack, and it works because jurisdiction is legally significant.

Eric