Numismatics and Lobbying
Originally published on the mrbrklyn blog on the ANA website - Collecting Tips | mrbrklyn
Over the last few weeks it has been crystallizing in my mind that
much of the hobby falls under increasing government jurisprudence and regulation.
It is a bit of an oddity because so many coin collectors and dealers
are inherently free market types and supporters of small government.
It comes with the territory that those that are interested in bullion, particularly
but not exclusively, have this libertarian bend. But the regulation
by government is sort of built into the hobby but regulation has
accelerated in the last decade driven by multiple forces, not the least
of which has been the general trend of growing government over site in society.
People increasingly look to government for solutions, and government
has its own agendas, such as it is.
For starter coins and currency are products of government. So there is
that coming right out of the gate. Its always been assumed and has been
particularly true that coins of precious metals have an intrinsic value.
But that has always been a bit of an illusion. Coins have always had
a dual nature of fiduciary value and the market value of the metals. In my
lifetime the metal has been virtually worthless, so I am not personally
familiar with a coinage system where value of money is intrinsic to market
values for precious metals.
We never give it a second thought. But many coin collectors still feel
they are fighting the 1933 move away from the gold standard, and swear that
Richard Nixon's biggest act of betrayal was ditching the gold standard
rather than Watergate.
The reality is that we live in a legal system that regulates coin
collection, and much of the regulation stems from one of three areas
- Monetary Regulation and counterfeiting
- Fiscal policy, investment and financial laws (including taxes).
- Cultural artifacts and archaeological laws.
All three of these have been in the recent news. For coin clubs, lobbying
often takes a back seat to the day to day interests of trading and
artistic issues. But lobbying really needs to be given more attention.
One such group that puts lobbying at the forefront of their mission is
The National Coin & Bullion Association, which was formally known at the
Industry Council for Tangible Assets. It is a 501(c)(6) trade association
that describes itself as:
dedicated to the coins, currency, and precious-metals bullion communities
for over 38 years. NCBA exists to promote and safeguard the interests of
its members, serving as the industry's watchdog to maintain a favorable
legislative and regulatory climate in the United States federal government
and individual state governments. The association provides a medium
through which its members may confer, consult, cooperate with, and
educate governmental and other agencies to solve problems affecting their
businesses. NCBA also offers its members assistance and information on
new and existing laws and regulations and promotes harmony and cooperation
among its members to advance the welfare of the numismatic communities.
They have varying degrees of membership from free to paid. Their
published accomplishments include Broker Reporting Regulations,
Cash-Reporting Law, FTC regulations on telemarketing, Precious Metals
and more. They are currently lobbying on Counterfeiting,
Airline regulations, FTC advisement, sales taxes etc etc. Again, see
their website for details.
To give you an example of the problems involved, a little known federal
agency called the Commodities Futures Trading Commission, an agency
designed to regulation options and futures trading, is directly involved
in coin collecting. Their legal status is defined in the law under
Chapter 17 part 1
The CFTC has a whole history of intervening in metals and rare coin markets
example outlines their position regarding Commission Regular 150.2
Unlike certain enumerated agricultural commodities set forth in Commission
Regulation 150.2, the CFTC has largely permitted speculative position
limits and position accountability levels for futures contracts on
metal commodities to be set by the futures exchanges. The speculative
position limits and accountability levels for specific metal commodities
are subject to approval, certification and oversight by the CFTC. As set
forth in Appendix B to Part 38 of CFTC Regulations, the CFTC through Core
Principle 5 specifies acceptable exchange practices for establishing
position limits for commodities, such as metals, and also allows the
exchanges to use "position accountability levels" rather than fixed
position limits in months other than the spot-month for commodities that
meet certain liquidity requirements.8"
The law allows them to regulate bullion coins under Section 31.3 of Title 17
Issues having to do with transport of coins designated as cultural
artifacts concern me a great deal. Recently it was reported that in
Champaign, NY ancient coins from Persia and Armenia were confiscated
because of a lack of a license. I have never seen such a license and I
have several ancient coins that I have purchased from legitimate vendors.
Furthermore, I just got done reading in David Hendin's text on Biblical
Coins that it can take months to get common window's mites out of Israel
now, and Israel is fairly lenient in these matters. Italy, Germany,
France and much of the world is much stricter. Coin dealers are terrible
at provenance and this is a quagmire waiting to happen to many collectors.
Tax and Business Law
Recently the IRS has tightened regulations on all monetary transactions
for more than $600 with on line. Vendors, banks and transaction companies
like paypal and ebay have stricter reporting rules.
It is common to purchase coins for these sums of money and coin dealers
are very much used to dealing in cash. With an increasing surveillance
state and the addiction to cellphones, it will get very difficult to
hide cash transactions.
Overall, it should be clear that we need a much better lobbying arm for
coin collectors and the education on these issues needs to be much better.
This might be a mandatory part of ANA education programs. From issues
relating to Pawn Brokers, to stolen goods, to taxes, to import export laws,
collectors are being regulated in every direction. We need to be more
proactive in the political dialog about this hobby.