Banking Crackdown Dominates Day One of Isle of Man Bitcoin Conference
Crypto Valley Summit, a two-day conference aimed at launching the
Isle of Man as a prime location for bitcoin businesses, kicked off today
in the wake of news that threatened to undermine its central goal.
Just one day before the conference of more than 200 attendees began, a firm providing banking facilities to bitcoin businesses on the island announced it would close those accounts under pressure from its partner banks.
Still, the event was opened resiliently by the Isle of Man’s Lieutenant Governor, Adam Wood, who extolled the island’s ability to take advantage of a rising interest in digital currencies.
Wood said:
“The rapid development of digital currencies is leaving legislators and regulators playing catch-up. This is where the Isle of Man’s small size works to its advantage. It’s agile and we can make an appropriate response in record time.”
Banking woes
A panel on banking garnered the most attention, as R Paul Davis,
the most visible digital currency proponent on the island, decried the
banks’ decision to cut ties with domestic bitcoin businesses.
Davis addressed the crowd and this most recent news head on, saying:
“HSBC closed CTS’ corporate accounts because it objected to bitcoin transactions flowing through it.”
Davis went on to state that banks like Barclays were invited to speak
at the event, but demurred following “national discussions”. Davis also
announced that a merchant services firm based in the US called Instabill would pick up the slack from CTS’ account closures.
He added:
“[Instabill] would be able to fairly quickly replace everything CTS is offering with the exception of UK Faster Payments. I have warned [Instabill's CEO] that his only real danger is being killed in the rush.”
Davis also offered his predictions on which banks would recognise the
opportunity in digital currencies, and which would fall behind,
asserting that Spanish megabank Santander
would be first to capitalise on cryptocurrency given its exposure to
Latin American markets where remittances and online payments are in
demand.
He said banks like HSBC and Barclays, which have faced recent sanctions from regulators, would be last.
Regulatory issues
The regulatory panel, which included David Hodgson, deputy director for authorisations at the island’s financial regulator, the Financial Supervision Commission, was largely positive on the development of digital currencies on the island.
“My view is that where the Isle of Man government has decided to
place itself, bringing in the AML [anti-money laundering] regulations is
appropriate,” Hodgson said, referring to the island’s requirement that
digital currency firms have to register with the FSC for AML oversight.
John Spellman, the island’s director of financial services, likened
digital currencies at present to earlier payment systems, which met with
initial resistance before widespread adoption.
Drawing comparison to debit cards, Spellman said:
“The idea of validating yourself with a PIN was bizarre. I see digital currencies as being in the same place.”
Gaming and crowdfunding
Simon Dixon,
of Bank to the Future, talked up the Isle of Man’s potential to become a
prime location for bitcoin firms on a panel he shared with Max Keiser,
host of the television programme The Keiser Report.
Dixon threw jabs at London and rival offshore jurisdiction Jersey:
“This is the ideal jurisdiction to disrupt the [banking] market. The jurisdiction that will win is not London [... and] despite the fact that Jersey reactionarily came along after the Isle of Man, it is a banking island, I think there will be a lot of politics involved with a new form of finance.”
The Isle of Man has a large online gambling industry, comprising about 10% of its gross domestic product. Firms like online poker giant Pokerstars are based on the island.
Panellists on the session on gaming and cryptocurrencies welcomed the
greater adoption of digital currency globally, with one panellist
noting that cryptocurrencies could potentially offer greater profit
margins to gaming operators.
On the sidelines, investor Brock Pierce, who is a co-founder of Isle
of Man-based GoCoin, was effusive in his praise for the event.
Pierce’s remarks captured the optimism of the event:
“It’s so refreshing hearing from government officials and regulators who are positive about digital currencies. The Isle of Man is the centre of the bitcoin universe now.”
Source : http://www.coindesk.com
Politician Keen for Vancouver Citizens to Pay Taxes in Bitcoin
A Vancouver politician says the city should allow residents to pay their taxes, fines and fees using bitcoin.
Jason Lamarche won 37,286 votes in a recent council election and now
he says he would solicit bitcoin donations if he chose to run again.
In an interview with the Georgia Straight,
Lamarche questioned why municipal politicians aren’t discussing
bitcoin’s disruptive potential. He pointed out that many people describe
Vancouver as the Silicon Valley of the north, yet the city is not doing
much to promote new technology.
Lamarche explained:
“Well, when we have companies that are working on the type of innovation that we’re seeing related to bitcoin, why aren’t we helping to promote and use this technology, which clearly has had massive uptake around the world?”
However, the city said it has no plans to consider accepting bitcoin payments at this time.
Bitcoin donations are legal in Vancouver
The issue of whether or not political donations made in bitcon are
legal was addressed by Nola Western, the deputy chief electoral officer
at election information resource Elections BC.
Western confirmed parties and candidates taking part in Vancouver’s
upcoming November elections can accept bitcoin donations. She explained
bitcoins are treated as non-monetary property and candidates simply need
to report the dollar value of bitcoin donations.
The value is set on the day the donation is received, so if the
bitcoin price goes up or down in the meantime there is no need to report
any changes in value.
However, anonymous donations are limited to $50 and anyone wishing to
donate more will have to disclose their identity, complete with
address, full name and other details. Such donations have to be reported
by the recipient. Western also cautioned that if a candidate received a
lot of anonymous $50 donations in bitcoin, questions about their source
would be raised.
Bitcoin campaign funding elsewhere
The use of bitcoin in political fundraising is not new. The US
Federal Election Commission (FEC) made it clear that political campaigns
and action committees can accept bitcoin as a form of in-kind donation.
A number of US politicians and political groups started accepting bitcoin over the past couple of years. Earlier this month the Republican Party of Louisiana became the first state republican party to accept the digital currency.
Although most US politicians who decided to embrace bitcoin tend to have libertarian views, but many others do not – they come from across the political spectrum.
Source : http://www.coindesk.com
CoinJar Launches Bitcoin Debit Card Trial
Australia-based exchange and payment processor CoinJar is set to
begin a national trial of a bitcoin-to-debit card system called Swipe,
which can be used to pay at any store that accepts electronic
payments and to withdraw cash at some ATMs.
The debit cards will work on Australia’s EFTPOS (electronic funds transfer at point of sale) network, which is supported by all major banks and has 826,769 payment terminals nationwide.
“CoinJar Swipe is our way of making bitcoin accessible to everyone,” Asher Tan, CEO of CoinJar, told CoinDesk, adding:
“Swipe lets CoinJar customers spend their bitcoin at any retail outlet that accepts EFTPOS, or withdraw cash from EFTPOS-compatible ATMs. It’s all part of CoinJar’s plan to build a simple, usable bitcoin ecosystem.”
According to the Australian Payments Clearing Association (APCA), over 17 million transactions take place via the country’s ATM and EFTPOS terminal network per day.
Testing, testing
About 100 CoinJar users will participate in the trial over the next
couple of weeks before the company makes the service available to its
entire 30,000-strong user base.
Customers will load bitcoins manually onto their debit cards, which
will be converted into Australian dollars and incur CoinJar’s standard
2% fee. There is no extra charge for using the EFTPOS feature.
The cards are planned to be issued by local company Emerchants.
Benefits of bitcoin
Tan said the card scheme was more about getting more people using
bitcoin and understanding its benefits, and that CoinJar wasn’t
expecting to make much of a profit from the project.
Those benefits included instant and almost free transfers from
anywhere in the world (which could benefit freelance workers), to easy
payments between individuals. Users can receive bitcoin, load the
EFTPOS card and be out spending within minutes, Tan said.
CoinJar has processed about A$50m (US$44.8m) in transactions so far. The company also offers a bitcoin wallet and an iOS app. As well as updating the iOS app for iOS8, it will also launch a new app for Android in the near future.
Source : http://www.coindesk.com
Huobi Launches USD Exchange With 24/7 Customer Support
Bitcoin
exchange Huobi has added another branded service to its collection with
the launch of BitYes.com, a USD-based platform for trading bitcoin and
litecoin.
The company launched BitYes at its first anniversary celebration at Beijing’s Shangri-La Hotel on Saturday.
BitYes will
feature 24/7 English customer support available through multiple
channels including Twitter, Facebook and Reddit, with a VIP system
providing additional services to ‘high-value’ users.
It has a 0.2% standard trading fee, 0% BTC and LTC deposit/withdrawal
fees, a 1% fiat currency deposit fee, 2% Egopay withdrawal fee, or 0.1%
fee for withdrawal to bank card.
Marketing to new customers
Huobi is offering special introductory deals: the first 1,000 users
may trade free for 30 days, as well as the first $1,000 depositors.
BitYes is aimed squarely at international customers, but it is
registered to Bit International Financial Services Ltd, a Hong
Kong-registered subsidiary of Huobi. The company says this will produce
both better service and a more secure legal environment.
BitYes has also collaborated closely with law firm Perkins Coie and other leading legal teams to ensure regulatory compliance across different jurisdictions.
Growing product mix
Huobi’s
product family has grown markedly over the past couple of months with a
series of launches and acquisitions, many offering something completely
separate to the original and comparatively straightforward exchange
business.
Each new product appears to appeal to a wider variety of digital
currency traders and reduce the company’s dependence on the mainland
Chinese market, with its regulatory uncertainty. All new services have
been launched simultaneously with English and Chinese versions.
These include BitVC, also part of the Hong-Kong subsidiary, a non-fiat exchange offering margin and futures trading, Yubibao interest-bearing wallets, the multi-signature Quickwallet, the Qukuai/Blockinfo block explorer, mining-linked investment products and an upcoming P2P lending platform.
Quickwallet provides users with the ability to make
instant-confirmation deposits from their personal wallet to the
exchange. This product will also be integrated with BitYes to provide
the same functionality.
A recent cryptographic audit of Huobi’s acconts showed it held
103% of claimed bitcoin reserves. It also claims a perfect security
record over its one year of operation and, like rivals OKCoin and Huobi,
have found a way to operate within a Chinese regulatory framework that
once threatened to stifle the country’s nascent bitcoin industry.
Source : http://www.coindesk.com
New Exchange SFOX Aims to Find Traders the Best Bitcoin Price
One
of the remarkable – and perhaps most confusing – aspects of bitcoin is
the fact that every bitcoin exchange seems to have a different price for
the cryptocurrency.
Of course, no two exchanges are ever alike because they all serve
different markets. When it comes to how much it costs to buy or sell
bitcoin, this is especially true.
The reasoning for this has to do with bitcoin being a global and
largely unregulated market. Because it is bought and sold all over the
world, there are numerous prices for it – with no centralization
dictating any one.
A new startup called San Francisco Open Exchange
aims to fix that. Or, at the very least, its platform will allow users
an opportunity to potentially capitalize on the spread across different
bitcoin exchange markets.
Akbar Thobhani is the co-founder of San Francisco Open Exchange, also
known as SFOX. He told CoinDesk that his platform allows people to get
the best price for bitcoin – a Kayak of sorts for the virtual currency – saying:
“What does Kayak do? It finds you the best liquidity across airlines. We do the same thing [with bitcoin]. We get you the best price and the best liquidity across multiple bitcoin exchanges.”
The idea
SFOX is essentially a platform for users to trade bitcoin and USD in
both buy and sell mode. The goal is to provide users the very best
price, similar to what an E-Trade or Scottrade offers with more
traditional financial instruments like stocks and options.
Thobhani and co-founder George Melika started SFOX with
entrepreneurial backgrounds and an understanding of the global payments
market.
Thobhani previously worked at mobile payments company Boku before heading up growth at travel website Airbnb,
where he said the lodging startup had to send money to over 190
countries, giving him key insight into what it takes to process payments
on a global scale.
“I learned that moving money was so complicated and I had no idea
about it,” said Thobhani. “I wanted to build technology to make that
easy.”
Melika has experience building trading platforms for financial institutions.
Right now bitcoin is not generally considered a traditional financial
instrument because of regulatory concerns from banking institutions.
Even so, SFOX does not believe that banks are the enemy of bitcoin.
“I wouldn’t define [banking] as a problem,” Thobhani said.
Bankers, he added, are just doing their jobs:
“I think banks – you just have to work with them. You have to understand what they are. Banks are responsible for following the compliance and the laws that are set in countries.”
It’s possible that someday platforms like SFOX will be integrated into something like E-Trade, a financial services company with which investors can by and sell securities on an ETF or by phone.
But for the time being, startups like SFOX will build a place to be a
sort of foreign exchange for decentralized currencies. This could
eventually make it desirable to banks, because of its experience
with bitcoin.
“Banks want to be involved [in bitcoin], they just have to be comfortable,” Thobhani said.
Algorithmic bitcoin trading
SFOX sees its platform as becoming increasingly useful as cryptocurrencies grow as financial assets.
Despite bitcoin’s $6bn market capitalization,
Thobhani believes BTC has room to grow, bringing specialized algorithms
for the financial markets into the cryptocurrency space.
“These algorithms are very special. They have to be rewritten for the world of cryptocurrency,“ said Thobhani.
SFOX sees its main customers as traders who will need access to
multiple exchanges at one time. While much there has been much
talk about derivatives and options or futures
to provide liquidity, SFOX is just managing trading across exchanges as
an easy starting point to integrating more complex instruments.
Said Thobhani:
“We [will be] the window into all of these instruments we can trade. We just want to make it super simple and easy for traders to manage that.”
For larger bitcoin deals on the exchange platforms it can be
difficult to transact bitcoin in buy and sell orders because of a
general lack of liquidity. SFOX offers itself to payment companies and
perhaps bitcoin-accepting merchants as a broker of sorts.
“Payment companies [are] going to need a mechanism to trade in large
numbers,” Thobhani told CoinDesk. “In a manner that doesn’t move the
market – they need to buy or sell one currency or another. We offer
liquidity.”
Y Combinator and beyond
SFOX was one of few bitcoin companies that were accepted into Y Combinator’s Summer 2014 class. Others, including Onename.io and card company Shift Payments were accepted with a more complete product to show YC’s partners.
However, SFOX came through the renowned accelerator building its
product; the founders only applied with the concept for the platform.
Said Thobhani:
“We applied to YC with an idea. Which is very unusual. You look at most of the YC companies and they have a product or at least you have been operational for six months or so.”
There are a number of companies that are somewhat similar to San
Francisco Open Exchange – especially by offering a trading platform.
Thobhani argues the startup is doing something unique amongst the
competition. The idea for SFOX, he says, is something many in the
bitcoin community will need, similar to how the conventional currency
markets operate right now, he said.
“There’s a lot of working with other partners in a currency market,
and we don’t see how bitcoin is going to be any different. Bitcoin is an
open technology, and we are an open platform. We see this as an
opportunity to work with the community,” said Thobhani.
SFOX is currently in limited beta. Anyone can sign up but deposits
and withdrawals are currently restricted. For full platform access, go
to the SFOX deposit page and follow @sfoxtrading on Twitter.
Source : http://www.coindesk.com
Announcing the Bitcoin Botswana Project
Martin Jones and Quinton Figueroa of
CoinVersity and Alakanani Itereleng of BitcoinLadyBotswana.com have
announced that they are teaming up to educate Botswanans about what
Bitcoin is, how to use it, and how it will benefit them through the
Bitcoin Botswana Project. 
The project will be producing tutorial courses to teach merchants how to accept bitcoins and to teach people how to get, save, and spend them. Attendees to the tutorials will be provided free bitcoins through the QuickyCoin exchange. In general, the project will be helping to educate people about the need for Bitcoin and the way the use of Bitcoin can simplify their lives and create a path to a better future.
Marvin Jones of CoinVersity said of the venture, “We are very delighted to team up with Ms. Itireleng. We are confident that Bitcoin can give the people of Botswana the freedom and power to transact in a world-wide market. Financial independence is capable of uplifting the entire country, and we are excited to begin.”
The project will officially commence at the Botswana Meetup scheduled for October 4, 2014 at the Oasis Motel. Many members of the business and Bitcoin community as well as the general public will be in attendance. The doors will open at 2:00pm, at which time the attendees will be provided with Bitcoin wallets. The full session will start at 5:00 and will feature presentations by CoinVersity and QuickyCoin.com after which the attendees will be shown how to receive their first bitcoins in their new wallets.
Alakanani Itereleng said, “Africa is a clear home for Bitcoin, and we have seen many technological developments succeed in Africa. Today, at least 15-20% of the population don’t have bank accounts and are using mobile money like Orange Money and Mascom MyZaka. Bitcoin will bring more than just the ability to transfer or share money, but open up business opportunities by drastically cutting down on the expense and excessive fees charged for moving money across borders. With Bitcoin, Africa will be better able to participate in the global economy without the friction of losing millions of dollars in fees. This is the opportunity we are bringing the people of Botswana and we will quickly be expanding this project into neighboring countries.”
To get involved with and /or learn more about the Bitcoin Botswana Project please contact: contact@coinversity.org
www.Coinversity.org
About CoinVersity.org – The Bitcoin Diversity Organization was created to bring greater diversity to Bitcoin ownership, education and use worldwide by focusing on under-developed and lower socio-economic people and countries. CoinVersity is an open resource to everyone interested in Bitcoin the currency, Bitcoin the technology, Bitcoin the payment network and anything and everything cryptocurrency related.
About Alakanani Itireleng – Mrs. Itireleng is a visionary entrepreneur and community builder. She is the voice of bitcoin in Botswana, founding Bitcoin Botswana and sponsoring a variety of Meetups in Botswana. Her mission is to see the adoption, use and growth of Bitcoin not only in Botswana, but the rest of Africa. She has connected with Bitcoiners in Ghana, Uganda, Sierra Leone and Somalia, and is helping them build Bitcoin communities in their respective countries.
About Botswana
Since independence, Botswana has had the highest average economic growth rate in the world, averaging about 9% per year from 1966 to 1999. Growth in private sector employment has averaged about 10% per annum over the first 30 years of independence. At the start of the 21st century, however, the economy of Botswana stagnated up through the early 2010s when it regained a growth rate above 6-7%
Botswana is also renowned as the country with Africa’s, and among the world’s, longest economic booms, almost surpassing the booms in Asian economies. The relatively high quality of the country’s statistics means that these figures are likely to be quite accurate. The government has consistently maintained budget surpluses and has extensive foreign exchange reserves.
Source : http://bitcoinwarrior.net
Satoshi’s choice does seem to indicate his thinking about why something like Bitcoin needs to exist –that the current financial system is broken to the point that perhaps we should try something else. Protest of the current political and financial system is built into Bitcoin’s very bones and has often expressed itself as a strong anti-regulation sentiment.
The fact of the matter is that Bitcoin can exist in a regulation free world only in what amounts to a worst case scenario: If governments pass laws to illegalize Bitcoin and financial institutions refuse to have dealings with anything cryptocurrency related, then Bitcoin will be relegated to a black and grey market currency. It’s our feeling that if this were the case, growth and innovation would continue and that Bitcoin would eventually succeed in some future catastrophic financial crash. Just because we suppose that it would survive under these harsh conditions, though, is no reason to want it to. It would be much better for everyone if Bitcoin develops in at least a somewhat cooperative environment.
If Bitcoin is to grow and be used alongside national currencies, there is going to be regulation, at the very least, of those places where bitcoins and regular money are exchanged. There are going to be attempts to regulate what Bitcoin does at more fundamental levels as well, as we’ve seen with the proposed BitLicense rules. Unfortunately, especially for people who are trying to build cryptocurrecy businesses, this is creating a lot of ambiguity about what is or is not legal. The ambiguity is severe enough that some businesses have already opted to move their operations off-shore to countries with more friendly regulatory environments.
Into this gap has stepped David Long, a Northern California attorney with a background in white-collar criminal investigation, offering AML/KYC compliance services for cryptocurrency businesses as the senior consultant at NCFPS-Digital Currency AML Consultants. We were able to get David to answer a few of our questions about himself and about Bitcoin regulation and compliance.
You are a former federal white-collar criminal investigator and a certified fraud investigator. What kind of crimes have you investigate and what kinds of things did you learn from that experience?
I spent about nine years with the federal Division of Labor Racketeering, Department of Labor, Office of Inspector General, as a Special Agent working out of Atlanta and Los Angeles. While working out of the Atlanta office, I spent a tremendous amount of time working the seaports in Tampa and, to a lesser extent, Miami, Florida. At the time, the stevedores’ union, the International Longshoreman’s Association (ILA), was troubled by continuing corrupt activities. Some of the corruption emanated from the union leadership’s collusion with certain employers at the ports. Based on our investigations, we were confident that organized crime was acting behind the scenes.
In Los Angeles, the investigations were completely different with there being significant focus on identity theft schemes carried out on a grand scale with criminals stealing personally identifiable information from payroll processors and filing unemployment insurance claims against the stolen identities, to the tune of millions of dollars. Some of this was traced to elements associated with the Mexican Mafia.
From the technical criminal law perspective, my investigations typically focused on money laundering, the Racketeer Influenced Corrupt Organizations Act (RICO), mail fraud, wire fraud, extortion, and false statements.
My experience as a federal agent taught me many, many, things. I think one of the most important things that the experience taught me is how to really listen to people. After all, probably the most important skill a criminal investigator or a fraud prevention professional can possess is the ability to listen. This was a fascinating experience for me because it actually helped me to refine my skills as an attorney. As an attorney, a federal agent, and now as a consultant, it is very important that I listen to my client to learn his or her story (or the story of their company), so that I can best determine how to assist them.
How did you find yourself assisting Bitcoin related companies with AML/KYC compliance? This would seem to be a small niche in a massive field. What got you involved in it?
Well, as an attorney and a federal agent, I really enjoyed thinking about ways bad actors might approach a company to defraud it or to launder money through it. Once I left government service, I obtained certifications in both anti-money laundering (through the ACAMS) and in fraud examination (through the ACFE) so I could continue learning and studying criminal thought and behavior. I also became a university professor in the fields of both criminal justice and legal studies. My faculty position helps to keep me sharp by affording me the opportunity (and time) to conduct research into the topics I am called on to consult about.
When
Bitcoin really came to my attention in late 2011, I became intrigued by
the underlying block chain technology and I began reading about the
ways that it could potentially revolutionize the financial services
sector. Then I began to learn about how the block chain technology holds
great potential to disrupt other industry sectors as well. Well, from
my experience, where technological innovations go, so goes the criminal
mind. I was just drawn to the prospect of helping companies design
procedures to mitigate the impact of criminal behavior on their fledging
companies, while at same time, assisting them in maintaining or
achieving regulatory compliance.
AML/KYC laws seem to be at odds with the fundamentals of Bitcoin – a pseudonymous currency that allows people to send any amount of money to anyone anywhere without the need for a third party to facilitate the transaction. Do you think it’s possible to reconcile these foundational principles of Bitcoin with these laws?
Bitcoin is indeed a disruptive technology that existing regulations did not contemplate. However, that is not to say that Bitcoin and the blockchain technology necessitate the need for additional regulations. There is an entire AML/KYC apparatus in place that with some adaptation, consideration, reflection and forethought, on the part of regulators, can be applied successfully to this new technology. I do not believe that we need new prohibitionist or otherwise strict regulatory constructs to “control” the technology. Top-down responses to innovative technologies do more harm than good.
What’s you take on the BitLicense proposal out of New York?
My dedication to ensuring that the financial system is not utilized to further the activities of bad actors is entrenched and has been a linchpin of my career. Yet, at the same time, I clearly grasp the essence and promise of the technology of the Bitcoin protocol. After thoroughly reading and digesting the regulations as proposed, I have concluded that, as written, the regulations do little to ensure the safety of the “virtual currency” industry from the threat of money laundering and the financing of terrorism, while doing much to potentially choke off the growth and innovation in this still nascent industry. Surely, this cannot be the intended result of this proposal. In my view, New York’s approach embodies a “top-down” rather than a “bottom-up” approach to regulation.
Interestingly enough, though the proposal correctly calls for the development of robust AML/KYC programs, it hastily discards the necessity of requiring effective AML programs based on robust risk assessments. In other words, it requires risk-based (presumably) AML programs and then departs from a risk-based approach by requiring a physical address for all parties to a transaction, without regard to the risk presented. Even disregarding for a moment the technological “substitutes” for a physical address, a risk-based approach could be drawn to be sensitive to the types of customer verification protocols customarily accepted in a given country. Absent that, why not consider simply recommending, as part of a risk-based analysis, lower maximum transaction thresholds and limiting the number of daily transactions available to those who are unable to furnish a physical address, or consider a combination of both? All of these assessments are properly made within the context of a risk-based AML/CFT program. In short, there are a number of other ways to more reasonably address the risks presented absent a “one size fits all” mandate. Such is the antithesis of the risk-based approach adopted by the Financial Action Task Force, of which the United States is a member.
What kind of Bitcoin businesses have you been working with and what have you found to be the most challenging part of helping them be compliant?
Ninety-nine percent (99%) of the businesses I work with are in the start-up phase. Some have received seed or first-round funding; others that I mentor are in the pre-funding stage. As far as business type, they run the gamut of Bitcoin businesses out there. I advise exchanges, remittance companies, trading platforms, derivatives exchanges, and mobile wallets. The challenges these companies face are often daunting and it is heartening to see how these entrepreneurs face these challenges with such fearlessness! I am proud and happy to have been invited to serve as a mentor at the Plug and Play accelerator in Sunnyvale, CA and at the Meltwater Entrepreneurial School of Technology (MEST), an incubator located in Accra, Ghana. MEST is fully funded by the Meltwater Foundation, a non-profit subsidiary of the Meltwater Group, headquartered in San Francisco.
The most challenging part for me is providing “advice” in an area so rife with regulatory uncertainty. Because Bitcoin is a disruptive technology, much of the regulation in place pre-dates the technology and, as such, the existing regulations often do not speak readily to the unique design of the software. Hence, there are huge ambiguities as far as regulation is concerned. For example, most regulation in the financial services sector assumes the existence of a third-party intermediary for most transactions. As a decentralized, disintermediated system, existing regulations generally are interpreted with great difficulty when trying to apply them to the new technology. That though, by itself, does not mean that new regulations are necessarily needed. What is needed though is clarification as to how regulators intend to apply existing regulations to digital currency companies.
In your practice, you conduct AML trainings to keep businesses compliant with the law. What are some of the most important things you stress in these trainings?
The Bank Secrecy Act and associated regulations require regular periodic training for compliance staff and for any other personnel whose responsibilities touch on AML/KYC issues. The most important items that are covered in training really surround the fundamentals of AML such as being cognizant of the types of transactions customers usually undertake so that unusual types of transactions are readily identified. I also spend significant amounts of time training in the area of report and record-keeping requirements. For example, properly preparing an appropriate Suspicious Activity Report is a task that requires some focus and training in as well.
I know that you have probably not investigated this professionally, but what’s your best professional guess about what really happened at Mt. Gox?
True. Anything I say about Mt. Gox is at best speculation as I have never spoken to anyone close to the investigation. My best speculation is that the Mt. Gox “affair” might be a combination of external hacking and internal theft. Perhaps there was collusion between the two as well. I really do not have a clue about what really happened though.
In Florida, there have been a couple of cases of people trading on LocalBitcoin.com. This causes a lot of concern for people since it means that any user or business might be tagged as a money transmitter. Do you think this is a real concern and what can regular users do to keep themselves safe?
You are correct. I do have some real concern about those involved with LocalBitcoin.com being considered as money transmitters. Whether or not a particular state would consider such a user a money transmitter, it is important to remember the following. Whether or not a person or a company falls within the ambit of regulatory oversight, anyone can potentially violate money laundering statutes or involve themselves in a money laundering conspiracy if they knowingly engage in certain conduct, or, if they turn a willful blind eye to the suspiciousness of the conduct to which they might be engaged.
California has taken the step of recognizing cryptocurrencies as legal tender. Why do you think the state took this step and what impact will it have on the development of Bitcoin and related businesses in California.
I think that California took this step in an effort to recognize the legitimacy of crypto currencies and to signal the industry that the state was not intending to quash the development of the ecosystem. Hopefully, more in the way of promoting and nurturing the industry is in the works here in California.
As far as the impact is concerned, I think it may have helped soothe any apprehension that might have been out there that the State was going to prove itself hostile to the industry. This step certainly helped venture capital and private equity elements breathe a bit more easily.
You folks have offices in the US, Britain, Mexico, and Canada. How do the regulatory environments in each of those countries compare? Which one do think is best suited for a Bitcoin startup to get going in?
NCFPS maintains strategic partnerships in those countries and we work closely with our partners there. The UK is really making strides to be a leader in the Bitcoin ecosystem. Canada is not far behind. In Mexico, things are finally starting to really come alive. The U.S. remains the goal of many start-ups; however, with the huge amount of regulatory uncertainty and existing bureaucratic red-tape, it presents a huge barrier to entry for many.
As a member of a number of prestigious professional legal associations, I can imagine that you get a wide range of reactions to your involvement with crypto currencies. What’s the typical reaction and how do you respond?
Most people are quite curious and intrigued about my involvement in the crypto currency environment. I tend to think that many people are fairly confused by the concept of Bitcoin and do not yet understand its potential impact. I enjoy explaining it to them and my role in helping along start-ups that are interested in compliance. So far, I actually have not had any negative reactions.
How do you see Bitcoin developing as a currency and protocol developing over the next couple of years?
Well, I believe that digital currencies are here to stay. However, I am not sure that the major digital currency will end up necessarily being Bitcoin. I am fairly certain that the blockchain technology is here to stay. As you probably know, there are all kinds of developers working on the blockchain technology to enable such innovations as programmable “smart” contracts, and “smart property,” through the use of “colored coins,’ and multi-signature transactions as well.
Source : http://bitcoinwarrior.ne
The project will be producing tutorial courses to teach merchants how to accept bitcoins and to teach people how to get, save, and spend them. Attendees to the tutorials will be provided free bitcoins through the QuickyCoin exchange. In general, the project will be helping to educate people about the need for Bitcoin and the way the use of Bitcoin can simplify their lives and create a path to a better future.
Marvin Jones of CoinVersity said of the venture, “We are very delighted to team up with Ms. Itireleng. We are confident that Bitcoin can give the people of Botswana the freedom and power to transact in a world-wide market. Financial independence is capable of uplifting the entire country, and we are excited to begin.”
The project will officially commence at the Botswana Meetup scheduled for October 4, 2014 at the Oasis Motel. Many members of the business and Bitcoin community as well as the general public will be in attendance. The doors will open at 2:00pm, at which time the attendees will be provided with Bitcoin wallets. The full session will start at 5:00 and will feature presentations by CoinVersity and QuickyCoin.com after which the attendees will be shown how to receive their first bitcoins in their new wallets.
Alakanani Itereleng said, “Africa is a clear home for Bitcoin, and we have seen many technological developments succeed in Africa. Today, at least 15-20% of the population don’t have bank accounts and are using mobile money like Orange Money and Mascom MyZaka. Bitcoin will bring more than just the ability to transfer or share money, but open up business opportunities by drastically cutting down on the expense and excessive fees charged for moving money across borders. With Bitcoin, Africa will be better able to participate in the global economy without the friction of losing millions of dollars in fees. This is the opportunity we are bringing the people of Botswana and we will quickly be expanding this project into neighboring countries.”
To get involved with and /or learn more about the Bitcoin Botswana Project please contact: contact@coinversity.org
www.Coinversity.org
About CoinVersity.org – The Bitcoin Diversity Organization was created to bring greater diversity to Bitcoin ownership, education and use worldwide by focusing on under-developed and lower socio-economic people and countries. CoinVersity is an open resource to everyone interested in Bitcoin the currency, Bitcoin the technology, Bitcoin the payment network and anything and everything cryptocurrency related.
About Alakanani Itireleng – Mrs. Itireleng is a visionary entrepreneur and community builder. She is the voice of bitcoin in Botswana, founding Bitcoin Botswana and sponsoring a variety of Meetups in Botswana. Her mission is to see the adoption, use and growth of Bitcoin not only in Botswana, but the rest of Africa. She has connected with Bitcoiners in Ghana, Uganda, Sierra Leone and Somalia, and is helping them build Bitcoin communities in their respective countries.
About Botswana
Since independence, Botswana has had the highest average economic growth rate in the world, averaging about 9% per year from 1966 to 1999. Growth in private sector employment has averaged about 10% per annum over the first 30 years of independence. At the start of the 21st century, however, the economy of Botswana stagnated up through the early 2010s when it regained a growth rate above 6-7%
Botswana is also renowned as the country with Africa’s, and among the world’s, longest economic booms, almost surpassing the booms in Asian economies. The relatively high quality of the country’s statistics means that these figures are likely to be quite accurate. The government has consistently maintained budget surpluses and has extensive foreign exchange reserves.
Source : http://bitcoinwarrior.net
Talking Bitcoin Regulation and Compliance with David Long, JD
On January 3, 2009, Satoshi Nakamoto embedded a message in the very first block of Bitcoin’s blockchain in order to prove that the block could not have been created before that date. To make the point, he selected a headline from The Times, a British newspaper. The top story that day was “Israel prepares to launch ground offensive on Gaza,” but he didn’t use that one. Instead, he went for the below-the-fold headline of “Chancellor on brink of second bailout for banks.”Satoshi’s choice does seem to indicate his thinking about why something like Bitcoin needs to exist –that the current financial system is broken to the point that perhaps we should try something else. Protest of the current political and financial system is built into Bitcoin’s very bones and has often expressed itself as a strong anti-regulation sentiment.
The fact of the matter is that Bitcoin can exist in a regulation free world only in what amounts to a worst case scenario: If governments pass laws to illegalize Bitcoin and financial institutions refuse to have dealings with anything cryptocurrency related, then Bitcoin will be relegated to a black and grey market currency. It’s our feeling that if this were the case, growth and innovation would continue and that Bitcoin would eventually succeed in some future catastrophic financial crash. Just because we suppose that it would survive under these harsh conditions, though, is no reason to want it to. It would be much better for everyone if Bitcoin develops in at least a somewhat cooperative environment.
If Bitcoin is to grow and be used alongside national currencies, there is going to be regulation, at the very least, of those places where bitcoins and regular money are exchanged. There are going to be attempts to regulate what Bitcoin does at more fundamental levels as well, as we’ve seen with the proposed BitLicense rules. Unfortunately, especially for people who are trying to build cryptocurrecy businesses, this is creating a lot of ambiguity about what is or is not legal. The ambiguity is severe enough that some businesses have already opted to move their operations off-shore to countries with more friendly regulatory environments.
Into this gap has stepped David Long, a Northern California attorney with a background in white-collar criminal investigation, offering AML/KYC compliance services for cryptocurrency businesses as the senior consultant at NCFPS-Digital Currency AML Consultants. We were able to get David to answer a few of our questions about himself and about Bitcoin regulation and compliance.
You are a former federal white-collar criminal investigator and a certified fraud investigator. What kind of crimes have you investigate and what kinds of things did you learn from that experience?
I spent about nine years with the federal Division of Labor Racketeering, Department of Labor, Office of Inspector General, as a Special Agent working out of Atlanta and Los Angeles. While working out of the Atlanta office, I spent a tremendous amount of time working the seaports in Tampa and, to a lesser extent, Miami, Florida. At the time, the stevedores’ union, the International Longshoreman’s Association (ILA), was troubled by continuing corrupt activities. Some of the corruption emanated from the union leadership’s collusion with certain employers at the ports. Based on our investigations, we were confident that organized crime was acting behind the scenes.
In Los Angeles, the investigations were completely different with there being significant focus on identity theft schemes carried out on a grand scale with criminals stealing personally identifiable information from payroll processors and filing unemployment insurance claims against the stolen identities, to the tune of millions of dollars. Some of this was traced to elements associated with the Mexican Mafia.
From the technical criminal law perspective, my investigations typically focused on money laundering, the Racketeer Influenced Corrupt Organizations Act (RICO), mail fraud, wire fraud, extortion, and false statements.
My experience as a federal agent taught me many, many, things. I think one of the most important things that the experience taught me is how to really listen to people. After all, probably the most important skill a criminal investigator or a fraud prevention professional can possess is the ability to listen. This was a fascinating experience for me because it actually helped me to refine my skills as an attorney. As an attorney, a federal agent, and now as a consultant, it is very important that I listen to my client to learn his or her story (or the story of their company), so that I can best determine how to assist them.
How did you find yourself assisting Bitcoin related companies with AML/KYC compliance? This would seem to be a small niche in a massive field. What got you involved in it?
Well, as an attorney and a federal agent, I really enjoyed thinking about ways bad actors might approach a company to defraud it or to launder money through it. Once I left government service, I obtained certifications in both anti-money laundering (through the ACAMS) and in fraud examination (through the ACFE) so I could continue learning and studying criminal thought and behavior. I also became a university professor in the fields of both criminal justice and legal studies. My faculty position helps to keep me sharp by affording me the opportunity (and time) to conduct research into the topics I am called on to consult about.
When
Bitcoin really came to my attention in late 2011, I became intrigued by
the underlying block chain technology and I began reading about the
ways that it could potentially revolutionize the financial services
sector. Then I began to learn about how the block chain technology holds
great potential to disrupt other industry sectors as well. Well, from
my experience, where technological innovations go, so goes the criminal
mind. I was just drawn to the prospect of helping companies design
procedures to mitigate the impact of criminal behavior on their fledging
companies, while at same time, assisting them in maintaining or
achieving regulatory compliance. AML/KYC laws seem to be at odds with the fundamentals of Bitcoin – a pseudonymous currency that allows people to send any amount of money to anyone anywhere without the need for a third party to facilitate the transaction. Do you think it’s possible to reconcile these foundational principles of Bitcoin with these laws?
Bitcoin is indeed a disruptive technology that existing regulations did not contemplate. However, that is not to say that Bitcoin and the blockchain technology necessitate the need for additional regulations. There is an entire AML/KYC apparatus in place that with some adaptation, consideration, reflection and forethought, on the part of regulators, can be applied successfully to this new technology. I do not believe that we need new prohibitionist or otherwise strict regulatory constructs to “control” the technology. Top-down responses to innovative technologies do more harm than good.
What’s you take on the BitLicense proposal out of New York?My dedication to ensuring that the financial system is not utilized to further the activities of bad actors is entrenched and has been a linchpin of my career. Yet, at the same time, I clearly grasp the essence and promise of the technology of the Bitcoin protocol. After thoroughly reading and digesting the regulations as proposed, I have concluded that, as written, the regulations do little to ensure the safety of the “virtual currency” industry from the threat of money laundering and the financing of terrorism, while doing much to potentially choke off the growth and innovation in this still nascent industry. Surely, this cannot be the intended result of this proposal. In my view, New York’s approach embodies a “top-down” rather than a “bottom-up” approach to regulation.
Interestingly enough, though the proposal correctly calls for the development of robust AML/KYC programs, it hastily discards the necessity of requiring effective AML programs based on robust risk assessments. In other words, it requires risk-based (presumably) AML programs and then departs from a risk-based approach by requiring a physical address for all parties to a transaction, without regard to the risk presented. Even disregarding for a moment the technological “substitutes” for a physical address, a risk-based approach could be drawn to be sensitive to the types of customer verification protocols customarily accepted in a given country. Absent that, why not consider simply recommending, as part of a risk-based analysis, lower maximum transaction thresholds and limiting the number of daily transactions available to those who are unable to furnish a physical address, or consider a combination of both? All of these assessments are properly made within the context of a risk-based AML/CFT program. In short, there are a number of other ways to more reasonably address the risks presented absent a “one size fits all” mandate. Such is the antithesis of the risk-based approach adopted by the Financial Action Task Force, of which the United States is a member.
What kind of Bitcoin businesses have you been working with and what have you found to be the most challenging part of helping them be compliant?
Ninety-nine percent (99%) of the businesses I work with are in the start-up phase. Some have received seed or first-round funding; others that I mentor are in the pre-funding stage. As far as business type, they run the gamut of Bitcoin businesses out there. I advise exchanges, remittance companies, trading platforms, derivatives exchanges, and mobile wallets. The challenges these companies face are often daunting and it is heartening to see how these entrepreneurs face these challenges with such fearlessness! I am proud and happy to have been invited to serve as a mentor at the Plug and Play accelerator in Sunnyvale, CA and at the Meltwater Entrepreneurial School of Technology (MEST), an incubator located in Accra, Ghana. MEST is fully funded by the Meltwater Foundation, a non-profit subsidiary of the Meltwater Group, headquartered in San Francisco.
The most challenging part for me is providing “advice” in an area so rife with regulatory uncertainty. Because Bitcoin is a disruptive technology, much of the regulation in place pre-dates the technology and, as such, the existing regulations often do not speak readily to the unique design of the software. Hence, there are huge ambiguities as far as regulation is concerned. For example, most regulation in the financial services sector assumes the existence of a third-party intermediary for most transactions. As a decentralized, disintermediated system, existing regulations generally are interpreted with great difficulty when trying to apply them to the new technology. That though, by itself, does not mean that new regulations are necessarily needed. What is needed though is clarification as to how regulators intend to apply existing regulations to digital currency companies.
In your practice, you conduct AML trainings to keep businesses compliant with the law. What are some of the most important things you stress in these trainings?
The Bank Secrecy Act and associated regulations require regular periodic training for compliance staff and for any other personnel whose responsibilities touch on AML/KYC issues. The most important items that are covered in training really surround the fundamentals of AML such as being cognizant of the types of transactions customers usually undertake so that unusual types of transactions are readily identified. I also spend significant amounts of time training in the area of report and record-keeping requirements. For example, properly preparing an appropriate Suspicious Activity Report is a task that requires some focus and training in as well.
I know that you have probably not investigated this professionally, but what’s your best professional guess about what really happened at Mt. Gox?
True. Anything I say about Mt. Gox is at best speculation as I have never spoken to anyone close to the investigation. My best speculation is that the Mt. Gox “affair” might be a combination of external hacking and internal theft. Perhaps there was collusion between the two as well. I really do not have a clue about what really happened though.
In Florida, there have been a couple of cases of people trading on LocalBitcoin.com. This causes a lot of concern for people since it means that any user or business might be tagged as a money transmitter. Do you think this is a real concern and what can regular users do to keep themselves safe?
You are correct. I do have some real concern about those involved with LocalBitcoin.com being considered as money transmitters. Whether or not a particular state would consider such a user a money transmitter, it is important to remember the following. Whether or not a person or a company falls within the ambit of regulatory oversight, anyone can potentially violate money laundering statutes or involve themselves in a money laundering conspiracy if they knowingly engage in certain conduct, or, if they turn a willful blind eye to the suspiciousness of the conduct to which they might be engaged.
California has taken the step of recognizing cryptocurrencies as legal tender. Why do you think the state took this step and what impact will it have on the development of Bitcoin and related businesses in California.
I think that California took this step in an effort to recognize the legitimacy of crypto currencies and to signal the industry that the state was not intending to quash the development of the ecosystem. Hopefully, more in the way of promoting and nurturing the industry is in the works here in California.
As far as the impact is concerned, I think it may have helped soothe any apprehension that might have been out there that the State was going to prove itself hostile to the industry. This step certainly helped venture capital and private equity elements breathe a bit more easily.
You folks have offices in the US, Britain, Mexico, and Canada. How do the regulatory environments in each of those countries compare? Which one do think is best suited for a Bitcoin startup to get going in?
NCFPS maintains strategic partnerships in those countries and we work closely with our partners there. The UK is really making strides to be a leader in the Bitcoin ecosystem. Canada is not far behind. In Mexico, things are finally starting to really come alive. The U.S. remains the goal of many start-ups; however, with the huge amount of regulatory uncertainty and existing bureaucratic red-tape, it presents a huge barrier to entry for many.
As a member of a number of prestigious professional legal associations, I can imagine that you get a wide range of reactions to your involvement with crypto currencies. What’s the typical reaction and how do you respond?
Most people are quite curious and intrigued about my involvement in the crypto currency environment. I tend to think that many people are fairly confused by the concept of Bitcoin and do not yet understand its potential impact. I enjoy explaining it to them and my role in helping along start-ups that are interested in compliance. So far, I actually have not had any negative reactions.
How do you see Bitcoin developing as a currency and protocol developing over the next couple of years?
Well, I believe that digital currencies are here to stay. However, I am not sure that the major digital currency will end up necessarily being Bitcoin. I am fairly certain that the blockchain technology is here to stay. As you probably know, there are all kinds of developers working on the blockchain technology to enable such innovations as programmable “smart” contracts, and “smart property,” through the use of “colored coins,’ and multi-signature transactions as well.
Source : http://bitcoinwarrior.ne
Could Scotland’s currency be bitcoin?
A central
question in the Scottish independence campaign has centered on
currency. The Bank of England has said repeatedly that an independent Scotland can not use the pound sterling, except for an 18-month emergency period following a yes vote.
No one has sorted out what currency Scotland would use after that period, but there’s been some speculation that digital currency bitcoin might be a good fit.
That idea may seem far-fetched, but it has been posited in at least one high-profile financial forum by the assistant governor of Australia’s central bank and in a publication by a British think tank.
The country does have some experience in experimenting with currencies. During the 18th and 19th centuries, Scotland tested out private currencies in an unregulated banking system before ceding control to the Bank of England.
Under
this free banking system, Scotland’s three largest private banks—the
Bank of Scotland, Royal Bank of Scotland and the British Linen Bank—
issued competing private currencies after the Bank of Scotland monopoly
on note issues ended. These private notes were backed by banks’ gold
reserves, while their supply was largely left up to market forces.
Adopting
a cryptocurrency like bitcoin would similarly be a return to private
money and could offer some benefits for Scotland, such as creating a
flexible flow of private capital at relatively low cost, says Pete
Rizzo, US editor for Coindesk, a digital currency news site.
But,
he warns, the risks would outweigh those rewards. A central bank would
have little to no control over setting monetary policy under bitcoin,
since the digital currency’s supply is dictated by market forces.
Instead of relying on a central bank to protect its value, bitcoin
uses high-powered supercomputers and sophisticated cryptography at
several unknown locations around the world.
A more
plausible solution, Rizzo explains, would be for Scotland to use the
underlying technology behind bitcoin to suit its needs and possibly
create its own, more flexible digital currency. The move would be almost
as radical as the one to break up the UK’s 307-year-old union.
Source : http://qz.com
CoinJar Trials Consumer-Friendly Bitcoin Debit Card in Australia
I
am persuaded that the Bitcoin economy should become “real,” with less
speculation and more use as a currency to buy goods, so I welcome
innovations that make spending Bitcoin easy for consumers. Australian
company CoinJar
unveiled the country’s first Bitcoin debit card, which seems especially
user-friendly and integrated with the existing Australian payment
infrastructure.
“We created Swipe because we simply wanted to make it easier for our customers to spend their bitcoin,”said CoinJar CEO Asher Tan.
“Swipe demystifies bitcoin and makes it accessible to everyone through a secure platform. Our team is really excited about Swipe, and we look forward to receiving feedback from our customers.”Tan told Mashable that Bitcoin is for people who want ultimate control over their money:
Earn Bitcoin Points by Creating a User on CCN & Join the Discussions!
“It is not controlled by a bank or other other third parties, but by a network of computers worldwide backed by strong encryption that verify transactions multiple times to ensure that no fraudulent transactions occur. This means nobody has total control over your money but you.”
CoinJar, which raised around AU$500,000 from Blackbird Ventures late last year, estimates that Bitcoin is being used by around 500,000 Australians, with that number growing rapidly, ZDNET reports. CoinJar alone has processed more than 50 million AUD worth of bitcoin transactions in the past 12 months for more than 30,000 individual and business customers, according to the company, which expects a wider rollout of the technology in the “near future.”
The CoinJar card will be issued to 100 CoinJar users for initial testing. The company said that customers taking part in the trial will be able to withdraw from their bitcoin accounts, converted to Australian dollars, at any ATM, or purchase items at any retail outlet accepting EFTPOS cards.
Participation in the trial will be offered to select early adopters, everyday consumers, and a wide variety of demographic characteristics. Customers are set to receive their cards from next week. If you are a CoinJar user, you can apply to get early access to the Swipe card and related apps.
“Owning bitcoin is great, but spending it is better. While lots of businesses are starting to take bitcoin, not all do. That’s why we’ve created CoinJar Swipe, an EFTPOS card that lets you spend your bitcoin anywhere, anytime. While the bitcoin network offers instant, frictionless transactions, turning bitcoin into cash can be slow and painful (we’re looking at you banks). CoinJar Swipe lets you take your card to any ATM or store that accepts cash-out and turn your bitcoin into cash instantly.” (CoinJar)There are other Bitcoin debit cards, such as the Xapo card, but the new CoinJar product seems especially consumer-friendly. It is fully integrated with Australia’s leading electronic payment network, and its relatively low fees will permit avoiding the wave of protest that followed the launch of the Xapo card.
After the trial period, the CoinJar Swipe card will only available to Australian consumers, which doesn’t help much those of us who live elsewhere, but I hope that other operators will offer similar products in their home markets.
Source : http://www.cryptocoinsnews.com
The Bitcoin Arms Race Shifts to the Cloud
GAW Miners initially focused on mining equipment for “altcoins” such as Litecoin and Dogecoin, which use the Scrypt algorithm to process transactions, rather than the SHA-256 algorithm used by Bitcoin. But the company's Bitcoin business is growing, …Source : http://crypto-news.com
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