One of the biggest problems currently facing the Bitcoin economy is the exchange market. The market suffers from continued concentration and price volatility. In order to maintain their links to the traditional banking world, these businesses have the unenviable task of attempting to shove Bitcoin into the world of bank accounts and anti-money laundering policies. New exchanges are joining the Bitcoin economy but regulatory compliance is no small barrier to entry. The few existing online exchange services continue to be significant points of failure for the Bitcoin economy.
A network of small, peer-to-peer transactions would likely bypass many of these issues and would be a fitting solution for the brilliantly decentralized Bitcoin network. But is such a thing possible? The guys behind MetaLair, a UK based start-up, think so and are working hard to develop the software and find the investors to make it a reality.
Continue reading “True peer-to-peer currency exchange?”
Late last week the Japan based exchange received an MSB license from US financial regulator FinCEN, license #31000029348132.
The exchange market leader had a run-in with US regulators earlier in the year when their US subsidiary, Mutum Sigillum LLC, had its bank account and Dwolla account shut down due to a lack of licensing. Soon afterwards the site changed their policies requiring all customers wishing to perform any USD withdraws/deposits to first verify their identity. As the majority of Mt. Gox’s businesses is in USD/BTC trades, their decision to appease US regulators is unsurprising.
Continue reading “Mt. Gox registers with FinCEN”
In an announcement made late last week, Mt. Gox said that they have temporarily halted US dollar withdrawals from the exchange due to increased volume and the pressure this has placed on their banking partners.
Over the past weeks Mt. Gox has experienced rising volumes of deposits and withdrawals from established and upcoming markets interested in Bitcoin. This increased volume has made it difficult for our bank to process the transactions smoothly and within a timely manner, which has created unnecessary delays for our global customers. This is especially so for those in the United States who are requesting wire transfer withdrawals from their accounts.
Continue reading “Mt. Gox ‘suspends’ US dollar withdrawals”
Late last week the Ukrainian Ministry of Incomes and Fees froze bank accounts of WebMoney in the Ukraine.
A search of WebMoney’s Keiv office allegedly revealed a number of regulatory violations. It seems authorities are concerned that WebMoney was issuing electronic money without authorization from The National Bank of Ukraine.
Authorities seized computer equipment and “Over 60 million Hryvnas ($7.5 million) held in the bank accounts of companies which were part of in the illegal system,” according to the Ministry of Incomes and Fees.
Update: WebMoney Ukraine resumes transactions.
One of the more worrying aspects of the Liberty Reserve takedown was the constant insistence by US authorities that Liberty Reserve was only a money laundering service with no legitimate use.
Regulators were very concerned with LR’s anonymity which was a serious draw to the service for many people. But what was likely an even bigger factor in LR’s success was its irreversible payments. This is a very important feature for businesses that are at risk of payment fraud or chargebacks, and it’s a feature that is not available in the current regulated financial system.
In the case of Liberty Reserve, It’s not the individual infractions committed by clients of Liberty Reserve that are worrisome to the regulators, it’s the fact that a semi-reliable platform for private payments existed in the first place.
Liberty Reserve provided a service that had a true market demand from legitimate business sectors and from non-criminals, notwithstanding the government’s claim that “virtually all” its business was illicit. If banks and traditional financial institutions still respected basic client privacy and facilitated some form of digital payments that did not always involve harmful reversibility to the merchants, then companies like Liberty Reserve wouldn’t even be necessary.
Continue reading “Liberty Reserve’s irreversibility was a legitimate and important service”
CoinDesk does an excellent job of pointing out the very different standards that entrenched TBTF financial institutions are held to as compared to those outside the system. Those choosing to operate alternative financial businesses are going to face many challenges. In fact, if you’re considering running a digital currency exchange you have only 3 choices…
- Find some damn good security experts and operate anonymously
- Forget about privacy for yourself or your customers and jump through any and all regulatory hoops
- Go to jail
Indeed it is time for digital currency businesses to grow up and make some tough choices.
The relationship between big banks and their regulators is pretty dubious, to put it mildly. But expecting federal investigators to give Bitcoin exchanges the same free ride is childishly naive.
When HSBC got caught laundering money for drug dealers and terrorists, it promised regulators it would improve controls.
Continue reading “CoinDesk: Bitcoin exchanges need to grow up fast”
One year and two months after heralding “the ultimate integration of bitcoin” into their system, the ecommerce company OKPAY has announced that it is suspending its “complete Bitcoin integration.”
Read more here.
The 2013 San Jose Bitcoin Conference has proven to be rather controversial. While it is considered to have been a success, being well attended and attracting high profile speakers, it has brought up a very divisive topic in the Bitcoin community…regulation.
Continue reading “Bitcoin selling out?”
After the success of services such as M-Pesa, Kenya’s mobile-phone based money transfer service, it is clear that there is a large under banked population in the non-western world. A population that is quick to adopt low cost mobile based solutions.
A new mobile payment system, Dinero MPS, aims to offer a wide variety of mobile payment services starting with the unserved markets in Africa, South America and Asia. Founded by financial cryptographer Ian Grigg and entrepreneur Ken Griffith, Dinero’s Ricardian-Contract based system is set to launch later this year with the release of an Android phone app.
Dinero’s co-founder Ken Griffith shared with DGC insight on the businesses’ plans and motivations.
Continue reading “Dinero MPS a new mobile payment system for the world's under-banked”
After a string of US banks closing the accounts of Bitcoin businesses, it seems that Canadian banks are following suit, well at least the Royal Bank of Canada, or RBC.
Two Canada based exchanges, VirtEx, and Canadian Bitcoins, have both had their RBC accounts closed…no explanation given.
Continue reading “It’s not just US banks; Canadian banks are refusing Bitcoin businesses”