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The Value of a Necessary Evil

[Reading Time: 3 minutes]

Over the past few years, I have been polling compliance professionals around the world, anonymously, of course, on how compliance and risk management are treated by their senior management within their organizations.  Consistently and overwhelmingly, the preponderance of responses has fallen on the A side:

The truth is that, whether we acknowledge it or not, a focus on compliance and risk management has always been a hard internal sell.  Although compliance professionals are partly to blame for that, I believe most of the Continue reading →

No Banking, No Bitcoin

[Reading Time: 4 minutes]

Last Friday’s news that the Internet Archive Federal Credit Union (IAFCU) had shut down Tradehill’s account must have sent chills down the spine of every virtual currency entrepreneur.  If it didn’t, it should. The IAFCU was supposed to be one of the few, if not the only, Bitcoin-friendly financial institution in the U.S. rescuing virtual currency exchangers from ‘banking oblivion’.  At this point, we can only speculate about the true causes of this unfortunate situation, and we certainly hope it gets resolved favorably, promptly and permanently.

Let’s hope it’s another case of entrepreneurial immaturity, as that would be the lesser evil compared to other potentially more devastating ones.  However, with all due respect to the parties involved in this particular case, there is, in general, a fine line between immaturity and stupidity; one that cannot be ignored in a nascent industry that is riddled with risks, and in which a few bad apples could set the entire industry basket back by years.  My point is: Are convertible virtual currency exchangers doing their homework?

News flash #1 to virtual currency exchangers: you are financial institutions!

Being a financial institution requires a heightened degree of governance –organization, discipline and Continue reading →

2013-09-01 Crypto-Timeline

Here is a log with relevant legal, regulatory, law enforcement and business risk milestones in the crypto-currency race to maturity with links to trusted sources.

The  Key August 2013 Crypto-Events were:

• 8/1/2013 – Tangible Cryptography (FastCash4Bitcoins) suspends Bitcoin-related transactions
• 8/2/2013 – Federal Judge declares Bitcoin a currency
• 8/12/2013 – New York State Department of Financial Services examines virtual currency practices
• 8/12/2013 – New York subpoenas Bitcoin firms in proble on criminal risk
• 8/12/2013 – U.S. Congress starts looking into Bitcoin
• 8/14/2013 – Top US compliance experts and industry players meet in first virtual currencies compliance conference [speakers and some presentations are listed here.]
• 8/15/2013 – Commonwealth Bank closes CoinJar’s business and founders’ personal accounts
• 8/18/2013 – Germany officially recognizes Bitcoin as ‘private money’
• 8/19/2013 – Mercatus Center publishes a Bitcoin Primer for Policymakers, a fine compendium of its Continue reading →