crypto-preneurs

What Would a BitLicense Look Like?

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Last November, the New York State Department of Financial Services issued a notice communicating its intent to hold a hearing on virtual currencies, with the purposes of reviewing “the interconnection between money transmission regulations and virtual currencies,” and considering “the potential issuance of a BitLicense specific to virtual currency transactions and activities.” The hearings are scheduled to be held on January 28 and 29 in downtown Manhattan.

I thought it would be useful to start a conversation on this topic by offering my experience-based perspective on the New York state licensing and examination process, and by posing a few trigger questions.

By way of background, the reason virtual currencies, New York and licensing appear in the same sentence is that in March of 2013, the United States federal government issued guidance equating virtual currency exchangers and administrators with money transmitters, a category of non-depository financial institution that in the United States, to the chagrin of crypto-preneurs worldwide, is subject to licensure by individual states.  Licensing is intended to subject industry participants to a supervisory authority primarily for purposes of Continue reading →

“Bitcoin Is the Perfect Way to Transfer Money Globally”

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Interview with Alan Safahi, founder and CEO of ZipZap

Last July, at the Inside Bitcoins conference in New York City, one speaker in particular made a comment that caused the loudest round of applause in the entire conference when he said: “This country was founded on a separation of church and state.  I think we should also add separation of bank and state.”  It was Alan Safahi, founder and CEO of ZipZap, Inc., a San Francisco-based start-up that aims to revolutionize international money transfers around the world.

Alan has graciously accepted to talk about his company, his vision and the future of digital currencies.

Juan: Please tell us about your background and how you got involved with Bitcoin.

Alan: I am a serial entrepreneur with 28+ years of experience with several start-ups under my belt in technology, telecommunications and financial services.  I was an early adopter in the evolution of prepaid cards in the 1990s, so I have been part of the problem for the longest time!  I got involved with Bitcoin in 2010 and have since been a vocal supporter and activist of digital currencies. I currency sit on the Advisory Board Continue reading →

“If Bitcoin Startups Don’t Self-Regulate, Government Regulation Could Get Insane and Hurt the Industry”

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Interview with Sebastián Serrano, founder and CEO of BitPagos

One of the highlights of this year for me has been to meet Sebastián Serrano, an unassuming yet deeply intelligent and highly confident young entrepreneur from Argentina who is determined to grab Latin America’s e-commerce and payments system by the horns.  And not let go until it’s completely upside down.  Read on for Sebastián’s insights on the big payments problem facing Latin America, his experience incubating BitPagos in Silicon Valley, and the challenges facing crypto-preneurs.

Juan: Please tell us about your background and how you got involved with Bitcoin.

Sebastián: I’m a software developer and entrepreneur.  Before BitPagos I ran devsAr, a software development company that provided services to technology ventures around the world.  I’ve known about Bitcoin for a few years now. I was initially intrigued by its amazing technology and started mining a little bit last year.  I bought bitcoins for the first time early this year when the price was at around $30, unfortunately not as many as I should have.  I grew up in Patagonia, southern Argentina, and have lived and worked near Buenos Continue reading →

Bitcoin Vegas Coming Out Party

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This week history was made in Las Vegas when, for the first time ever, digital currency entrepreneurs prominently showcased themselves at Money2020, the largest payments and financial services technology conference in the world.  CoinX, Bitpay, Kraken, Blockchain.info and Coinbase had booths on the expo floor and a lot of digital currency investors and entrepreneurs were in attendance, notably Nejc Kodric and Damijan Merlak of Bitstamp, Stan Stalnaker of Ven/Hub Culture, Gabriel Sukenik of Coinapult, and Meyer “Micky” Malka of Ribbit Capital.  See photos below.

As expected, the event was largely dominated by traditional players, and only three of over one hundred panels were directly related to Bitcoin and virtual currencies, which qualifies as a drop in the ocean.   However, the words “bitcoin”, “ripple”, “digital” and “currency” were heard everywhere both in and out of the formal sessions, especially in connection with two other key words: regulation and disruption.

Here are a few things that stuck in my mind:

• In the panel “Bitcoin & Beyond: Math-Based & Virtual Currencies”, masterfully moderated by Continue reading →

The Hidden Rule that Could Kill Bitcoin’s Irrevocability

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If federal anti-money laundering rules ‘killed’ Bitcoin’s anonymity, could consumer protection rules ‘kill’ its irrevocability?

Last March, the crypto-currency world was struck dumb when the Financial Crimes Enforcement Network (FinCEN), the United States federal agency responsible for enforcing anti-money laundering and anti-terrorist financing regulations, issued the now famous interpretive guidance equating exchangers and administrators of ‘convertible virtual currencies’ to money transmitters.

Although some of us saw it coming, crypto-preneurs are just now slowly waking up to the reality of what it really means to be this particular species of non-bank financial institution.  See the final section for a compendium of risks and obligations.

One set of regulations that I included in the laundry list of obligations last April but has yet to come to the fore are the federal consumer protection rules emanating from the Dodd-Frank Act and being enforced by the Continue reading →

Bitcoiners In Denial + Compliance Just the Beginning (Redux)

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For the benefit of those whose low tolerance for verbosity may have caused them to miss my insights-laden interview with David Landsman, Executive Director of the National Money Transmitters Association, the industry’s leading advocate for the rights of state-licensed US money transmitters, I have abridged it considerably and converted it into a more digestible format.

In PART ONE of the interview, David talked about the image problems that all money transmitters have in the United States, the fragmented regulatory regime and the likelihood of a federal license, now that the Bitcoin community has begun to join the fray.

In PART TWO David offered his strong viewpoint on US banks, federal and state regulators.  Also, he provided more details about the legal and PR efforts in fighting the closing of accounts, including anti-trust, administrative and civil rights causes of action.

On the fragmented US regulatory regime and the likelihood of a federal license Continue reading →

“Bitcoiners Must Understand that Compliance is Just the Beginning”

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Interview with David Landsman, Executive Director of the National Money Transmitters Association (NMTA) – PART TWO

Longer post than usual, I’m aware, but well worth it –the closing of bank accounts, the Bitcoin Foundation Cease & Desist Order from California…  David comments on it all and gives links to valuable resources!

In PART ONE, David talked about the image problems that all money transmitters have in the United States, the fragmented regulatory regime and the likelihood of a federal license, now that the Bitcoin community has joined the fray.

Read on for David’s strong viewpoint on US banks –very timely, given the increasing closing of Bitcoin operator accounts in the US–, and the reasons why many legal and PR efforts in fighting the closing of accounts have so far been fruitless.

PART TWO Continue reading →

“Most Bitcoiners Are Unaware or In A State of Deep Denial”

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Interview with David Landsman, Executive Director of the National Money Transmitters Association (NMTA) – PART ONE

In the past couple of weeks I have noticed in my conversations with cryto-preneurs a growing, yet begrudging acceptance of the inevitability of having to comply with United States regulation if their ventures are to be viable.  However, many remain unperturbed and some even defiant.

After writing extensively on America’s convoluted regulatory regime, and the challenges ahead for Bitcoin entrepreneurs, this week I thought I would seek the thoughts and opinions of someone I respect a lot, who knows the money transmitter industry inside out, and who has for decades advocated for regulatory rationality and fair play –David Landsman, head of the National Money Transmitters Association, a U.S. industry advocacy group for small and medium-sized operators who toil through some of the same issues as the Bitcoin community is facing today. Continue reading →

The End of Bitcoin as We Know It

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(Or as hard-core Bitcoiners want it, I should say.)

“U.S. crypto-preneurs who don’t factor in regulation could under-budget their ventures by, at a minimum, a quarter of a million dollars annually.”

Rocky week for the crypto-currency world this past one!  All of the following happened over the course of the last seven to ten days:

• Liberty Reserve (LR) was shut down, and its management indicted and arrested, in what is being described as “the largest money laundering case in U.S. history.”  A short video at the bottom explains how the case went down.
• FinCEN designated LR as entity “of primary money laundering concern,” and proposed a rule to order that all large financial institutions freeze any and all of LR’s assets. Continue reading →