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virtual currencies

This tag is associated with 16 posts

“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

Dwolla Account Seizure Reveals Mt Gox on Brink of US Indictment

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The US District of Maryland seizure warrant that stopped Dwolla in its tracks this week reveals in good detail that the Department of Homeland Security, the US federal agency charged with not only protecting the US borders but also deterring cybercrime, has been investigating Mt Gox for a while now, and has found a criminal violation to the US federal prohibition to operate an unlicensed money transmission business.

This warrant, which was published yesterday by multiple blogs, officially confirms that the FinCEN guidance of March 18, in which this federal government agency equates virtual currency exchanges and administrators to money transmitters, is already being enforced.  To my knowledge, no charges have been made at this point, but the fact that two bank accounts were seized (see below) seems to indicate that an indictment may be imminent.

What exactly is the “Dwolla Account” seizure warrant that stopped its operations this week?  Why was it issued?  What’s going on here!? Continue reading

It’s Official: Foreign Bitcoin Operators Servicing Texas Residents Must Obtain a Texas Money Transmitter License

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As of May 1, the state of Texas became the second US state to explicitly require foreign-located money transmitters (including Bitcoin exchangers and administrators) to obtain a state money transmitter license if their customers are residents of Texas.  The state of New York had taken a similar stance back in March of 2011.

In no ambiguous terms, the Texas Banking Department ruling, states that:

” […] it is the Department’s position that any money transmitter who allows Texas consumers to initiate transactions through its website is subject to the licensing requirements of the Money Services Act, regardless of where the transmitter is physically located.”

Equally clear had been the state of New York Banking Department in 2011 when ruling that:

” […] there is no doubt that businesses located out-of-state are subject to the jurisdiction of the state in which they do business.  […] Likewise, it is clear that businesses located out-of-state that do business Continue reading

Is US Regulation the Single Biggest Threat to Bitcoin?

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On March 4, 2013 I gave a talk titled just like this post at the New York City Bitcoin Meetup.  The talk blurb read:

If you are a Bitcoin ecosystem participant (user, entrepreneur), you may be aware that there is a myriad of rules and regulations, at the federal, state and even international level, that may apply to you.  Why?  Because Bitcoin is technically a “value transfer” system, and such systems are heavily regulated to protect consumer rights and deter financial crime, including the financing of terrorism.  Join us for a lively discussion of potential obstacles to the growth of the Bitcoin ecosystem.

The rather hyperbolic title attracted a few dozen very smart (and gracious) entrepreneurs and geeks, most of whom, unsurprisingly, were not aware that the United States has a very convoluted and onerous regulatory regime that can potentially stifle innovation or, at a minimum, slow down the spread of virtual peer-to-peer value transfer systems like Bitcoin. Continue reading

FinCEN Issues Guidance on Virtual Currencies

It didn’t take me a crystal ball to make this prediction!

FinCEN’s Virtual-Money Guidelines Add Roadblocks for New Companies

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