Bitcoin Forum

I've just started using BTC after a few months and I notice that mtgox now requires a photo ID (passport, driver's license, etc) to withdraw any currency to either bank accounts or dwolla. This was never the case in the past when I had used mtgox to exchange BTC to USD. From what it looks like now, all exchanges are mandating this. Is this in fact the case with all exchanges now, and what is the reason for this requirement? It's been a few months since I've used these services, so anybody who could fill me in on this, the information would be very much appreciated.

If any exchange isn't yet requiring it, it's only a matter of time before either they do or get shut down.

This is the result of fraud, plain and simple and the fact that exchanges have to deal with the laws and regulations of existing banking infrastructure, this is the problem of being hooked into the banking system.

If anyone can find a solution to this problem, it will be worth a lot of money.

Maybe a good start would be identity services that take care of all that hassle and simply countersign encrypted messages affirming they know who sent them and will provide that info upon court order.

Then all kinds of businesses can go ahead and trade with people without all this extra "barrier to entry" hassle.

(In essence "my customer is this ID place, go see them if you want to know which of their people in particular sent any particular order / instruction / message on their behalf".)

-MarkM-

This is not a technical problem and there is no real technical solution to it.

Exchanges must impose some sort of controls to prevent their services from being used for money laundering (and most likely violating the law of their country).


This would be a pretty amazing service if able to be done legally and professionally. I can see a service such as this using an OAuth2-type of authentication (think Facebook, Twitter app authentication dialogs) that hands out unique IDs for each identity and each service (so as not to be able to track users across services).

There are probably dinosaur services (old, ancient) that provide this type of verification, but I'm sure there is an opening for a more modern competitor.

BTC-E requires no photo ID, and no other info. When you sign up, I think it asks for an email account, but you don't have to verify it. The email is just if you want to set up a feature that requires that you confirm in email that you want to withdraw BTC/LTC/NMC/$.

They are based out of Russia though, so that might be the difference?

Yep, its coming to the point where the 'anonymous' sales pitch used to entice others to start using BTC will be an outright lie. (though it was never really anonymous without the proper precautions)

Maybe there is a market for a Tor hidden service that will send cash in the mail for bitcoins?

Dunno how to do the reverse though... leave small unmarked bills under a park bench won't work too much chance someone stakes out that park bench.

I think the fail is on the fiat side; it simply underscores how much fiat sucks and the importance therefore of never going back to it once you manage to get to bitcoins...

-MarkM-

This would end up as mybitcoins.com 2.0

There is no way around it, the only way for money and BTC to swap while remaining anonymous (mostly) is to do it in person. The economic incentive for someone who runs an anonymous exchange is to cut and run once it becomes worth while.

BTC-E doesn't do any KYC because the government has yet to come knocking on their door, perhaps being based in Russia they're paying the right people in which case all is well.

Money-laundering laws and other financial-services regulations.

Mt Gox does not require verification for limited withdrawals to UK bank accounts; for full verification they want both official ID and proof of address, such as a utility bill, where a financial-services bill is not accepted, apparently.

The most obvious fix for this is to build up the bitcoin economy to the point where exchanges into fiat $ become more or less redundant, et voilà! problem is solved.

Thanks for the responses. I guess my next question is, by providing my photo ID to a site like mtgox which is pretty well established and legitimate, as far as that goes, is this a relatively safe thing to do? Or am I seriously putting myself at risk for a breach of my identity?

Assuming it is safe, then by providing all this information to an exchange, am I responsible for reporting what I exchange? God help us all when a 1099-BTC comes into existence.

I guess what I'm trying to ask is, do I have to worry about all the potential big brother issues that come from my identity being tied to where and what I exchange, or is it simply to combat money laundering and therefore nothing I need to be worried about?

If you live in a first world country that has a tax authority, your information is at risk. And of course any money you cash out of an exchange into a bank account has to be accounted for in tax records. It's not just about money laundering.

+1

Absolutely - if you don't want to risk having your sensitive financial details pored over by the prying eyes of the all-omnipotent State (welcome to Ingsoc! Big Bro is watching you.) then it's best not to cash out via those exchanges in the first place. The mainstream exchanges are, IMO, playing it absolutely right in complying with all the financial-services regulations. This should in theory eliminate the risk of them being closed down.

I like BTC-E but have never used it to deal in fiat so far. I use Mt Gox for that. At my level of wealth, in a state that uses a PAYE taxation system, the tax man won't be coming anywhere near me. When I do get that rich (hahaha), well, I'll cross that bridge there and then!

Yes the only way to expect to be able to cash out or in with privacy from government entities is in person.

Everything you send to Mt Gox is very much at risk. Dollars, Bitcoins, Identification, etc. All of it. Mt. Gox has already had their password database stolen and published online for everyone to make a copy of. Hashed passwords were cracked and countless further thefts occurred because of it.

https://mtgox.com/press_release_20110630.html

You can make small withdrawals without sending them your identification.

https://support.mtgox.com/entries/20919111-aml-account-statuses

It all comes down to legal jurisdictions and regulators.

Depending on where you live or operate the company, there will be some sort of regulatory body or none at all.

Some countries require you to have special licensing. In the US in some cases you need both federal and state licensing.

In some cases, taking customers or orders from other states makes you technically 'operating' in that state thus requiring licensing in that state as well.

Many exchanges here have bank accounts and corporations in much more lax jurisdictions, but that is not a good solution because it won't last forever.

This is the world we live in, wether you like it or not everyone is treated like a criminal de facto

Here is a great paper on 'The Money-Laundering Conundrum: Mugging Privacy in the Assault on Crime?'

Fantastic short paper to read over tea, coffee or a J : http://cei.org/pdf/2372.pdf

Its a pretty stupid way to do it though.

Any Tom Dick or Harry who wants to sell or use other people's identities merely has to claim the government insists people have to send them to him else he can't let them in on the awesome 7%/week business opportunity he is offering...

-MarkM-

What are you talking about? trading in bitcoin is anonymous, but when you decide to bring other currencies in to the mix, then you lose anonymity. If you want to remain anonymous at all time, then don't use an exchange. Sell something for bitcoin instead.

You're assuming the only way to get bitcoins is to buy them.  How about you sell something for bitcoins?  Or work for bitcoins?

Or mine bitcoins (the original only way to get bitcoins)?

Then you'd be able to spend your bitcoins anonymously. 

The thing is that the people who simply want the advantages of owning bitcoins or spending bitcoins don't feel that they can work for bitcoins fast enough or selling things for bitcoins fast enough or mine bitcoins fast enough... hence why the exchanges exist and why the "price" in traditional fiat continues to rise.

Many people continue to tell me the reason bitcoin won't "take off" is because it's too tough to get bitcoins.  I'm not worried about a fast influx of cash into bitcoin because I'm ok with the market slowly growing as people start to accept the value of bitcoins for what it is rather than constant wonder how much traditional fiat it can be "cashed out" for.

People already offer this service on Silk Road.

PayPal wanted my photo-ID after many years of making e-bay purchase through them and keeping a cash balance.  They certainly made it sound like it was due to new government regulations.  This made me decide to finally quit them.  When I tried, their UI would't let me so I had to call.  The lady asked me my SSN and DOB which I spoke into the phone and then said that we are all golden now.  So PayPal at least is clearly asking for much more than they actually need (unless they consider a voice-print to be sufficient.)  I consider photo imagery and voice data to be bio-metric and jealously guard it from those who wish to put it into a database for any reason.

A big difference between PayPal and Mt. Gox is that PayPal would happily return all of my money if I did not comply.  They simply would not let me add more to my account.  Mt. Gox, OTOH, will freeze funds until they get the bio-metric info.  I consider this to be extortion and theft.  But it has not happened to me since I've never tried to get money out of them so I am only going by what I read on these forums (and of course most of it is from jaded customers.)

One solution is Local Bitcoins (https://localbitcoins.com/).

It is worth quite a bit of money to anyone who wants to make a market and there is significant population, like SoCal, NYC, etc. Plus, I think any brick and mortar stores could increase traffic by performing this service and it would not really cost anything extra.

yes I agree, we need to build a system different from the current regulatory one otherwise the advantage of anonymity is lost. Untill then the best way is a network of person to person transfers. Meet your local dealer contacted via a tor e-mail address at a local wifi hotspot. exchange BTC to fiat or fiat to BTC there and then -go home . You would expect to pay more than exchange rate for BTC and pay less than exchange rate for fiat  but it would work! reg.

Indeed. Funding costs higher than Paypal, ID-checking worse than Paypal... Of course they can be traded from hand to hand against cash, but sadly that doesn't look too convenient for massive adoption...

Yup, Paypal are jackasses, but they're honest jackasses. They may return the money to the wrong person sometimes, too (in case of an abusively reversed transaction), or with a delay, but at least it seems that they do their best to return it to the right person, and that they don't make up excuses to keep it to themselves forever, unlike Gox. I mean, if you deposit, then don't want to provide biometric info, why wouldn't you be allowed to withdraw what you deposited?

I did see that tier 0 on mtgox requires no photo ID to withdraw up to $1000 USD per day, but how exactly is that done? I know I can't use dwolla, which requires an ID no matter what. Anybody know the trick to exchanging BTC to USD without the ID bullshit?

The Russky exchange BTC-e? They trade litecoins, namecoins and rubles too.

Yeah, you just log into mtgox and use bank wires to cash out.

edit: I found the ABA/routing option for a US-based account. I'll see what the deal is with this option and if I can get away with a withdrawal without forking over an encyclopedia of my entire life's information, data, account and identification numbers, pictures, and favorite color in order to exchange BTCs for USD and transfer that into a bank account.

requiring ID is one step forward in the removal of illegal activities and trying to gain some positive legal trading. which i am all for, bitcoin has had too much bad press lately.

the reason im for it: real world businesses wont adopt bitcoin as a payment method due to the bad press and ease of losing funds via illegitimate trades.
 
what should be done to get better press is have a service that you sign upto, give all of your identity too. and your awarrded a 'verified user' tag.
the other services will just know you at sign up time as 'legally verified person'. it will only become known of ur true identity to that other service if a fraud has been commited.

how it would run:
much like how websites are starting to offer 'sign up using facebook'. where facebook gathers all ur personal stuff and the other services just grab what they need. in this case a simple 'verified user' tag and a username.

then even the BTC OTC can use this to verify users etc.

worth someone giving it a try

it might be worth it. cos businesses might pay the service a small fee for veryifing users on their bahalf.

P.S i do understand silk road users desire for complete anonymity. which is where non verify requiring sign ups can continue, with slightly higher fee's for trading to cover losses. but for legitimate trading a verifying service can also have its place, giving users a lower trading fee due to less risk of fraud.

Shit. It turns out that ABA transfers require a 2000 Yen transaction fee, roughly a $25 charge for every transfer. This is not good at all. That's too much of a chunk to make it worthwhile for myself and plenty of others I'm sure.

Does anybody know of any service aside from mtgox that offers relatively small-time users a free, or at least a nominal-fee exchange rate (ideally < 1%) and a relatively safe method of taking the currency exchanged from BTC and transferring it into a US-based bank account? I used to be able to exchange BTC to USD on mtgox for next to nothing, then mtgox to dwolla for either next to nothing, or nothing at all (can't remember exactly at this point  ???) and then dwolla to bank account in 2 days flat, again for either next to nothing, or nothing at all. What I do remember is that what I lost in that process was, in total, absolutely negligible compared to the principle sum. All I ask now is a similar way to exchange my hard-earned BTC to either USD or some gold, silver or copper-based currency, basically anything that would be very liquid in its ability to become USD. Maybe I'm completely missing the boat here, but if somebody could fill me in, it would be greatly appreciated.

I've also considered skipping all the big-brother bullshit and going down the SR route, achieving my means and ends of BTC to USD (or any liquid asset) but as I've been out of the BTC scene for a few months now, as my previous posts have noted, I have unfortunately forgotten my way down that particular road. If anybody would be good enough to send a private message guiding my way back to a certain Silk territory, that would help me knock this issue out in one fell swoop.

Now, to those of you planning on replying with the advice that I should wait for a severe lightning storm to come along, grab my ankles, and hold my ass in the air in order to zap! and magically gain access, please spare me the agony and the ecstasy. Thomas Jefferson may have founded the great United States of America by flying model rockets with keys attached in thunderstorms, one of which got struck by lightning, the current of which rode the exhaust plume back down to Jefferson* and relayed the words of the Declaration of Independence directly to his brain, but I do not wish to go to these lengths to achieve access to that which I desire to gain access to. Plain and simple.

Again, many thanks to those with the patience to help me out in these matters. It will feel good to finally be back on my feet again and not a complete and total newb.

* Luckily for Jefferson, John Aaron was at the console on this fateful day and made the legendary call "Flight - try SCE to AUX" which luckily saved the day. This earned John Aaron the coveted designation of "the Steely-eyed Missile Man"

If they ever start requiring full verification for all withdrawals, including BTC, my money is going to be locked at MtGox forever. This is because I have only about $250 worth of money at MtGox and the cost of providing them an English language proof of residence is far higher than that. I get no utility bills in English and a notaried translation is very expensive where I live.

Well Mr Stardust... it'd seem you already have access to some pretty awesome stuff.

I may have missed it, but I didn't see bitcoin.de mentioned here. They don't store cash and thus don't have to make bank transfers. They act more like an intermediary with escrow service. This probably makes them free from some obligations like photo ID: bank transfers are done directly by users.

What if someone where to offer a service where BTC could be sent to them, and they could then make a actual cash deposit at a local branch of the sender's bank?

I've paid rent this way before, when the landlord's bank was within walking distance instead of dropping it off, sending a check, or having them pick it up I just had his account number and made a cash deposit each month, with a receipt for proof of deposit.  Just off the top of my head, I have a TD Bank, Citizens, BofA, Chase, and a ton of local banks in less then a 5 min drive. If someone was willing to pay a fee to keep anonymous it could work. It would require a large amount of trust, and possibly a third party escrow, and would only work for smaller amounts but it's something.

Potentially faster than a wire transfer as well, it could be same day as cash deposits are available instantly.

Edit: I tend to let ideas run pretty wild in my head, but if this is something people would be interested in, I wouldn't mind setting something like this up.