Bitcoin Forum

Its a simple idea, leverage the advantages of the devision of labor in order to overcome government meddling.

The exchange would open up shop probably in either los-angales or new york and would only accept deposits in the form of cash at the front counter. The exchange would be safe from a myriad of legal trappings which would allow them to focus 100% on the service they are intended to provide and the market could innovate highly decentralized mechanisms of getting cash from one side of the country and into the front door of the building. Decentralized community of peers working within the framework of a reputations systems could provide the money transmission instead of some big payment processing company. As an example, suppose we have two brothers, one lives next to the exchange and another 1000 miles away. The one brother could take payments and the other would make deposits and when ever they visited each other periodically they would clear out the debt between each other, always operating within the black or gray market.

There may be a really good reason why this doesn't exist and i just havn't thought about it yet.

because you'd have to comply with a shit ton of rules and regulations.

Isn't this the idea behind the bitcoin ATMs and/or localbitcoins?

....created by fat belly wankers to protect them from ideas like that. BTC made huge impact on their decisions. people know they don't need USD to pay for something in whole world. that's what's scared them the most.

Because one shop would have  to spend bucketloads of money complying with anti-money laundering regulations. Bitcoin ATMs solve the problem in a much more economical way.

Just interject a little tidbit here that might be relevant.

NoCal weed growers I know of say that getting the product to NY has not been much of a problem lately, but they have been taking crippling losses getting the cash back Westbound.

I like your idea, but I would be very wary about the actual shipments of fiat.

Lost me .... how is this relevant to a bitcoin shop?

from the OP "they would clear out the debt between each other, always operating within the black or gray market"

so the proposal is actually for a noncompliant exchange, a great idea IMO, but the fiat settlements would be vulnerable to seizure by the state, just as any other black market proceeds are, and I have it on good authority that the state has become rather adept at this seizure.

Opening up a bitcoin shop in New York??? Give it 3 days ........

3 days...till what exactly?

Till you'd have to explain to New York authorities what the purpose of the shop accepting all that cash was for. And all done without going through any proper channels to set up the business.

Give it a go, by all means.

The penalty for violating interstate banking and branching law is either not less than 20 years in prison a $10,000,000 fine or both. Interstate drug trafficking law is either not less than 10 years in prison a $250,000 fine or both. It would be less damaging to your future and your wallet if you just drove drugs between states for profit.

not a shop. im not talking about a store. im talking about something like mtgox or bitstamp. except inorder to avoid so many of the regulations they only take cash. since they would never touch the banking system in anyway i dont think they would even be under the jurisdiction of FINCEN and i dont think they would have to comply with AML regulations at all.

yeah a shop would be a regulation nightmare at this stage, until fincen or whoever decides what they want to do with bitcoin i guess a shop is not v practical.

Even if you have an online xchange that only takes cash, 1. where would people come to deposit cash ? like u meet them in the street and stuff ? , 2. Even if you have like a shop or office, end of the day the cash will go to your bank account (unless u put it under your pillow but that doesn't make sense) lot of cash inflow to your account will raise alarms and then before you know it swat is raiding your home trashing everything

Can foreign exchange shops do bitcoin exchanging on the side?

Anyone can do Bitcoin exchanging if they're in compliance with local law.

So that's perfect then isn't it? Legal forex shop operators already have the relevant licenses for trading currencies. I seem to remember whenever I go into forex shops the sales are done in cash....

Trading and exchanging are two different things. In the US forex traders, the individuals, need to be registered with NFA, CFTC and the SEC. That would mean every Bitcoin user would need to register. Bitcoin would also need to be legally considered currency but currently it's not.

Also, most casinos sell chips for cash and pays cash for chips. (Where gambling is legal) If a casino offers to take bitcoins for chips and payouts in bitcoins on redeeming chips, then we have a way for fiat to enter and exit the cryptocurrencies market.

It doesn't have to be bitcoin they exchange for redeemed chips, it could be a casino alt-coin "for use on their online games", which could be exchanged for bitcoins on an online exchange.

What makes you think that FinCEN is going to consider Bitcoin ATMs to be exempt from AML?  Believe me, they won't.  That's why it's been so hard to get them going.

But I agree that cash businesses also must comply with AML if they want to stay out of jail, BUT cash businesses don't have to put up with banks cutting them off at every turn.  And if we develop our own clearing houses....

Well, bitcoin is either a currency or a commodity (I would say both). So if it is legally a currency, forex shops can buy and sell it to customers. If it is not, then forex shops can sell and refund it like a gift voucher, sales tax/VAT applies.

Of course, it could become a currency that is illegal to trade, or a contraband, but it is not yet.

It would be hard for me to believe we could come up with a loophole that the government couldn't close with a quick sweep of a pen.

I agree.

I just don't see how they can do it without making random persecutions or making random laws that have other serious repercussions, like making cryptography illegal, or banning bartering altogether, or requiring trading to be carried out strictly in legal tender, i.e. no more gift vouchers.

They may have the power, but they lack the authority.  Our duty is to resist.

Don't underestimate the stupidity of bureaucrats.

the people who ran the exchange would work out of an office. that office would have a front desk with a cashier.

no bank account. just a very large very secure safe with cash in it. perhaps you could buy up a building that used to be a bank.

If there was an earthquake then a fire, they can embed a message in a transaction to themselves on the blockchain: “Building Destroyed, Vault Intact, Credit Unaffected.” ;D

As I understand it, any business having anything to do with exchanging BTC for USD would be considered a "money transmitter," so they'd have to register with FINCEN. I'm not sure that this is the killer though. The killer seems to be that you'd also have to register in every state (that your customers would come from). So it seems you could open up a *local* Bitcoin-for-Cash exchange pretty much anywhere as long as you register with FINCEN and your state (and as long as you don't take or send money to another state).

I just read that SC and NM do not require anything. Other states may require you to post a rather large bond.

So the local cash business actually seems do-able in many places even with the regulatory requirements.

Local money transmitters are an ideal candidate. The problem is they would worry about banks closing down their accounts.

Local transmitters are already under tight scrutiny by their banks as the banks just don't want anything to do with bitcoin because they are concerned they may end up getting fined and criminal charges.

A clear mandate from governments that bitcoin is ok to trade with and there are thousands of options from existing money transmitters, pay-day-loan operators, to ATMs, to retail shops.

I really like the idea though, weapons check service on the way in, cashier in the booth with bars, couple guys with H&K MP5s hanging out in the corner...

"Yes sir, that does count as $100,000, would you like that all in BTC today or credit on the exchange?  Oh, and before I forget, this month we are giving out a free Trezor for each deposit over $25,000"

Forex shops have licenses and deal with legal currencies. Bitcoin is not a legal currency in the US

When I exchange money at a money changer counter, I am not asked for ID, so why can't money changers do the same with bitcoin?

In a country where bitcoin is not considered a currency, and where there are no regulations requiring ordinary businesses to obtain ID of customers who pay via bank deposit or other indirect means, then deposits can be anonymous because AML / KYC regulations might not apply. I'm not sure about that but I'm looking into it.

and dont forget free leather suit cases for cash withdrawals of >250,000 ;D

something tells me this idea is totally legally legit but if you actually tried to do it you would find yourself going from zero to boot on your face in about 12 seconds.

A money changer deals with currencies. Bitcoin is not a currency in virtually every country on the planet at the moment. That's why money changers can't "do the same" with bitcoin.

If you could do more with Bitcoins, retail outlets like "payday loan" and "we buy gold" businesses might also buy and sell them.

The volatility of Bitcoins is so high, though, that a business like that can't afford to hold Bitcoins for more than a few minutes. Currency exchange shops have the same problem, but unless a currency is in severe turmoil, cashing out once a day is usually enough.

You are pretty much totally wrong about all of this.  FinCen would come down hard on you if you tried this.

I agree. Money is money whatever form it is in. Same rules and regulations apply. Money laundering didn't start with wire transfers you know, it started with cold hard cash.

Well, besides the fact that you have basically described the Hawala system, which may or may not be the funder of global terrorism (I mean, what good idea ISNT funding global terrorism in the eyes of the government these days), you are also kind of describing Me, You, Email, a bag of cash and starbucks.

Or localbitcoins.com :-)

Yes, I don't understand why everyday someone comes up with a proposal for some BTC-cash exchange mechanism that has already been (more or less) solved by localbitcoins.com.

Why the resistance to using localbitcoins?

I believe there are bitcoin ATM machines planned for at least two cities in America soon. I might be wrong.

Perhaps the OP had never heard of localbitcoins.com ;)

One of the first ATMs was made in the USA, but first used in Canada because of the regulatory issues in the USA.

I know where they were made, but they announced they would actually place in at least 2 US cities very soon ........ can't find the article now though.

It sounds like a dream come true.  I know the government would make it impossible because they feel the urge to look into all financial transactions.  In real life we call this busybodyness and let our neighbors know that they aren't welcome to pry that closely, but when people win popularity contests they feel it gives them the right to do this kind of thing and to even prevent some transactions - and to punish you if you don't comply. :(

Another thing I would like to see is a precious metals exchange.  This could operate a little bit like those "cash for gold" places that sprung up the last five years.  You send in your gold and silver jewelry or junk or whatever and receive credit on the exchange (minus an appraisal fee and other fees, most likely).  The exchange facilitates trading between grams of gold, grams of silver, and units of cryptocurrency.  When you want to withdraw gold or silver the exchange would probably permit doing so in defined units such as nationally minted bullion coins or silver rounds.  Again, likely minus a fee for shipping, insurance, security, etc.

Somebody please make this happen!

Sometimes I want to cry thinking of how great the world would be if all of this could be done and how it isn't likely to happen anytime soon and I may not live to see it.

Rabbit, you educate me every day.  I'd never heard of Hawala.

All the posts about Bitcoin ATMs and localbitcoins.com are missing the point - an exchange.  The problem being considered is not "how to purchase Bitcoin with fiat."  The problem is "how to facilitate cash deposit and withdrawal on an exchange."  These are two different problems.

The cash only Bitcoin exchange idea makes my heart leap for joy, but I don't think it could work with current laws.

Perhaps this might be a good idea to pass on to entreprenerial shops on indian reservations that sell cigarettes without the usual tax.  They can also buy and sell bitcoin for USD maybe?

Indian reservations are just likes states and have no autonomy from federal laws. They are treated like states when running a business. Indian "Smoke Shops" only sell cigarettes without the state tax but you still pay federal excise taxes which are included in the sale price. It would be the same as driving to Nevada to buy cheap cigarettes and taking them back to California. Avoiding the state tax is still quite a bonus and can be very high depending on which state the reservation is located. It's federal law that requires Bitcoin businesses be licensed and comply with AML/KYC so that would still apply on an Indian reservation.

How about this?

The shop only accepts gold and silver bullion, no FRNs allowed.

Granted, it ads another annoying step for depositors, but then we are never touching their fiat so those rules no longer apply.

That could work. Certain forms of gold which trade as commodity contracts fall under the Broker Reporting Act of 1982. Specifically named are South African Krugerrands, Canadian Maple Leafs, and Mexican gold Onzas in quantities of 25 ounces (one 'contract') or more. Sales of these in contract quantities require a 1099B IRS information form, reporting the sale of a regulated commodity contract. There is no branch of federal, state, or local government that is interested in how much gold you might own. The U.S. Mint strikes the gold Eagle bullion coins so I wouldn't trust selling their coins but everything else should be fair game.

it would be neat. im sure you couldnt escape every regulation, obviously. but perhaps it would atleast make fewer of them apply to you.

You've hit the nail on the head. And nobody is going to change the laws. Hence the idea doesn't work.

If you make it "cash only" you are attempting to bypass all the AML and KNC stuff. This just ain't gonna fly folks. The government spents a lot of money attempting to know who is sending money to who.

Well, I think we can easily limit those specie to transactions of 24OzT or less

sounds like progress

So we've gone from a cash-only exchange to a gold and silver for bitcoins exchange. Progress? Maybe ....

I think so, at least as far as this thread goes...we have gone from "no wai, state will raep u" to having to drop by the coin store before going to the exchange

But its still a physical shop, and all the costs that incur. Which you would have to pass onto customers. Still not sure why that is better than localbitcoins or similar?

because it would be tied to an online exchange

an online exchange you could move value to anonymously

last time I tried localbitcoins I had to show my ID to deposit in the guy's account

An online exchange based in the US, where people have used "cash" to fund their accounts, by going to a shop anonymously. Yeah, good luck with that taking off

who says the website needs to be based in the US?

and we have taken the "cash" out of the equation

AML & KYC are actually designed to combat cash transactions.  The reasons governments are applying such to exchanges is that bitcoin is more analogous to cash then bank accounts/checks.

It would be great if someone could write down a half-page summary of current idea, so I can try and wrap my head around it.

I was not assuming that Bitcoin is a currency. I ask, where is the precedent for requiring ID checking of customers for cash-only small-quantity Bitcoin exchanges, when the same requirement does not apply to cash-only currency exchange below some value per transaction?

Secondly, I have a question for anyone here: Iff Bitcoin is not a currency, then how and when should KYC regulations apply to deposits/withdrawals to/from Bitcoin exchanges?

Because people withdraw fiat from bitcoin exchanges.

I would imagine a crypto only exchange would not necessarily need to comply with AML/KYC at this point. Bitcoin is either a currency or it is not.  Applying currency rules to it in some places and not other is double standard.

You cannot say "bitcoin is either a currency or not" unfortunately. Each country has a right to decide on that question, and it will take years for some to answer it. Very few have to date.

Ok. In a given country that is governed by law, bitcoin is either legally a currency or it is not legally a currency.

All businesses that are open to the public and deal with cash must have aml/kyc policies in place.  That doesn't mean they will check everyone's ID it means that there must exist policies and procedures to deal with it.  Just like a gold coin shop doesn't check ID for small deals the same would apply to a cash for bitcoins business.  Crypto to crypto exchanges will likely not need aml/kyc unless governments accept cryptos are real currency.  Some have, some haven't.