Bitcoin Forum

We've caught up our deposits and withdrawals after our primary bank accounts were closed. If your funds haven't arrived let us know.

Recently we had been using Paxum for a large percentage of transfers and were quite happy with it. Unfortunately they cited increasing banking regulation and stated that they will no longer be working with Bitcoin exchanges.

All deposits have been or will be credited very shortly. All withdraws that were submitted but not sent out yet will be canceled. It is no longer possible to request a Paxum deposit or withdrawal from TradeHill. At this time we do not have an estimate on when we will be working with Paxum again.

Jered Kenna

Jared, can you inquire with Paxum regarding the regulations that they say are affecting their ability/willingness to work with bitcoin exchanges?  I think many people in the bitcoin community would like more insight into the regulatory environment that seems to be affecting the exchanges.

For sure, I'll be talking to them soon as will Bitinstant and we'll pass along anything we hear. They're actually based out of Canada if anyone isn't aware of that.

Jered

Moneybookers is apparently doing the same thing.

https://bitcointalk.org/index.php?topic=63096.0

Jerred, can you please complete my withdraw via cheque from tradehill, its been in process for 6 days now, there has been no communication with your customer support, they seem to ignore

Official response from Ruth Blair at Paxum:

http://gfy.com/showpost.php?p=18753403&postcount=1

Follow up:

http://gfy.com/showpost.php?p=18753657&postcount=22

It sounds like some arm twisting from MasterCard. Why else would she mention them?  What does MasterCard have to do with the legality of Bitcoin?

It will be interesting to see if MasterCard takes the same heavy handed approach with their merchants.

Paxum offers the Paxum Prepaid Mastercard issued by Choice Bank Ltd. in Belize, so there is an affiliation with bitcoin sellers depositing proceeds to the Mastercard product.  Seems like a stretch to me.

How do Dwolla and CryptoXchange's banking partners avoid the same kind of pressure that Paxum received?

it seems like a stretch to me too Jon, but loading a prepaid mastercard using bitcoins is perfectly legal as long as the amount is under the AML requirements of $1000 per day per person.  And even if its above $1000, its is not illegal, it just requires recordkeeping of identity information.

Dwolla is only in the USA from what I know.  However they may decide to give bitcoiners the boot now that they have critical mass and $5M in wall street investment.  it depends what agenda their new owners want to push.

CryptoX has a licensed partner to do the international transfer, I don't know who it is, but they say they have no problems.

Businesses transfer millions of dollars internationally every day, with no trouble.  It seems like the trouble comes in when you start offering international consumer services, which are dominated by Visa/MC/PayPal and Western Union.

I have been following this thread and the thread https://bitcointalk.org/index.php?topic=63465.0 with a lot of interest (https://bitcointalk.org/index.php?topic=63465.0 with a lot of interest)

The issue here as was the case with Paypal is that services that accept funding via a credit card as a purchase cannot then allow those funds to be used to purchase another form of money. This is to avoid what is in reality a cash advance transaction to be treated as a purchase. One cannot go to say a Canadian Merchant with a Canadian Credit Card and for example purchase CAD or EUR. The consumer has to instead go to a bank, and get a cash advacne on the Credit Card and then purchase the USD or EUR. These rules have been in place for a very long time, long before Bitcoin or even the Internet existed, and for a very good reason.

There are many credit cards that have a say $1000 CAD cash advance limit and say an overall $4000 CAD overall limit. If one maxes out the $1000 CAD cash advance limit, and then goes to a bank for an additional $4000 CAD one gets declined, not because the overall limit was exceeded but because the $1000 CAD cash limit was exceeded. But our card holder still wants the cash advance. So instead he funds Paxum with his $4000 CAD credit as a purchase, then uses Paxum funds to fund MtGox via BitInstant, purchases $4000 CAD (less the fees) worth of BTC, then funds Cavirtex with the BTC, and sells back the BTC for CAD effectively getting his Cash Advance in CAD out of the Credit Card.

The reality here is that many in the financial services sector are actually realising that BTC is actually money and has to be treated as such. What I find surprising actually is how long this has been allowed to go on.

This is why one must avoid any service that can be funded by a Credit Card for the purchase of BTC.

Well..... that just happens to be the exact focus of your business. I think the trouble comes in when there is a series of inbound and outbound transfers because AML also requires monitoring of 40 aggregated transactions of $1,000 each. Each jurisdiction is coming up to speed at different times and Australia will have something to say fairly soon. Pre-emptive measures work now in the OECD/FATF world because they all want to be on the safe side, but a court case is needed in any common law jurisdiction. It will be a precedent-setting case probably getting to the Supreme Court and it only requires a bank and an exchange willing to make the challenge.

Bitcoin is not money -- it is an RPOW. If bitcoin is money, then any RPOW can be money. Then, there is legitimacy.

This is really bad news!
With closed bank accounts, paypal nightmares and now this, all europeans are left now with is OkPay. But what are the chances that OkPay won't suffer the same fate? ???

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As a payment processor we aggregate merchant sales once per day, so we do have methods in place to comply with this.

And since payments are made from our business bank account to the merchant's business bank account, everyone's identity is already known to the banking system, so money laundering with our service is not really possible.

The question becomes what type of data needs to be collected from the customer?  Can a customer purchase something online without giving out their name?  Just like they can do in a retail store?  Bitcoin makes that possible, and this is where everyone wants to stick their noses in.  

I've actually wondered about this - would it be possible to somehow bill bitcoin transactions as a cash advance? Perhaps if we had actual bitcoin ATMs that could do a card present pin transaction? Some ATMs actually have menu items that allow you to top up your mobile phone for instance.. perhaps a menu item could be added to some machines to buy bitcoins at an ATM and treat that as a cash advance transaction?

Of course. I meant that you're mainly an alternative to processing through VISA/MC/PayPal, so half of your value proposition is retail consumer.

On collecting data from the consumer, VISA/MC/PayPal already do this and so would Bit-Pay for transactions that exceed a certain amount. The merchants would have to be in compliance either with transaction amount thresholds or Bit-Pay would have to restrict merchant classes if consumers were not providing data. For instance, could Bit-Pay be the merchant processor for a no-limit anonymous bill payment service without taking customer identity? Could Bit-Pay process Pimpcoin for any daily transaction size without source of funds data? If not, then Bit-Pay has a sweet spot just in the sub-$1000 transaction range -- and that may get lowered.

Jon,

Very good points.  for the consumer side, it's the Know Your Customer laws that take effect.  At present time, any sales made with cash over $3000 need to have the customers identity recorded.  Again they are not banned, you just have to collect ID.  If we treat bitcoin as cash, then we can apply the same thresholds.

The easy way around this now is to limit orders through the Bit-Pay payment system to $2999 or less.  But with something like Pimpcoin or the Deposit Card its not possible to limit how much can be sent in one transaction.  So that's where we have to throttle the daily payouts to the merchants, possibly, or require the merchants to get the information from their customer, not us.  As long as someone has the customers ID, that's fine, that's all the Feds would need should they want to backtrack a money flow in an investigation.

[EDIT] This may be a good reason for people to use Bit-Pay, and not try to do it themselves.  We handle all the regulatory requirements and capture real-time exchange rates at the point of every sale.  It's the same reason why many small businesses use 3rd party payment processors for credit cards.  The PCI compliance is a nightmare if you have to do it yourself, so let someone else mess with it.  

The average internet order is about $100, even on big companies like Amazon, so bitcoin is just a perfect fit for the clear majority of all ecommerce transactions.

If the merchant is authorized to do cash advance transactions on Credit Cards then yes that would work for BTC. I stand to be corrected on this but my understanding is that most merchant accounts do not have the ability to process cash advance transactions. Credit card cash advance transactions are typically processed at banks. What I do understand is that if a merchant processes what is in effect a cash advance as a purchase they are asking for their merchant account to be pulled. By the way this has nothing to do with AML laws it is about the risk to the credit card issuer of a cash advance vs a purchase.

we still have intersango or bitstamp working flawlessly and okpay doesn't have to comply with us banking pressure, please research for yourself before making such statements.

that's all nice and stuff, but do they also offer a prepaid credit card (https://bitcointalk.org/index.php?topic=53882.0) which can be charged without relying on a local bank acc?

1.) The post above mentioned MasterCard. All "big three", Visa, MasterCard and AmEx are all U.S. based and as such, US regulations apply by proxy to all services offering any of them. The question is to what degree is okpay, as the only remaining service right after paxum, threatened to suffer the same fate as paxum...

2.) Since when is Canada in the US??


.

yeah, seems like credit cards will sign their fate at this pace


Okpay doesn't rely on them with it's business model, as you know they have all kind of payment options available, so worrying it will have the same fate it's a little exaggerated. Oops my bad, didn't know paxum ppl were from Canada, sorry.

No. Okpay does not accept funding via Credit Card, and that makes it very different from Paxum. The trouble with Paxum started after they started accepting Credit Card as a funding source.

@ArticMine

That, of course, explains a lot. Thanks.

Good information in all of the previous posts but I want to address this question. All of the pending checks have been sent out. If it doesn't arrive early this week let me know.

We are working through a huge backlog of emails and are nearly caught up. Responses should be much more prompt from here out. Dealing with simultanious unannounced closures of our bank accounts was a massive setback and caused additional problems while we waiting for the funds to be realsed so we could send them to Paxum. Now unfortunately we need to wait to receive funds from Paxum. Fortunately we have far less funds in Paxum than we did in Citi and Chase.



I really don't want to believe there is a conspiracy against Bitcoin. I think it's far more likely that more institutions are becoming aware of it and are either not informed enough or just uncertain. Banks and e-wallets are all making risk based decisions and the Bitcoin economy despite being larger than I had ever hoped for is still small potatoes compared to the volumes they deal with. That said if they perceive it to be a risk at all with it only bringing in a small amount of revenue they'll kill it in a heartbeat.

To put it in perspective Citi has around 1.6 Trillion in assets (don't hold me to that number) so even if Bitcoin moves a few million a month through them it's not even a drop in the Bucket at this point. This further illustrates why I'd suggest you use a credit union instead of a large bank. They really just don't care about any single individual or company nor do they need to.

-Jered

Glad to see there is some sort of communication, when I checked on the site my request still says "In Process" does it mean its still sent out or do I have to wait until it says complete (sorry, this is my first time using TH)

edited: off topic

Hello Jered, please don't forget to deposit my 586 Euro Paxum deposit, already triggered at 3. of January. (ID 37652)

Hey Jered I recieved a message from your support team finally, basically saying did Jered mention you need to upload AML documents, then explained why I needed to upload them... wow I cant beleive its taking so long... before anything I already uploaded two of the 3 documents required, 1. DL       2. Proof of residency         3. they want a picture with me holding my DL...

The problem is that the withdraw method I used was cheque, I live in Canada but to avoid the bank wire fee I asked a family member in the States to recieve the cheque for me (under my name, but there address) so what do I do? now do I have to do it through bank wire?

This is crazy, I really cant stand waiting this long, espeically for a response... I would be glad to support the new website but if this continues im having doubts