Bitcoin Forum

"the government's plan to apply anti-money laundering (AML) regulations to digital currency exchanges." As a possible UK-based firm, this would impact me hugely! I'm not saying this isn't a good idea, however, isn't the purpose of Bitcoin to get away from the government control, fiat currencies, corruption, and taxes? How will they go about regulating me?

What type of firm do you operate?

There's zero reason why digital currencies should be AML exempt if you're exchanging fiat for them.

Were I to start a used tampon exchange, if pounds were involved I'd have to do exactly the same. It's a fact of life for everyone.

Exchanges already apply those directives, well, at least Bitstamp does.

It would be nice not just AML/KYC but also insurance and proof of solvency, AML/KYC does shit when exchanges get robbed or run away with our coins...

it seems whenever something gets TOO BIG (the man) governments always have to get thier hands in it...its sad really,seems we cant have anything BIG without regulation and such..its a shame :(

That's the problem, users would be exchanging with each other, in a decentralised format. I do not want to be forced to centralise our system. So i'm guessing It's a comply, or you're out of business sort of thing?

I guess you'll need to consult yourself an expert. If you're not touching the money yourself, perhaps that's a different ball game. It would be more of a platform connecting buyers and sellers than an exchange where you're the entity taking and sending out money.

I can't imagine Autotrader or Gumtree has anything to do with AML and there's millions flowing through there every day. Perhaps they'd keep a closer eye on it if it was digital currency.

It is always better to quote a source, so members know what regulations we are talking about:
http://www.coindesk.com/breaking-uk-treasury-issues-landmark-digital-currencies-report/

I understand hard-core Bitcoin users do not want ANY government control. The reality is, once money is involved, governments want in on it. The good news from this Treasury Report is that they do not wish to ban Bitcoin, but to:


This is fairly encouraging. We have heard so many UK bank accounts was closed without any explanation from the bank staff, this "plan" to apply AML might actually open doors for businesses and individuals to freely and legally engage in Bitcoin operations.

They started with the u-turn on Tor.. I'm still trying to figure out why they would allow something that is so called 'secure' - they dont like anyone getting one over on them, and by allowing

This would obviously incur additional costs and expenses for the exchanges that decide positively on insurance or agree upon external audit. In this case they will have to volens-nolens raise the fees which their clients will have to pay...

A small price to pay for not getting goxxed, vircurexed, GBLed, and many others.

Amateur hour is over!

Study: 45 percent of Bitcoin exchanges end up closing: http://www.wired.co.uk/news/archive/2013-04/26/large-bitcoin-exchanges-attacks

From what I've noticed, this is a good thing. The movement is regulation and control, sure, but it's also more about setting out some certainty about the rules that businesses (including banks) can operate in. Without that, support from legal financial organisations is always going to be paranoid. Anyone that has seen exchanges like Intersango jump from bank account to bank account, or just try to get a startup loan, knows this kind of state move is needed to make Bitcoin legally-plausible.

Government control and taxes won't be avoidable with bitcoin if it does go mainstream.
At some point governments will come up with consensus rules about the taxation of bitcoin. At the moment bitcoins saving grace is that the falling price means no one has to worry about capital gain tax, next time the price rises, I think they will really start to look at who is making money from bitcoin and tax accordingly.

I am surprised to see the report. I think I keep a reasonable eye on the bitcoin space,
and I heard nothing about the Treasury consultation before its publication. 

Reading the list of contributors suggests that the report will be heavily biased toward
those who have no interest in bitcoin's success. It seems that HMG expects the
bitoin community to be grateful that they are "only" being hit with AML and KYC
regulations. The problem with their consultation is that many of the contributors
think in terms of millions of pounds - for example the £10,000,000 for research would
have bought every bitcoin on the planet a couple of years ago.

So, on the one hand KYC and AML regulation will do nothing to prevent another
MtGox from happening, while ensuring that barriers to entry are raised. And
don't get me started on the hypocrisy of state sponsored terrorism and criminality.

Let me make a suggestion : so long as the amounts in bitcoin are less than those
handled by the UK's Small Claims Courts - currently circa £3000, no regulation is
needed beyond that already in place. For amounts above that, and for example
exchanges, quarterly reporting of the state of the accounts in addition to the normal
company requirements.

And think about capital gains and bitcoin. If Bitcoins go to £10,000,000 ea, it will
be because the UK government has totally failed in in its fiscal responsibilities.
And They want bitcoin to bail them out?

How will they go about regulating me?

they will regulate you when you exchange your btc for fiat, no way they can regulate bitcoin directly, for example if you do a trasaction above 1k in btc to buy a thing always in btc, i doubt they can do anything

I'm not afraid, I'm sure there will be a minimum. Say if you want to buy 50 BTC, you will have to explain where your money comes from, but if you just buy 2 BTC, nothing will be checked, nor required.

True, but wouldn't a decentralized exchange fix issue tho? In any case im not leaving a single satoshi in any of the exchanges even if I trust them (like Poloniex). Unfortunately I cant do day trading because of the fear.

How does a decentralized exchange work?

I also have serious trust issues. :)

I do some trading but, but I only left a small value on exchanges for daytrading, usually less than 0.5 BTC.

This is why in China, they started to buy mining gear instead of Bitcoin itself in order to get money out of their country once the government came down on it.  Even if the profitability of mining decreases, hash keeps going up from things like this (as well as technical advances obviously).

So just how effective are these AML laws when people can just buy hardware instead?

That's your opinion.  Can you not be content to patronise those exchanges which actively invite proof of solvency and insurance?  Must you work towards forcing your model of the ideal exchange on everyone else?


If people have trust issues with decentralised exchanges or completely unregulated exchanges then they will favour the exchanges which provide a safer, highly regulated environment.  If many people feel this way then such exchanges will thrive, while the sketchy exchanges will remain illiquid and collapse regularly.

All government regulations achieve here is to remove some freedom from the people.  People are being denied the freedom to experiment.  This is defended as: "The people should not be allowed to experiment and fail" but what is left unsaid is: "The people should not be allowed to experiment and succeed".

If you feel that when you know better than other people how they should handle their money and further that you have a moral duty to control these people for their own good then we're opposed in principle and will likely never agree.

Not an opinion, it's fact!

Scammers will scam!


I still don't know what a decentralized exchange is...

A decentralized exchange means you don't have to store your bitcoins somewhere else, it's like P2P exchange.. or something along the lines. I have no idea how day trading would work tho.

In short, a decentralized exchange is the blockchain itself. As I got it from a BitShares guy, when you buy or sell some asset on it, the execution of the deal is insured by the coin of the blockchain (as a collateral), so if you try to revert the deal (or your counterpart, for that matter), you (your counterpart) will lose the blockchain money, that is, the collateral...

I'm really concerned that this could be an issue for newcomers.

So, I does someone buy bitcoin in such an exchange?

I have a bank account full of euros and I ant to buy a few bitcoin, how would that go?

I guess you won't be able to directly buy bitcoins with euros using this exchange, since the currency of the BitShares blockchain is, well, BitShares, which is used as a collateral for so-called BitAssets (bitUSD, bitEuro, bitBTC), the price of which (denominated in BitShares) corresponds the price of the underlying, that is USD, Euro, BTC...

So it is not an alternative to the kind of exchanges we already have, like Bitstamp, Kraken or Coinbase, plus it seems a lot more complicated than current exchanges for someone who just wants to buy a few bitcoins.

It is a decentralized exchange, so you don't bear the risk of your money being stolen by any exchange like Bitstamp, Kraken or Coinbase, and their kind. It seems complicated, that's why you probably didn't understand the technology behind it before. But now, I hope, you do...

Sure, but if it isn't an alternative to current exchanges and it is not suitable for 'average people' to use it, its impact on bitcoin's economy is going to be negligible.

It may be good for altcoin exchanges thought.

I simply can't imagine how it would be possible to make a decentralized exchange allowing to trade directly all the currencies out there (dollars, euro, bitcoins). Whenever I think about it, I come to the same idea that is already implemented in the BitShares blockchain. Theoretically, the bitcoin blockchain could mirror the BitShares functionality in the future, but that would be a hell of a change...

The personage who mentioned this in the first place phrased it as 'exchanging with each other in a decentralised format'. That's pretty much a localbitcoins or bitcoin.de that maybe bypasses a vulnerable website. Or perhaps there's something very impressive up their sleeve.

Regulation will come afterwards, when people will look for ways to exchange their freshly mined coins into fiat.

To clarify: "A small price to pay for not getting goxxed, vircurexed, GBLed, and many others." is an opinion.  One could just as easily consider the price too high.

Certainly scammers will scam, just as regulators will regulate, but such observations do not magically render the subjective objective.

They don't really have to exchange to fiat, unless you're implying holding BTC is risky.

Wild west of bitcoin must come to an end, and its obvious that regulations are the first step to legalising bitcoin related businesses and activities.
I dont see why people are against it, did u not have enough of exchange scams already?
Im not saying there will be no more scams present, but its the first step to make it a safer place for all of us, and its a step in the right direction.

cheers

"regulations are the first step to legalising bitcoin"

I, for one am totally convinced by your logic.
I am willing to provide the self regulation that bitcoinUK clearly needs.
Just pm me with your proposed transaction, 0.1BTC fee, (I'm
still working on the reason for that, this is a work in progress after all)
private keys, family history, medical history, (you can't be too careful)
current bank details and full details last year's transactions, (GCHQ knows this
already and you have nothing to hide, right? so no problem there)

!!! Nearly forgot ;-) just in case I get accused of Money Laundering,
I'll need your passport details and date of birth. I don't actually need these
right now but they might come in handy later - I'll trust you to send
them on if you don't have them handy.

Yes .. April 1st can't come soon enough ... ;-)

Awesome!  I've been looking everywhere for an exchange aspiring to provide an experience on par with the major banks.

Do you have plans to randomly freeze accounts due to "suspicious activity" where the details are withheld from the account holders for the purposes of "security and fraud-prevention"?

Yeah part of the purpose of bitcoin is that from our point of view but many people see bitcoin differently like many people see the internet differently.

Can you elaborate on that please as it doesn't really make any sense. Regulation isn't such the dirty word you may think it is. It will probably attract more newcommers to bitcoin in fact as people will start to see it as a legitimate and viable currency.

like it or not regulation has to come to Bitcoin for it to compete with fiat

and compete it will  ;D

I imagine they'd work in a similar way to normal exchanges. You put your orders in and when they're accepted you just have to send the coins otherwise someone else will likely get them before you. some sort of 2 or 3 escrow may be used as well. I'm interested to see how they deal with certain issues, though.

Not sure how they would do it but I expect every time before you make a withdrawal, you will need to submit a long list of supporting documents that require yourself to declare some statements concerning where the coins are obtained. Also they could make it mandatory for companies dealing in bitcoin to register and comply to certain guidelines. I see good and bad to it.

Thats only if you do it throught a bank. They can't stop P2P (as in person to person) direct local exchange of BTC for cash. There's always a risk of it being a trap, but if you buy from a trusted seller form LocalBitcoins nothing wrong should happen. It sucks tho, it makes adquiring Bitcoin as if you are adquiring god damn coke or something.

I don't. I meant there are still many things which are difficult to get with nothing but BTC.

"Do you have plans to randomly freeze accounts due to "suspicious activity" where the details are withheld from the account holders for the purposes of "security and fraud-prevention"?"

I am presently unable to answer your question ;-) however I would direct
your attention to rule 162 of the standard contractual conditions, just
under those providing various forms of indemnity, and "First Born Collateral".

I can tell you that this week I am providing a free badge to all new clients
in recognition of their contribution to GDP and the employment given to
countless numbers of otherwise unemployable fact-checkers, not to mention
the launch of my new company Badge Builders Conspiracy Inc ...

I'm sure there will be both positives and negatives to regulation, but one thing is for sure there's nothing we can really do about it. Regulation is inevitable but were going to have to play by their rules whether we like it or not. I can opnly hope that they're fair and don't actually cause harm to the bitcoin ecosystem.

I can see a lot of people still getting their accounts shut down. It's happened quite a few times in the UK from what I've read on this forum.


What's this about and where are you quoting it from?

They will never be able to stop the underground bitcoin trade. "They" are just upset people are making money without having to pay >25% of all profit to the governments of the world. Taxes are bullshit.

Bitstamp has already had a go at that. I found it a humongous turn off. A lot of the anality is due to its freshness.

You don't have to prove sod all if you're buying or withdrawing a million quid on shares other than who you are. I expect it'll settle down eventually.

They are are severly butthurt at the fact we have now a fact to bypass all their monitoring. There will always be a fact to not get caught by these scammers.

You're right, they won't be able to stop the 'underground' trade just like they can't stop the sale of drugs in the underground which is what happens when you make things illegal or put silly restrictions on them, but just like drugs people don't want bitcoins to be 'underground'. We want to be able to use them freely and as a legitimate currency.

""They" are just upset people are making money without having to pay >25% of all profit to the governments of the world. Taxes are bullshit."

"They" are the people who avoid having to pay >25% of all profits. "They" make the rules.

Regulation of cryptocurrency is bullshit.

Did Regulation prevent the crash in 2008? or reduce the £500 BILLION needed to prop up the banks?
Did the government even go to the Regulator to ask for their money back? "Asleep at the wheel" IIRC

What has happened since - apart from G Brown promoting himself for "Saving the World" to Saving Scotland?

Debts and Leverage have increased, so the next crisis will different and more painful, and soon.
There's just enough time to introduce capital punishment for financial crime, like they have in China, instead of a Knighthood or promotion to the House of Lords. After that is passed and proven effective, then think about regulating bitcoin.

Jeremy Clarkson should run for Parliament!
Banking Regulator with a plan meets Jeremy Clarkson - I'd pay bitcoin to see that.

They will try to limit the inevitable expansion of cryptocurrencies… but they will fail eventually

Not directly applicable to bitcoin, but the Money Laundering part is worth noting :

http://www.newsletter.co.uk/news/regional/newry-fraudster-spared-jail-over-money-laundering-1-6664964

"In two and a half years his business handled over £63m, much of it, according to HM Customs, profit made by gangs north and south of the Irish border."
“I will impose a sentence of two years on all counts and they will be suspended for a period of three years”
"Prosecutor Stephen McCourt told the court that confiscation proceedings are due to take place at the end of April to recover £1 million from Trainor as a result of his “criminal offending’’"

Lucky for him no bitcoin was involved.