Bitcoin Forum

This is a simple customer survey. We have a deadline of imposing KYC procedures, and basically we have to do that in order to be fulfill the compliance requirements as a legal financial services provider.

Before you vote, we want to assure you that:

- We will be fully legal as a financial services provider.

- We will have the legal right (and also the obligation) to collect your identifications.

- We will require a scanned copy of Photo ID and proof of residential address.

- We will store all identification in a secure place, and we will never give out to anyone without a court order.

- We will have a detailed Terms of Service and Privacy Policy before identification becomes an absolute requirement.

If you have any ideas, please voice out too.

It would all depend on what Legislative jurisdiction you operate from and the implications that would hold in store for me.

To be honest tho, I prefer to remain anonymous.

If you do all that I bet you'll get the "paraipan seal of approval"  ::)

What about for business accounts?

What's the deadline?

Why are so many people voting the last option? Do you honestly think Bitcoin has any way of succeeding without required identification at the major trading and exchange sites? Of course I would prefer no requirements of identification at all, but it's just not realistic in the long run. What should be discussed is the actual terms we will have to agree/disagree with. As long as we don't have to agree to outrageous terms, it's going to be a step forward for the long run.

If you make your transactions immediately traceable to you by governments and agencies, you are negating one of the major points of bitcoin.

It looks to me like they are doing just fine without requiring it, not sure what they want to add to it now, or maybe is it what they want to prevent.

OK I understand you want to go "legal." But why in the US?
Weren't you located in Singapore?
If not, why not register in Belize or some other financial haven?
you don't even need to travel there for that.

Accept IDs that meet minimal requirements.  Be as lenient as possible for your customers' (and Bitcoin's) sake.

I don't know about you but I've always thought that exchanges will be the way authorities can have some control over Bitcoin. It's crucial for its long term survival. So far only Mt. Gox has been serious about this and has been targeted but other exchanges will follow eventually.

This doesn't kill Bitcoin's anonymity, no one forces you to acquire bitcoins from a major exchange. There are already a number of ways you can buy bitcoins from people directly. As more and more exchanges add these requirements, it's likely that alternative ways of acquiring bitcoins become more commonplace.

From my perspective all of this is very good development and it reduces fears that Bitcoin might some day be announced illegal. If that happened, all exchanging would be person to person and that is where any larger potential Bitcoin has, dies.

After these ID requirements are implemented, it is only a matter of time before they start sending 1099s to the IRS.

I mostly agree with this -- the main problem I see is something like this:  Right now, as is, Bitcoin is offering extremely impoverished, yet smart people (like myself) to financially turn their lives around and get a fresh start.  If I had to start paying taxes on my earnings, boom it's game over and I'm back to being impoverished and underpaid (unless I want to partake in the then illegal trading markets which will no doubt spring up), but I don't want to -- this is why I still do not deal drugs or anything like that.

Tbh, if this happens I see myself or somebody else creating a new one without these requirements.

A big number of users won't accept this change easily.

you know if you're poor and smart, you shouldn't actually have to pay taxes, in fact, you should get EIC and the people who do pay taxes pay you.

no EIC if you have no EI
I sure as heck took advantage of that refundable american opportunity credit though ;-)
edit:  lol and promptly spent it on bitcoins

This is exactly right. Bitcoinica is a place where you can use bitcoin to trade on leverage, and if it requires ID then so be it - you have the choice whether to indulge or not.

I see this as analogous to cash. If you want to open a broker account, or do forex trading etc then you are likely going to have to identify yourself to the brokerage. If you just want to hoard, spend and remain anonymous then you can use good old cash.

The benefit over cash is that you have X number of other ways of moving huge amounts of bitcoin around internationally and virtually anonymously. Whereas if you try an take a suitcase full of dollars out of the country you can bet seem questions are gonna be asked!

Zhoutong, when you are fully compliant don't forget to embed the Paraipan Seal of Approval on Bitcoinica.

https://i.imgur.com/ab4H1.jpg

Your user base will skyrocket for sure.

You can't be serious. Without complying with the legal requirements, no matter how outrageous they seem, the exchange can and will be declared illegal. I think it will be a good thing for exchanges to comply so that in the long run bitcoin is traded widely.

About the anonymity, bitcoin can be made anonymous as long as you remain within the bitcoin domain. As soon as you cross over from bitcoin to USD (or for that matter any other currency) electronically, you will leave an electronic trail that can be easily tracked. Does not matter how much anonymity you think you have got online?

New section on Bitcoinica for proceeding with verifications, showed up few moments ago:

http://dl.dropbox.com/u/1127246/Screenshots/zzdf.png

Yep, this is why you don't create an exchange yourself. You operate in bitcoins and bitcoins only, and since bitcoins are not legally money, you have zero regulations to respond to. You only need bitcoins and proofs of transaction (be it mtgox codes or intersango PoT just to mention the 2 biggest exchanges). They deal with the legal part, that's why they are exchanges.

If you want bitcoinica to be also an exchange, that's when the big can of worms is opened. I may want to use this service with bitcoins that come, for instance, from mining. Or direct sales in bitcoins. There is no need to be passing my personal information around. It's a negative trade-off IMO, which is just what I'm stating here.

New name should be Para-pain (in the ass)

Are verified accounts required for anything at this point?

No, but you can already get your account verified using our verification feature.

Does this mean you would start sending out 1099's based on incomes made from each account?  :D

Ok, thanks for your answer.

In the FAQ you still recommend TradeHill as an exchange. I suggest you update that...

Cheers

No. We will not operate the business in the United States, nor will we respond to requests outside of our operating jurisdiction.

What if this is only required before you deposit or withdraw fiat?

Here's how I see it:

• If you're depositing or withdrawing fiat, that money has to go through a traditional clearinghouse, where you can be identified by "someone with a warrant" already.
• If you're not depositing or withdrawing fiat (e.g. using bitcoins as maintenance for going long), then your use of Bitcoinica isn't in any way touching the money to which regulation applies, until and unless BTC's legal status switches to being considered currency itself.

So, folks who really want to deal anonymously would still be able to use Bitcoinica for those purposes that make sense, and maybe whatever legal requirements Zhou is sweating about would still be fulfilled?

Just an idea.

Good compromise, but I'm concerned that since they are still taking out USD loans to go long, or purchasing USD with BTC to go short the government will require identification.  Perhaps not, but I'm almost certain my government would.

It is a gray area. But gray is better than black, especially if you have a lawyer who thinks it's a light enough gray to be feasible in court (and presumably Bitcoinica is in consultation with its lawyers about whatever actual issue underlies this poll).

Where will the business be operated ? Singapore ?

Will this registration as financial service provider resolve liquidity issues ?

I never tried bitcoinica because of liquidity issues, which is obviously a huge limitation. Without that, i would have for sure some money in it.
To me that's also actually good news. I'm ok giving personal info to have a quality, reliable service. I already do for broker accounts.

If some are not ok with that, i'm sure someone else will set up something for them.

Why the hell is bitcoinica wanting more identification than mtgox does? I will certainly stop trading if its required for bitcoin deposits/withdraws. I have no plans to use USD within bitcoinica except to use my profits to buy more bitcoins. I work hard to be 100% anonymous online and prefer to keep it that way.

You also must implement exit addresses (http://www.reddit.com/r/Bitcoin/comments/ohfxw/update_mt_gox_steals_from_tor_users_now_i_can_not/c3ha5li) BEFORE identification becomes an absolute requirement.

For those who don't know, an exit address is a bitcoin address that the customer registers with an exchange when they sign up.  The address cannot be changed once the account is established.  At any time, and for any reason -- even if the account is "frozen" for any reason -- the customer can request total liquidation of their account and payment of all resulting funds to the exit address.  In order for this to be an "exit address", this liquidation ability must override any and all "account frozen" or "account pending review" or "we think your account was compromised" (this is why the exit address is unchangeable) or other nonsense statuses imposed on the account.

If Bitcoinica starts requiring identification without first committing to an exit address policy, I will immediately liquidate my positions and close my account.

Good answer Zhou... but the US believes you are ALREADY in their jurisdiction, merely because US residents do business with you. As of two days ago, http://www.fincen.gov/statutes_regs/guidance/html/FIN-2012-A001.html (http://www.fincen.gov/statutes_regs/guidance/html/FIN-2012-A001.html)

The problem with keeping the private records of your customers, is that WHEN the US demands your records, they'll have a treasure trove of information with which to harass people.

With that said, it's inevitable that some portion of the Bitcoin businesses will go the route of full legalization/licensing. I think, strategically, that is probably a net benefit, because it allows Bitcoin to grow and gain adoption. I'm okay with it, because I also know Bitcoin itself is inherently beyond the grasp of the state - and so the longer it's allowed to exist and grow, the better. If the government thinks it's regulating Bitcoin because it's managed to regulate most exchanges, then I'm okay with them having that delusion. It will keep them docile.

Agreed 100%

Just as with cash, the existence of fully licenced operators within the Bitcoin economy is in no way at odds with the anonymous nature of Bitcoin itself. You don't want to have a government find out how much is in your MtGox or Bitcoinica accounts? Don't own one. Or own one with a nominal amount of BTC, and keep the rest of your stash in a flash drive buried in the backyard.

Unlike cash, Bitcoin will not, in the long term, lose its value simply by existing. No one will be forced to keep a bank account in BTC just to ensure they don't lose their money. That being said, if a Swiss bank offered me a way to keep my BTC with them, either now or in the future, I might just decide to keep some there... because old habits die hard :)

Just get yourself a safe in a Swiss bank and put your paper wallet in it. Fairly cheap (from 50 CHF per year)... No one can track that. Better than having an actual account in BTC since that could be affected by future data-exchange or taxation treaties / leaks / etc.

And yes, the US somehow believes it has jurisdiction over banks (and other entities) operating entirely outside of the USA, simply because it has US customers. A good example is Wegelin, being sued by the US despite having no branches or operations in the US itself.

The US government does not do this to harass foreign citizens.  They do this to keep their citizen sharecropping slaves in line.  Americans, no matter where they live, or where their money has made money are required to pay taxes on everything.  If I am a US citizen and if I lived in Singapore and made over 100873.26 SGD (Singaporean Dollar), then I would have to pay taxes on part of that income.  Even if I did not live or go to the United States for years, I would still be required to pay taxes.  I would have to report any of my income in USD or other currency stored in bank accounts (over $8,000).  If I tried to change my citizenship and renounce my American citizenship the United States federal government could investigate me and decide, without due-process, to make me pay taxes to the United States for 10 years after I give up my citizenship.

The American dollar is backed by the sweat of the American sharecropper slaves (its citizens).  If those sharecropper slaves found a way to circumvent the Federal Reserve System and keep more of their fair share than the Federal Reserve masters allow them to keep then America financial empire would collapse.

Maybe a good idea is to not use USD as the quote currency anymore.

i live in Europe and tell you EUR is not an option, ECB is pulling the strings

British Pounds, surely  8)

Or gold/silver oz.

I was thinking along these lines as well. If Bitcoins aren't yet legally thought of as currency, and gold is a commodity, then a Pecunix/BTC exchange may not actually qualify as an MSB (http://www.fincen.gov/financial_institutions/msb/definitions/msb.html)...

I dont like it, I would rather remain anon, but bitcoin will NEVER get out of the under ground unless we accept some regulations at least on the edges. Neweggs and amazons.coms will never take the coin until it is acceptable to banks and unfortunately, governments. hey it is kinda fun as it is and there are some limited markets and all but it will never be mainstream without developing trust in the exchanges and online banks, which means following accepted regulations.

And just remember, it was never designed for anonymity, it was designed to not be centrally managed.  If it even becomes somewhat useful, governments will pounce.  And look what they did to online poker. The governments used the banks to pretty much shut them down for us customers. They would do the same to BTC until it accepted regulations, like these.


i'll play either way. Besides it is useful as an underground currency as it is, even if it wasnt designed as such(though they are working on some issues that make it more underground friendly). Still the community needs to decide which direction they want to go, head in the underground way, keep anonymity but be doomed to it staying nitchy or if it gets large be prepared to be under attack, or do we want to head the legit route and be prepared to give up some things like anonymity on the exchanges.

The funny thing is that if you trade goods and services for your coins instead of going through the exchanges, it's still anonymous and there's really no way to effectively regulate it. Giving up exchange anonymity really doesn't give any more information than governments could already get, and doesn't give up one whit of information about your use of coins that you never had stashed away at Gox Mountain.

So again, I'd go a step beyond saying it's a necessary sacrifice, and describe it as more of a necessary inconvenience. That which was really anonymous yesterday will also be anonymous tomorrow.

good point

So for Bitcoin offshore is going to be Tor Hidden Service.

I dont' care, i never used bitcoinica.
Leverage is bad!

+1

Zhoutong, this is not "gentle pressure" to make people verify their accounts. This is obnoxious pressure that leads to customer insatisfaction.

"Please verify your account to enable unlimited instant withdrawals" would still be okay. But the threat of other service restrictions without specifying what or when makes me worry about having any money in bitcoinica.

Don't worry guys. You won't suddenly lose your money nor will your money suddenly get stuck. They will announce a deadline later on for people who don't want to comply. They get withdraw their funds as usual. Here's a quote from Zhoutong which stated this:

I'm glad this is happening; leverage has done a great deal of damage to our community and the markets, and this AML move will make some people think twice about playing with leverage :)

Not going to stop me from using leverage ;)

http://www.youtube.com/watch?v=HgzGwKwLmgM&ob=av3e

Wut? don't worry? so basically he just confirmed that ALL accounts will need to be verified or else they will have to withdraw everything.

Uh oh. I hope next time such a decision is taken he emails me, namely, this deadline.

We won't freeze accounts. Everyone will be able to withdraw regardless of verification status. You're safe to continue trading until we announce further details.

Why so negative? He just denied what you said. You're just spreading FUD...

The FUD here was introduced by bitcoinica when they started displaying an open threat.

"Myself" didn't say anything wrong, unless you equate "freezing your account" to keeping your money. I don't think bitcoinica will do that, but still, they will stop all your trading, which is "freezing" enough for me. Basically, they unilaterally change the ToS drastically and with very short notice. I think some complaining is warranted.

Short notice? The deadline hasn't even been set. For all we know it might not take effect for months to come, although I agree it will probably sooner than later. Still, we can't make a judgment before that is known, however. Besides, their choice is to become regulated up to a certain degree, which in turn requires them to require identification from their customers. You can't deny them that choice. All you can do is not do business with them anymore by withdrawing your money, which is exactly what is going to be possible.

Hmmm good point. Not sure how there's any other way they can do this, though. Not saying it's a good thing, just saying there might be no other way to do this. Hopefully Zhoutong can shed some light on how they are going to handle the cases in which people still have open positions they don't want to close yet, but who don't want to send identification either.

Mushoz: if you deem it acceptable that they change their ToS, and they declare to change them even further (no deadlines, no indications yet) as long as they don't steal your money, then you have very very low expectations as a customer. "You are free to just not use the service" yeah, I take all the time wasted in it with me though. I'm on my second account now, expecting to take all my coins off it soon in light of the changes.

I guess you are a very good consumer for whatever services you have contracted, just happy to have ANY ToS change as long as they don't steal money from you directly. You can always stop using the service, huh?

http://youtu.be/qd8hy032uLc

I can't force a company to go a certain way I want the company to go. If a change in their ToS doesn't negatively affect me beyond me not willing to use their service anymore, I can live with that. Then they've just lost a customer, and I'll go looking for a company does offer what I want. You have to remember I don't _want_ them to change the ToS to one I don't like, but I can't _demand_ them not to. All I can do is take my business elsewhere.

+1.  And as far as what will be done with open positions that "people want to keep open, but don't want to also be verified" (?????)... You can't have your cake and eat it too.  I would imagine such positions would be immediately liquidated, and whatever remaining margin balances be refunded back to the account of origin.  Is it really more complex than this?

Also, I don't know if this has been discussed elsewhere, but what is the impetus behind this new verification requirement?  I assume that the government where Bitcoinica operates requires it, but I wonder if THAT had anything to do with that asshole that was posting screenies of his massive unrealized profit a few weeks ago?  Everybody remember that, yeah?  That guy was a dick and deserved what he got, and it was NOT bitcoinica's fault -- it was his own dumbass dipshit lack of responsibility with his own fucking funds and impulses.

Zhoutong mentioned financial and strategic moves as motivators for this change. He wouldn't disclose exactly what he meant, only that we will learn in a few weeks time.

Sure, sure. But I don't have to like it and I can also post here that this will drive me off bitcoinica as a customer. Zhoutong will have to ponder if it's worth it for him or not, it's a trade-off like any other. In this trade-off list he'll have to add the risk of a knock-off coming out without these restrictions. So far there is no incentive for it. There will be and we will be able to estimate more or less how many users one would be instantly be able to steal from bitcoinica just on these grounds.

I wish him luck and I suspect he'll make more money by going into a full-fledged, official financial services provider. If things work for him, of course.

You're reading too much into my posts if you think I'm demanding anything. I'm expressing that I wish he didn't do it, and if he does it then I will be off bitcoinica (I try to give my personal information away the least I possibly can - to justify it I'd have to expect massive gains, and I don't see them happening in bitcoinica with the risks I'm willing to take at this moment).

Zhoutong reads this forum and I guess he prefers to know as accurately as possible how many of us will leave his service when he does this, instead of parroting good wishes and then f**** off with our money when the moment arrives.

In my case this is not about being positive or negative. It's about being realistic. I wish him luck, but when I think his service is not worth the risk for me (as in, my ID being stolen for instance) then I will take my coins and leave. As we say around here: "simples."

Ahh, sorry, I misunderstood you then. You indeed have the right to be unhappy and state that here. But still, I think this will be good for both Zhoutong himself and Bitcoin in general in the long run, so the choice is only logical. And that's why I "deem it acceptable that they change their ToS, and they declare to change them even further (no deadlines, no indications yet) as long as they don't steal your money". Even though I might not like certain changes, I find them acceptable the way he is doing it, which is all what matters in allowing them to change the rules. If I don't like them, I can state that here and leave, but that's all I can do.

I see the current changes as something positive for Bitcoin in the long run, so I currently have no plans of leaving Bitcoinica anywhere in the near future.

At this point if Bitcoinica requires verification's to trade and withdraw funds I'll be pulling everything out of Bitcoinica and wait for Mt. Gox's solution or another service.

My two cents... spend them wisely.  :)

Ouch, aren't you the guy with 300k+ BTC volume a month? How much of that is on Bitcoinica? That might actually put a decent dent in their profits...

Regardless of my actions it won't change how they move forward, I'm just commenting on what my intentions are when they do.

I know, but I'm just interested :) Of course, if you prefer to keep that data private, that's understandable :)
But I figured since you already mentioned you have 300k+ BTC volume months, you wouldn't mind such a question. Just to find out if Bitcoinica is losing a big part of their volume by losing you.

This is nothing against Zhou or Bitcoinica in general - I think the platform and service have been put together & run quite well, providing a quality service. Sadly, we are all at the mercy of a belligerent system that is creating dangerously volatile conditions. Return of capital really is much more important now than return on capital.

Some potentials from best to worst, assuming you have funds with Bitcoinica:

• Services relocates and doesn't require identifying information
• No information required for Bitcoin-only transfers (trading still available)
• Nothing bad happens after information submission
• Taxation pressure exerted on identifiable users
• Bitcoinica is locked out from transactions by financial partners
• Funds are frozen/confiscated pending information submittal
• As above, but funds remain unavailable even after information presented
• Bitcoinica is raided and everything is seized no matter where the user is from

Considering both the wealth preservation capability of Bitcoin as well as the growth potential for even 1% usage of Bitcoin within System D, each BTC could eventually become worth nearly $5,000 or more in 2012 USD. I'm not leaving that on the table.

Personally, I find only the first two possibilities acceptable (that risk profile is overwhelmingly negative), so I'm converting everything to BTC and withdrawing to a secured wallet until further information becomes available. This is similar to the difference between holding a hundred ounces of gold in your direct physical possession vs. having it tied up as a COMEX contract (especially like the ones stolen in the MF Global fiasco (http://jessescrossroadscafe.blogspot.com/2012/02/mf-global-trail-growing-cold-no-one-to.html)). That way, I'm protected and can always jump back in. I'd rather be out early than too late.

We will give you a plenty of time before the deadline. We announce this change early because we want to know the community's feelings towards this change.

Unfortunately, we find being regulated as a financial services provider with specific licenses to issue loans, exchange currencies, pay interests on deposits and issue means of payments much more important than making short-term profits.

It's totally understandable that some people are not willing to submit IDs before more details are posted. But I can assure you that you will have at least 30 days before we suspend trading, and you can withdraw any time until 90 days after the "deadline".

All the legal solutions are in-house. We have bank-like functions so Bitcoinica USD account can be segregated. So your funds are always protected.

Everyone has their own criteria. Where else is there a service offering leveraged trading (including shorting) for Bitcoin?

It might be time for Pirate Industries to get into the trading platform sector.  :)

Earlier you said that a lack of ID would not in any way prevent withdrawls.
Did you change your mind? If someone without ID has been trading on Bitcoinica for a while, then leaves for a few months and misses all this, might they come back to find they have no recourse for getting their coins?

Or am I reading this "90 day grace period" wrong?

We will try to contact them before the deadline.

You'll need the https://i.imgur.com/ab4H1.jpg before starting such business.
Imagine Paraipan going to the spanish police to file a complaint against a "Pirate"...
Now that would be something!

that would be insanely awesome!  You could beat zhou's interest rates by >100 times as your first feature :P