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Based on articles and other information available online, does a bitcoin exchange need any licensing to operate in CA? From what i can find, seems like the answer is NOT CURRENTLY. These links contain some interesting information about it: http://www.coindesk.com/california-regulator-coinbase-exchange-regulated-licensed/ - "The California Department of Business Oversight has not decided whether to regulate virtual currency transactions, or the businesses that arrange such transactions, under the state’s Money Transmission Act. California consumers should be aware Coinbase Exchange is not regulated or licensed by the State.” https://www.coinbase.com/legal/licenses - Coinbase doesn't have such license and seems like they don't need one as of this moment judging by the above links. http://www.dbo.ca.gov/Consumers/Advisories/Virtual_Currencies_0414.pdf - "Virtual currencies are not regulated by a government. California has been working with virtual currency industry leaders and other state and federal regulators to evaluate businesses engaging in virtual currency transactions for possible licensing." Thanks |
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What is a bitcoin kiosk? Do you mean an ATM or a booth that's selling bitcoin?
I mean a bitcoin ATM. According to what you provided and that it is official and has not been contradicted in a newer document, yes, you may set up an bitcoin atm without permission, as long as it is not using a third-party exchange. But as required, my advice should not be interpreted as a legal opinion and you should see and request a full legal interpretation or opinion in writing by an attorney in those states you intend to operate. There may be other issues that apply to you but are not addressed in those documents. (Is it a hobby or a business? BTC profit taxes paid individually or as a business? etc etc). Talking to a lawyer who is knowledgeable about such matters, before proceeding, is the smartest thing to do. And what if it's an online broker selling his own stock without a third party involved, You think the same applies? An online broker can only apply if the broker takes the orders online, but then meets in person and exchanges the btc for currency directly. That is why the self-stocked ATM is important and legally allowed. It doesn't use 3rd-party and transacts directly on the spot as your in person representative. According to the documents, the full transaction must be made directly and made immediately. There can be no 3rd-party exchanger/escrower or a promise to pay later. This means that if you accept a bank deposit from someone, you confirm that the deposit was made, then send the btc to the buyers btc address shortly later, all while sitting in your home or office, then, according to the documents, you acted as a money transmitter. In addition, your bank could be argued to be an "exchanger/escrow" for your portion of the transaction and ultimately you provided a promise to pay later after you made sure you received your currency. Of course, this advice should not be regarded as a legal opinion and you should seek out a lawyer who is knowledgeable and licensed to practice law in the jurisdiction that you wish to do business in. Why would the broker need to meet in person if he is selling bitcoin (online) from his own stock without any 3rd party/exchanger/escrower involved and in case the transaction is made directly and immediately without a promise to pay later? How would the buyer be playing online? If there is any waiting with the payment system, it is a promise to pay later. Cash is immediate and needs to be done in person usually. From my understanding, if all these conditions are met (no 3rd party, made directly, no promise to pay later) then this exception should also apply for online bitcoin brokers.
If you use a site to facilitate your payments and trades, that would be a violation of that states law. If the broker doesn't meet in person, it is almost always a promise to pay later situation. Can you provide a detailed explanation on how you would do this online and still have immediate and direct exchange? I mean a process like that: A user is creating an order on buybitcoin.com , enter his credit card details and as soon as he clicks "confirm payment" the coins are sent to his wallet. Same applies for cash meaning a user can send a cash transfer with one of the many cash remittance services and the moment his payment is arriving, the system automatically and immediately send the user his coins. How is that different from a bitcoin atm operator that uses credit cards and cash to facilitate transactions? How is that different from any other non-bitcoin e-commerce website? I'm asking that from a consumer protection perspective which is often and even most of the time what matters the most to state regulators. |
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What is a bitcoin kiosk? Do you mean an ATM or a booth that's selling bitcoin?
I mean a bitcoin ATM. According to what you provided and that it is official and has not been contradicted in a newer document, yes, you may set up an bitcoin atm without permission, as long as it is not using a third-party exchange. But as required, my advice should not be interpreted as a legal opinion and you should see and request a full legal interpretation or opinion in writing by an attorney in those states you intend to operate. There may be other issues that apply to you but are not addressed in those documents. (Is it a hobby or a business? BTC profit taxes paid individually or as a business? etc etc). Talking to a lawyer who is knowledgeable about such matters, before proceeding, is the smartest thing to do. And what if it's an online broker selling his own stock without a third party involved, You think the same applies? An online broker can only apply if the broker takes the orders online, but then meets in person and exchanges the btc for currency directly. That is why the self-stocked ATM is important and legally allowed. It doesn't use 3rd-party and transacts directly on the spot as your in person representative. According to the documents, the full transaction must be made directly and made immediately. There can be no 3rd-party exchanger/escrower or a promise to pay later. This means that if you accept a bank deposit from someone, you confirm that the deposit was made, then send the btc to the buyers btc address shortly later, all while sitting in your home or office, then, according to the documents, you acted as a money transmitter. In addition, your bank could be argued to be an "exchanger/escrow" for your portion of the transaction and ultimately you provided a promise to pay later after you made sure you received your currency. Of course, this advice should not be regarded as a legal opinion and you should seek out a lawyer who is knowledgeable and licensed to practice law in the jurisdiction that you wish to do business in. Why would the broker need to meet in person if he is selling bitcoin (online) from his own stock without any 3rd party/exchanger/escrower involved and in case the transaction is made directly and immediately without a promise to pay later? From my understanding, if all these conditions are met (no 3rd party, made directly, no promise to pay later) then this exception should also apply for online bitcoin brokers. |
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What is a bitcoin kiosk? Do you mean an ATM or a booth that's selling bitcoin?
I mean a bitcoin ATM. According to what you provided and that it is official and has not been contradicted in a newer document, yes, you may set up an bitcoin atm without permission, as long as it is not using a third-party exchange. But as required, my advice should not be interpreted as a legal opinion and you should see and request a full legal interpretation or opinion in writing by an attorney in those states you intend to operate. There may be other issues that apply to you but are not addressed in those documents. (Is it a hobby or a business? BTC profit taxes paid individually or as a business? etc etc). Talking to a lawyer who is knowledgeable about such matters, before proceeding, is the smartest thing to do. And what if it's an online broker selling his own stock without a third party involved, You think the same applies? |
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What is a bitcoin kiosk? Do you mean an ATM or a booth that's selling bitcoin?
I mean a bitcoin ATM. |
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It is becoming increasingly difficult to see why anyone does bitcoin business in the USA, land of the fee.
I agree. Kind of ridiculous but i encountered a message like "Currently not serving Iran, Syria North Korea and USA" more than once. So how the hell Bitstamp is pulling this off after all? |
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because they bank is not in the usa, is this the same as kraken isn't it? i don't remember other exchange outside of the usa having any licence
rule abroad(when see from america) are different
The US AML law for this matter doesn't refer to wether your bank is outside the US or not and not even if you have a physical US presence. From what i know, as long as you serve US customers in any state you should be licensed in that state (that of course if your operations and business model requires a license and Bitstamp's does). CEX for example is a non US based exchange and they do have money transmitter licenses in the US. maybe they are not allowing some citizens from america, so they can go ahead and not acquire a license? or their jurisdiction is vastly different? it's not like USA can impose a licence to an exchange that operate outside of their territory, at best they can not allow their customers to buy there They are currently allowing customers from all US states. The US law, federal and state, is imposing its regulations on whoever serves their residents meaning if you operate an exchange and have customers in the states you are obliged to obtain money transmitter licenses in most states. If you operate without proper license not only they can shut down your website/business but they can (and will eventually) also come after you even if you're outside the country and throw you in jail for running an unlicensed exchange. I'm guessing they have some kind of a legal opinion which mandates them to operate somehow. i doubt small exchange are doing it, they can hide their location well, somethign like yobit exchange is not runnign any licence, i can bet my ass on that, but perhaps is not needed if you deal in crypto only I agree that most small exchanges probably don't have any license but this is Bitstamp we're talking about here, they don't really fall under the definition of a small exchange. |
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because they bank is not in the usa, is this the same as kraken isn't it? i don't remember other exchange outside of the usa having any licence
rule abroad(when see from america) are different
The US AML law for this matter doesn't refer to wether your bank is outside the US or not and not even if you have a physical US presence. From what i know, as long as you serve US customers in any state you should be licensed in that state (that of course if your operations and business model requires a license and Bitstamp's does). CEX for example is a non US based exchange and they do have money transmitter licenses in the US. maybe they are not allowing some citizens from america, so they can go ahead and not acquire a license? or their jurisdiction is vastly different? it's not like USA can impose a licence to an exchange that operate outside of their territory, at best they can not allow their customers to buy there They are currently allowing customers from all US states. The US law, federal and state, is imposing its regulations on whoever serves their residents meaning if you operate an exchange and have customers in the states you are obliged to obtain money transmitter licenses in most states. If you operate without proper license not only they can shut down your website/business but they can (and will eventually) also come after you even if you're outside the country and throw you in jail for running an unlicensed exchange. I'm guessing they have some kind of a legal opinion which mandates them to operate somehow. |
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Bitfinex is well and truly outside the US. They reject customers in NY. Plenty of Chinese exchanges reject US customers too. There's got to be a reason for that.
It's a good question. They have a US office listed now too. They declared on twitter that they were applying for a bitlicence. As for all the other states there's never been a mention of anything.
As i mentioned above it doesn't seem to matter wether you have a US presence or bank in the US. What matters is if you serve US residents which they do. the fact that they also have a US presence does make it even more strange though. So the question remains unanswered |
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because they bank is not in the usa, is this the same as kraken isn't it? i don't remember other exchange outside of the usa having any licence
rule abroad(when see from america) are different
The US AML law for this matter doesn't refer to wether your bank is outside the US or not and not even if you have a physical US presence. From what i know, as long as you serve US customers in any state you should be licensed in that state (that of course if your operations and business model requires a license and Bitstamp's does). CEX for example is a non US based exchange and they do have money transmitter licenses in the US. |
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Are they simply risking their asses or am i misunderstanding something? To date, they don't have any single money transmitter license and still they operate in all states.
Any idea how come?
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