Before we get too far ahead of ourselves this kind of functionality will require laws to be changed to accommodate it. It will not happen overnight.

Google Ventures put in "less than 200k" in an early round.  So far as I am aware they have not put in any further funding.  I expect they would be a minor equity holder unless they have already exited completely. 

Did you receive a revised response?

I would appreciate if someone can find the answer to this question.  I cannot find it.

Is an ordinary user located in the US who trusts both Bitstamp for USD and an offshore exchange for USD required by FINCEN to be licensed as a money transmitter.  Anyone familiar with the issue will know the guidance note - I will try to find the link.  

*edit* link here: http://www.fincen.gov/news_room/nr/html/20130318.html

Sorry all the coloured concepts (Mastercoin, NXT etc) are so far removed from being able to be legally enforceable in the real world against real assets it's a joke.  At least with crypto you are dealing with virtual assets.

Ripple is misunderstood because no one can understand it.

If I want to receive $10,000 USD from Bitstamp as a money transfer I have to agree to lend them that amount at any time (and they can just take it without telling me). I can't think of any circumstances in which that would be a good idea.  Bitstamp is not a bank and is not FDIC insured.

At least when I deal with an exchange I choose when and if they get my money. 

Thank you for the clarification. That simplifies things a lot. I still have NFI whether that makes you a money transmitter though.

It is just an example.  It applies equally to trusting both Bitstamp and BTC-E for USD.  The issue is ordinary users inadvertently being caught by cross border financial control legislation.  


As a user.  It has been repeatedly said that funds will ripple through users' accounts if they link to two gateways in the same currency.  Accordingly is a user who trusts two gateways in the same currency a money transmitter?  Ripple is building the system - I hope they have thought about this.  


The issue here is that Ripple could get getting ordinary users into a world of hurt without the users having any idea.


Well I need to ask somewhere because I have spent hours reading Ripple information and I haven't found the answer yet. The point is that if I am issuing an IOU to Ripple China due to a transfer from Bitstamp rippling through me I don't know what that means for me under Chinese law.  


Technically speaking if you are dealing in US dollars then US law applies.  If you don't believe me take it up with FINCEN.  So that means I have to comply with US KYC and AML if I am a money transmitter.  The fact that many don't is irrelevant - we are trying to avoid ordinary users getting into regulatory trouble. 


Just a user.  I would strongly suggest that the Chinese government can do something about it.  Like putting the employees of Ripple China in prison for breaking Chinese law as a starter.  Look at "Stern Hu" on Wikipedia for a story about what they do to foreign company employees who piss them off.  


Yes but remember I am issuing IOUs for USD under the Ripple system as an ordinary user when a transaction ripples through me.



Look I get that (now) it just seems like there is an entire world of regulatory issues here that have not been explored or closed out. It is obviously impractical for users to consult lawyers before trusting a gateway so these issues need to be sorted out and clearly explained.  

Bitcoin is binary.  It is either going to the moon or to zero.  It is a good choice.  But 2014 is probably too short a time frame to know. 

If I trust Ripple China for USD and I trust Bitstamp for USD, then USD payments can ripple through me.

Do I need to be registered as a money transmitter under US law (FINCEN) or Chinese law (SAFE)?

Is this on the list of prohibited activities for foreigners in China?  

Do I need to maintain minimum registered capital under Chinese law?

How do I comply with KYC and AML if I have no idea who is rippling through me?

Do I need to comply with Chinese foreign currency law as a third party payment processor? Does this mean I am prohibited from dealing in Bitcoin under the PBOC directive?

Am I carrying on a business in the US?  Am I carrying on a business in China?  What are the tax consequences in each jurisdiction?

BTC's location in the Shanghai FTZ does make it interesting because I think the foreign currency controls are not supposed to apply there. So the real question is what rules apply in the FTZ?

*edit* did some digging - transfers between domestic accounts and FTZ accounts will be treated as cross border transactions so no opportunity for regulatory arbitrage.

http://news.xinhuanet.com/english/business/2013-12/03/c_132936829.htm

The system is based on trust and there are massive financial incentives to abuse that trust.  The ability for a gateway on the brink of insolvency to sweep all of its customers accounts and then collapse is terrifying once you start talking about real world money.

I have seen companies go insolvent and the owners will try to suck out every cent before it goes under.

If Bitstamp was trusted by millions for hundreds each then Bitstamp could explode and take hundreds of millions in assets and the account owners would not even know until they woke up with worthless Bitstamp IOUs the next morning.  Most of us are old enough to remember Lehman Brothers and Bear Stearns exploding and know that brand counts for nothing when a black swan hits.

If Ripple is to succeed then the concept of trust lines needs to be refined.   I actually want Ripple to succeed but their model just seems horribly flawed.

It will singularly come to nothing.

We need a Coin coin

Better yet, ask Taiwan with China in the room.

On Thursday.

If the box stinks the cat is dead.

It is a Special Administrative Region of the People's Republic of China.

http://en.m.wikipedia.org/wiki/Special_administrative_region

Hamster coin.

The coin that poos in your shoe.

If Loaded is still in Shanghai and goes out to the Big Bamboo tonight he will definitely regret it in the morning.