exchanges requiring photo ID??

[st4rdust]

I've just started using BTC after a few months and I notice that mtgox now requires a photo ID (passport, driver's license, etc) to withdraw any currency to either bank accounts or dwolla. This was never the case in the past when I had used mtgox to exchange BTC to USD. From what it looks like now, all exchanges are mandating this. Is this in fact the case with all exchanges now, and what is the reason for this requirement? It's been a few months since I've used these services, so anybody who could fill me in on this, the information would be very much appreciated.

[Nefario]

I've just started using BTC after a few months and I notice that mtgox now requires a photo ID (passport, driver's license, etc) to withdraw any currency to either bank accounts or dwolla. This was never the case in the past when I had used mtgox to exchange BTC to USD. From what it looks like now, all exchanges are mandating this. Is this in fact the case with all exchanges now, and what is the reason for this requirement? It's been a few months since I've used these services, so anybody who could fill me in on this, the information would be very much appreciated.

If any exchange isn't yet requiring it, it's only a matter of time before either they do or get shut down.

This is the result of fraud, plain and simple and the fact that exchanges have to deal with the laws and regulations of existing banking infrastructure, this is the problem of being hooked into the banking system.

If anyone can find a solution to this problem, it will be worth a lot of money.

[markm]

Maybe a good start would be identity services that take care of all that hassle and simply countersign encrypted messages affirming they know who sent them and will provide that info upon court order.

Then all kinds of businesses can go ahead and trade with people without all this extra "barrier to entry" hassle.

(In essence "my customer is this ID place, go see them if you want to know which of their people in particular sent any particular order / instruction / message on their behalf".)

-MarkM-

[Nefario]

Maybe a good start would be identity services that take care of all that hassle and simply countersign encrypted messages affirming they know who sent them and will provide that info upon court order.

Then all kinds of businesses can go ahead and trade with people without all this extra "barrier to entry" hassle.

(In essence "my customer is this ID place, go see them if you want to know which of their people in particular sent any particular order / instruction / message on their behalf".)

-MarkM-

This is not a technical problem and there is no real technical solution to it.

[freewil]

Exchanges must impose some sort of controls to prevent their services from being used for money laundering (and most likely violating the law of their country).

Maybe a good start would be identity services that take care of all that hassle and simply countersign encrypted messages affirming they know who sent them and will provide that info upon court order.

This would be a pretty amazing service if able to be done legally and professionally. I can see a service such as this using an OAuth2-type of authentication (think Facebook, Twitter app authentication dialogs) that hands out unique IDs for each identity and each service (so as not to be able to track users across services).

There are probably dinosaur services (old, ancient) that provide this type of verification, but I'm sure there is an opening for a more modern competitor.

[SaltySpitoon]

BTC-E requires no photo ID, and no other info. When you sign up, I think it asks for an email account, but you don't have to verify it. The email is just if you want to set up a feature that requires that you confirm in email that you want to withdraw BTC/LTC/NMC/$.

They are based out of Russia though, so that might be the difference?

[CJGoodings]

Yep, its coming to the point where the 'anonymous' sales pitch used to entice others to start using BTC will be an outright lie. (though it was never really anonymous without the proper precautions)

[markm]

Maybe there is a market for a Tor hidden service that will send cash in the mail for bitcoins?

Dunno how to do the reverse though... leave small unmarked bills under a park bench won't work too much chance someone stakes out that park bench.

I think the fail is on the fiat side; it simply underscores how much fiat sucks and the importance therefore of never going back to it once you manage to get to bitcoins...

-MarkM-

[Nefario]

Maybe there is a market for a Tor hidden service that will send cash in the mail for bitcoins?

Dunno how to do the reverse though... leave small unmarked bills under a park bench won't work too much chance someone stakes out that park bench.

I think the fail is on the fiat side; it simply underscores how much fiat sucks and the importance therefore of never going back to it once you manage to get to bitcoins...

-MarkM-

This would end up as mybitcoins.com 2.0

There is no way around it, the only way for money and BTC to swap while remaining anonymous (mostly) is to do it in person. The economic incentive for someone who runs an anonymous exchange is to cut and run once it becomes worth while.

BTC-E doesn't do any KYC because the government has yet to come knocking on their door, perhaps being based in Russia they're paying the right people in which case all is well.

[nobbynobbynoob]

Money-laundering laws and other financial-services regulations.

Mt Gox does not require verification for limited withdrawals to UK bank accounts; for full verification they want both official ID and proof of address, such as a utility bill, where a financial-services bill is not accepted, apparently.

The most obvious fix for this is to build up the bitcoin economy to the point where exchanges into fiat $ become more or less redundant, et voilà! problem is solved.

[st4rdust]

Thanks for the responses. I guess my next question is, by providing my photo ID to a site like mtgox which is pretty well established and legitimate, as far as that goes, is this a relatively safe thing to do? Or am I seriously putting myself at risk for a breach of my identity?

Assuming it is safe, then by providing all this information to an exchange, am I responsible for reporting what I exchange? God help us all when a 1099-BTC comes into existence.

I guess what I'm trying to ask is, do I have to worry about all the potential big brother issues that come from my identity being tied to where and what I exchange, or is it simply to combat money laundering and therefore nothing I need to be worried about?

[dissipate]

Thanks for the responses. I guess my next question is, by providing my photo ID to a site like mtgox which is pretty well established and legitimate, as far as that goes, is this a relatively safe thing to do? Or am I seriously putting myself at risk for a breach of my identity?

Assuming it is safe, then by providing all this information to an exchange, am I responsible for reporting what I exchange? God help us all when a 1099-BTC comes into existence.

I guess what I'm trying to ask is, do I have to worry about all the potential big brother issues that come from my identity being tied to where and what I exchange, or is it simply to combat money laundering and therefore nothing I need to be worried about?

If you live in a first world country that has a tax authority, your information is at risk. And of course any money you cash out of an exchange into a bank account has to be accounted for in tax records. It's not just about money laundering.

[nobbynobbynoob]

If you live in a first world country that has a tax authority, your information is at risk. And of course any money you cash out of an exchange into a bank account has to be accounted for in tax records. It's not just about money laundering.

+1

Absolutely - if you don't want to risk having your sensitive financial details pored over by the prying eyes of the all-omnipotent State (welcome to Ingsoc! Big Bro is watching you.) then it's best not to cash out via those exchanges in the first place. The mainstream exchanges are, IMO, playing it absolutely right in complying with all the financial-services regulations. This should in theory eliminate the risk of them being closed down.

I like BTC-E but have never used it to deal in fiat so far. I use Mt Gox for that. At my level of wealth, in a state that uses a PAYE taxation system, the tax man won't be coming anywhere near me. When I do get that rich (hahaha), well, I'll cross that bridge there and then!

[Nefario]

Yes the only way to expect to be able to cash out or in with privacy from government entities is in person.

[Syke]

Thanks for the responses. I guess my next question is, by providing my photo ID to a site like mtgox which is pretty well established and legitimate, as far as that goes, is this a relatively safe thing to do? Or am I seriously putting myself at risk for a breach of my identity?

Everything you send to Mt Gox is very much at risk. Dollars, Bitcoins, Identification, etc. All of it. Mt. Gox has already had their password database stolen and published online for everyone to make a copy of. Hashed passwords were cracked and countless further thefts occurred because of it.

https://mtgox.com/press_release_20110630.html

You can make small withdrawals without sending them your identification.

https://support.mtgox.com/entries/20919111-aml-account-statuses

[Yankee (BitInstant)]

It all comes down to legal jurisdictions and regulators.

Depending on where you live or operate the company, there will be some sort of regulatory body or none at all.

Some countries require you to have special licensing. In the US in some cases you need both federal and state licensing.

In some cases, taking customers or orders from other states makes you technically 'operating' in that state thus requiring licensing in that state as well.

Many exchanges here have bank accounts and corporations in much more lax jurisdictions, but that is not a good solution because it won't last forever.

This is the world we live in, wether you like it or not everyone is treated like a criminal de facto

Here is a great paper on 'The Money-Laundering Conundrum: Mugging Privacy in the Assault on Crime?'

Fantastic short paper to read over tea, coffee or a J : http://cei.org/pdf/2372.pdf

[markm]

Its a pretty stupid way to do it though.

Any Tom Dick or Harry who wants to sell or use other people's identities merely has to claim the government insists people have to send them to him else he can't let them in on the awesome 7%/week business opportunity he is offering...

-MarkM-

[kokojie]

Yep, its coming to the point where the 'anonymous' sales pitch used to entice others to start using BTC will be an outright lie. (though it was never really anonymous without the proper precautions)

What are you talking about? trading in bitcoin is anonymous, but when you decide to bring other currencies in to the mix, then you lose anonymity. If you want to remain anonymous at all time, then don't use an exchange. Sell something for bitcoin instead.

[kjlimo]

Yep, its coming to the point where the 'anonymous' sales pitch used to entice others to start using BTC will be an outright lie. (though it was never really anonymous without the proper precautions)

You're assuming the only way to get bitcoins is to buy them.  How about you sell something for bitcoins?  Or work for bitcoins?

Or mine bitcoins (the original only way to get bitcoins)?

Then you'd be able to spend your bitcoins anonymously. 

The thing is that the people who simply want the advantages of owning bitcoins or spending bitcoins don't feel that they can work for bitcoins fast enough or selling things for bitcoins fast enough or mine bitcoins fast enough... hence why the exchanges exist and why the "price" in traditional fiat continues to rise.

Many people continue to tell me the reason bitcoin won't "take off" is because it's too tough to get bitcoins.  I'm not worried about a fast influx of cash into bitcoin because I'm ok with the market slowly growing as people start to accept the value of bitcoins for what it is rather than constant wonder how much traditional fiat it can be "cashed out" for.

[foo]

Maybe there is a market for a Tor hidden service that will send cash in the mail for bitcoins?

People already offer this service on Silk Road.