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Author Topic: Bitcoin-Central, first exchange licensed to operate with a bank. This is HUGE  (Read 190201 times)
crazy_rabbit
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May 30, 2013, 12:42:13 PM
 #521

Compliance, compliance, compliance. We should all be making that happen.
It is not possible even if you want to. Bitcoin is not compatible with current banking regulations. Your money service business will be compatible only if you can confiscate money from customer accounts. It is not possible with bitcoins. This is why bitcoin is illegal by definition! Of course, there is nothing wrong with bitcoin. This is current money laws that need to be changed.

*sigh* You're assuming someone is trying to run a bitcoin bank versus an exchange. They are different things.

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May 30, 2013, 12:48:09 PM
 #522

You're assuming someone is trying to run a bitcoin bank versus an exchange.
Bank or exchange it doesn't matter. Under the current regulatory framework they are parts of one chain and operate in the same fashion. If you are not able to confiscate the funds on a customer account you are not compliant. Period.
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May 30, 2013, 12:56:10 PM
 #523

Paymium is talking now to potential banking partners: this should not take a whole lot longer.
In parallel, the Paymium dev team is working on enhanced security, peformance and GUI.
Stay tuned..


Good luck in finding a bank that its CEO hasn't heard about Liberty Reserve.

My guess is that no bank will touch Paymium in fear of opening the doors for a money laundering investigation.

Any bank that does allow Paymium as a client, probably has low due diligence standards and should be avoided.

Can't wait till you publicly name the bank you get lucky to team up with. I'm sure they, too, can't wait to see their name in print.

I think you're being a bit dramatic. It is entirely possible to team up with a bank in such a way that the bank isn't exposed in a bad way. Compliance, compliance, compliance. We should all be making that happen. 


I've seen some of the paperwork involved between a bank on one side and a bitcoinmarket on the other.
NOT trivial AT ALL, no matter how nicely you can spell "compliance".

I was assuming they would hire someone who has done more then just 'seen' some paperwork. Thanks for your expert opinion in once having glimpsed a stack of paper that you didn't understand.

If they are a real company they will hire a lawyer with regulatory compliance experience.

Sheesh, don't get all peeved just because I read something you only heard about^^
There's a whole number of issues that even a bunch of lawyers familiar with the field have a hard time answering.
Hell, a whole number of issues are completely up for interpretation. And no bank I know of will touch bitcoin without securing every possible line of transaction or possible failure.


One basic example: Need Bitcoin deposits be held at the exchange or at the bank? MUST they be at the bank? MAY the be at the exchange? What kind of libel arises in either case? Are they subject to the EU deposit insurance? To what extent...?


crazy_rabbit
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May 30, 2013, 01:22:23 PM
 #524

Paymium is talking now to potential banking partners: this should not take a whole lot longer.
In parallel, the Paymium dev team is working on enhanced security, peformance and GUI.
Stay tuned..


Good luck in finding a bank that its CEO hasn't heard about Liberty Reserve.

My guess is that no bank will touch Paymium in fear of opening the doors for a money laundering investigation.

Any bank that does allow Paymium as a client, probably has low due diligence standards and should be avoided.

Can't wait till you publicly name the bank you get lucky to team up with. I'm sure they, too, can't wait to see their name in print.

I think you're being a bit dramatic. It is entirely possible to team up with a bank in such a way that the bank isn't exposed in a bad way. Compliance, compliance, compliance. We should all be making that happen. 


I've seen some of the paperwork involved between a bank on one side and a bitcoinmarket on the other.
NOT trivial AT ALL, no matter how nicely you can spell "compliance".

I was assuming they would hire someone who has done more then just 'seen' some paperwork. Thanks for your expert opinion in once having glimpsed a stack of paper that you didn't understand.

If they are a real company they will hire a lawyer with regulatory compliance experience.

Sheesh, don't get all peeved just because I read something you only heard about^^
There's a whole number of issues that even a bunch of lawyers familiar with the field have a hard time answering.
Hell, a whole number of issues are completely up for interpretation. And no bank I know of will touch bitcoin without securing every possible line of transaction or possible failure.


One basic example: Need Bitcoin deposits be held at the exchange or at the bank? MUST they be at the bank? MAY the be at the exchange? What kind of libel arises in either case? Are they subject to the EU deposit insurance? To what extent...?


haaha, sorry. :-)

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davout
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May 30, 2013, 01:37:56 PM
 #525

Just for the few people here who seem a little confused : Bitcoin is legally neither currency, nor electronic money.

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May 30, 2013, 01:45:44 PM
 #526

Just for the few people here who seem a little confused : Bitcoin is legally neither currency, nor electronic money.

It is a financial instrument, tho (at leas so sayeth BAFin).
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May 30, 2013, 02:44:06 PM
 #527

Just for the few people here who seem a little confused : Bitcoin is legally neither currency, nor electronic money.

It is a financial instrument, tho (at leas so sayeth BAFin).

Not at all 2weiX, but digital property like for example a domain name. We've been having allot of talks with our lawyers here in Spain, and the most probable course of action will be to follow laws and regulations regarding personal property that are already in place for the digital realm.

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becoin
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May 30, 2013, 02:53:16 PM
 #528

and the most probable course of action will be to follow laws and regulations regarding personal property that are already in place for the digital realm.
That'll be a big mistake! If you follow this course of action all bitcoin exchanges will have to apply sales tax in the US or VAT in the EU which is roughly 20% on every bitcoin sale. You understand that bitcoin can not compete with any fiat currency if 20% "fee" is applied on all currency conversions!
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May 30, 2013, 03:24:01 PM
 #529

and the most probable course of action will be to follow laws and regulations regarding personal property that are already in place for the digital realm.
That'll be a big mistake! If you follow this course of action all bitcoin exchanges will have to apply sales tax in the US or VAT in the EU which is roughly 20% on every bitcoin sale. You understand that bitcoin can not compete with any fiat currency if 20% "fee" is applied on all currency conversions!

Please read again, I said digital property not digital goods, although you can find certain tax exempt goods too.

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becoin
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May 30, 2013, 03:43:47 PM
 #530

Please read again, I said digital property not digital goods, although you can find certain tax exempt goods too.
I'm not aware of any judicial system that makes distinction between digital property and digital goods. The article you've pointed me to is describing only the digital property:

Quote
Intellectual property rights also can exist in digital property, such as pictures, music, movies, literary works, Web pages, computer code, and other creative works.

If above items are digital property I wonder what would be digital goods then?
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May 30, 2013, 03:57:36 PM
 #531

Surprisingly, becoin is right, if you sell stuff there's VAT.

Please read again, I said digital property not digital goods, although you can find certain tax exempt goods too.
Oh, so that's where you were going, be a fixed-rate exchanger, sell BTC, pay VAT on sales but find some sort of category that benefits from a VAT full/partial exemption and get lawyers to make it fit in said category. Right?

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May 30, 2013, 04:04:45 PM
 #532

Please read again, I said digital property not digital goods, although you can find certain tax exempt goods too.
I'm not aware of any judicial system that makes distinction between digital property and digital goods. The article you've pointed me to is describing only the digital property:

Quote
Intellectual property rights also can exist in digital property, such as pictures, music, movies, literary works, Web pages, computer code, and other creative works.

If above items are digital property I wonder what would be digital goods then?

Explaining the difference would be quite lengthy and off-topic for this thread. You can look at it like the difference from real estate, house or land deeds, and chattels which are your possession too but can be moved with ease. Bitcoin would be the equivalent of real estate in this case, and the only thing that changes would be their possession in the blockchain. This is similar to a central register that is maintained by your local Town Hall with all the people's property on available land.

Sorry for derailing this topic.

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paraipan
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May 30, 2013, 04:17:54 PM
 #533

Surprisingly, becoin is right, if you sell stuff there's VAT.

Please read again, I said digital property not digital goods, although you can find certain tax exempt goods too.
Oh, so that's where you were going, be a fixed-rate exchanger, sell BTC, pay VAT on sales but find some sort of category that benefits from a VAT full/partial exemption and get lawyers to make it fit in said category. Right?

That's right davout. We found out this could be applied to a floating rate exchange too, so a a license for money transmitting would only be required in case we want to provide extra services to our clients, but not the basic exchange of bitcoins for fiat. A recent similar decision was made public by the Canadian FinTRAC authority.

http://www.theregister.co.uk/2013/05/20/canada_welcomes_bitcoin_traders_fintrac_letter/

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davout
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May 30, 2013, 04:41:09 PM
 #534

That's right davout. We found out this could be applied to a floating rate exchange too, so a a license for money transmitting would only be required in case want to provide extra services to our clients, but not the basic exchange of bitcoins for fiat. A recent similar decision was made public by the Canadian FinTRAC authority.

http://www.theregister.co.uk/2013/05/20/canada_welcomes_bitcoin_traders_fintrac_letter/
It depends on what you call a floating rate exchange.

As soon as you touch the clients funds you need a license because you're escrowing them, aka holding them on deposit.

The alternative is "we buy from the seller, and sell to the buyer in the very same operation, the money on deposit is just a pre-payment to us" but then the whole VAT mess sneaks back in.

So your thing is "Bitcoins aren't sold or bought, only their 'property titles' are negotiated" that's really interesting. I'll look into it Smiley

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May 30, 2013, 04:45:58 PM
 #535

...

So your thing is "Bitcoins aren't sold or bought, only their 'property titles' are negotiated" that's really interesting. I'll look into it Smiley

Exactly, I recommend you look into SEDO, the biggest marketplace for domain names around. I think I already did enough thread derailing for today.

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becoin
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May 30, 2013, 04:53:44 PM
 #536

You can look at it like the difference from real estate, house or land deeds, and chattels which are your possession too but can be moved with ease.
In all the countries I've lived so far transactions in real estate, house or land deeds, and chattels are NOT tax exempt! You have to pay both federal and local taxes. So, back to square 1.
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May 30, 2013, 04:56:22 PM
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You can look at it like the difference from real estate, house or land deeds, and chattels which are your possession too but can be moved with ease.
In all the countries I've lived so far transactions in real estate, house or land deeds, and chattels are NOT tax exempt! You have to pay both federal and local taxes. So, back to square 1.

Sit back and relax, you have the answer in your post. NOT tax exempt, but you don't pay VAT  Wink

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becoin
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May 30, 2013, 05:02:10 PM
 #538

...

So your thing is "Bitcoins aren't sold or bought, only their 'property titles' are negotiated" that's really interesting. I'll look into it Smiley

Exactly, I recommend you look into SEDO, the biggest marketplace for domain names around. I think I already did enough thread derailing for today.
I appreciate when somebody is trying to find a solution but believe me, this is the wrong way to follow. Domain names are very different from bitcoins. For instance, there is only one "manufacturer" worldwide of .com's, .net's, .org's etc. This is why they have special treatment. While with bitcoins every miner is a "manufacturer" of bitcoins and will have to pay sales tax when they sell their product if, of course, bitcoin don't get the status of a currency.
becoin
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May 30, 2013, 05:06:28 PM
 #539

You can look at it like the difference from real estate, house or land deeds, and chattels which are your possession too but can be moved with ease.
In all the countries I've lived so far transactions in real estate, house or land deeds, and chattels are NOT tax exempt! You have to pay both federal and local taxes. So, back to square 1.

Sit back and relax, you have the answer in your post. NOT tax exempt, but you don't pay VAT  Wink
It is worse. You pay a dozen of different taxes and fees depending on the location and there are also different restriction upon subsequent resales.
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May 30, 2013, 05:09:38 PM
 #540

It is worse. You pay a dozen of different taxes and fees depending on the location and there are also different restriction upon subsequent resales.

Relax. And go do something of your own.

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