Unlicensed Exchangers

[BayAreaCoins]

Where these just folks on LocalBitcoin trading BTC peer to peer?!

That'd be fucking nuts if you need some lic bullshit just to do peer to peer trades on LocalBitcoin... the USA is going bat shit crazy.

How could anyone support that? (OP)

Just got off the phone with Jay from Arkansas Securities Department in regards to selling my personal Bitcoins peer to peer using LocalBitcoins or friend to friend.

The guy I spoke to said it would be totally fine to sell my Bitcoins to individuals as long as:

1.  I wasn't brokering deals between individuals.  AKA Party A uses me to link up with Party B.  This can be using a site or doing it manually.

2.  I wasn't selling Bitcoins marketed as an investment tool.

That's what I expected and it makes sense.

[AgentofCoin]

...
Also, please name one State that doesn't require a license for bitcoin(e-currency) exchanges.

Each state is currently working on, has finished, or has not even started to address
the issues discussed in this thread. If they have not addressed it yet, it is considered "OK".

To answer your question, according to my understanding from last year,
Texas does not consider bitcoin to be money, so thus it can not be money transmission.

I do not know if that still stands though.

[mayax]

Where these just folks on LocalBitcoin trading BTC peer to peer?!

That'd be fucking nuts if you need some lic bullshit just to do peer to peer trades on LocalBitcoin... the USA is going bat shit crazy.

How could anyone support that? (OP)

Just got off the phone with Jay from Arkansas Securities Department in regards to selling my personal Bitcoins peer to peer using LocalBitcoins or friend to friend.

The guy I spoke to said it would be totally fine to sell my Bitcoins to individuals as long as:

1.  I wasn't brokering deals between individuals.  AKA Party A uses me to link up with Party B.  This can be using a site or doing it manually.

2.  I wasn't selling Bitcoins marketed as an investment tool.

That's what I expected and it makes sense.

Now, ask yourself if, for example , Kraken follows under point 1 or point 2. They accept clients from Arkansas  

[snoovering]

Where these just folks on LocalBitcoin trading BTC peer to peer?!

That'd be fucking nuts if you need some lic bullshit just to do peer to peer trades on LocalBitcoin... the USA is going bat shit crazy.

How could anyone support that? (OP)

Just got off the phone with Jay from Arkansas Securities Department in regards to selling my personal Bitcoins peer to peer using LocalBitcoins or friend to friend.

The guy I spoke to said it would be totally fine to sell my Bitcoins to individuals as long as:

1.  I wasn't brokering deals between individuals.  AKA Party A uses me to link up with Party B.  This can be using a site or doing it manually.

2.  I wasn't selling Bitcoins marketed as an investment tool.

That's what I expected and it makes sense.

That's what an exchange does. If you're not doing that, you're not running an exchange

[franky1]

Yes, are under this law. They are saying:  "We are a US-based cryptocurrency exchange". More than that, USA reserves the right to go after any company who is doing businesses with US citizens if they don't have financial license in US. See the  example with Mtgox and Dwolla. US gov seized the Mt gox funds from Dwolla even MT Gox was registered in Japan because MtGox was doing exchanges with US citizens.
 Yes, this is the law

because of DOLLAR deposits..

Paypal is a payment service provider based on real currency while the exchangers are virtual currency exchanges. Both of these businesses follow to the same MSB law. Virtual money is a commodity(like gold) and you need a financial license to make transactions between fiat and ANY e-currency (like Bitcoin).

no.. now your trying to redefine virtual currency..
gold is not a virtual currency. its a commodity. and has separate laws.
pawn brokers for instance follow 13 different federal laws. rather then being MSB

gold is not a direct substitute for dollars.
apples and pears are not a direct substitute for dollars.
cars are not a direct substitute for dollars.
jewelry and antiques are not a direct substitute for dollars
a euro is actually not a direct substitute for dollars. thats why american MSB does not apply to foreign currency that never touches the dollar

but a paypal "dollar" is not a real FIAT dollar. its just a mysql database balance to substitute a real dollar held in a real bank account in another location.
credit cards are not real dollars either.. they are credit. that is then separately settled with real dollars in a bank account..

as i said you cannot use paypal to pay court fines or other 'legal tender' tasks. even though its a direct substitute. but not the exact same thing.

even stuff like IRS and courts dont like you using credit cards to pay off fines. it normally has to be a debit card or physical cash.

but with all that said it just reveals how lacking the terminology is that it can be left open to many interpretations. and any good lawyer can rip apart the fallacy that bitcoin is 'money'.. because its not.. 'money' is the fiat world stuff.. currency can be anything. and bitcoin is an asset currency.

[mayax]

Where these just folks on LocalBitcoin trading BTC peer to peer?!

That'd be fucking nuts if you need some lic bullshit just to do peer to peer trades on LocalBitcoin... the USA is going bat shit crazy.

How could anyone support that? (OP)

Just got off the phone with Jay from Arkansas Securities Department in regards to selling my personal Bitcoins peer to peer using LocalBitcoins or friend to friend.

The guy I spoke to said it would be totally fine to sell my Bitcoins to individuals as long as:

1.  I wasn't brokering deals between individuals.  AKA Party A uses me to link up with Party B.  This can be using a site or doing it manually.

2.  I wasn't selling Bitcoins marketed as an investment tool.

That's what I expected and it makes sense.

That's what an exchange does. If you're not doing that, you're not running an exchange

right but if you do that, you have to respect the rules. how many exchangers are respecting them?

[Jeremycoin]

Bitcoin is not regulated by any country, so I think those exchangers won't be close by any government on any country. Maybe they can ban the site from their country, but they can't stop it to be used on every country around the world.

[mayax]

Bitcoin is not regulated by any country, so I think those exchangers won't be close by any government on any country. Maybe they can ban the site from their country, but they can't stop it to be used on every country around the world.

what does have Bitcoin with the exchangers? Bitcoin cannot be regulated but the exchangers can be. The exchangers are doing financial transactions and they are under the financial laws. That means they MUST have license. once an exchanger is financial licensed, it can perform many other kind of transactions not only those involving BTC.

BTC is an e-currency and nothing more. The exchangers are companies and the companies can be and are regulated by the countries where they are registered. Example : Bitfinex is registered in BVI and BVI requires a such license in order to make FX trades and financial transaction in and out an e-currency. Bitfinex is outlaw as most of other exchangers are(see: BTC China, Huobi, LakeBTC, BTC-e, Bitstamp, Kraken, etc)

This license is not only for them is for their clients too. Once you are regulated, you cannot disappear overnight like MANY exchanger did. The funds are audited, it's hard to make tricks.

I am going to make a bank. I put a website with everything(internet banking, etc) but I am not getting any banking license. It's just an website and maybe I am registering a company in Europe or BVI.

Would you use "my" bank? . I guess not.   It's the same thing with the exchangers.

[DimensionZ]

Bitcoin is still not regulated as a currency so anyone could open a Bitcoin exchange if they wish and they can't be closed because they aren't doing anything illegal. If Bitcoin is to be regulated then all the exchanges that want to operate in a given country would need to obtain a license from the government.

[Jeremycoin]

Bitcoin is not regulated by any country, so I think those exchangers won't be close by any government on any country. Maybe they can ban the site from their country, but they can't stop it to be used on every country around the world.

what does have Bitcoin with the exchangers? Bitcoin cannot be regulated but the exchangers can be. The exchangers are doing financial transactions and they are under the financial laws. That means they MUST have license. once an exchanger is financial licensed, it can perform many other kind of transactions not only those involving BTC.

BTC is an e-currency and nothing more. The exchangers are companies and the companies can be and are regulated by the countries where they are registered. Example : Bitfinex is registered in BVI and BVI requires a such license in order to make FX trades and financial transaction in and out an e-currency. Bitfinex is outlaw as most of other exchangers are(see: BTC China, Huobi, LakeBTC, BTC-e, Bitstamp, Kraken, etc)

This license is not only for them is for their clients too. Once you are regulated, you cannot disappear overnight like MANY exchanger did. The funds are audited, it's hard to make tricks.

I am going to make a bank. I put a website with everything(internet banking, etc) but I am not getting any banking license. It's just an website and maybe I am registering a company in Europe or BVI.

Would you use "my" bank? . I guess not.   It's the same thing with the exchangers.

I see the problem here, and I think you're right about this. The license is important for the customer to make sure that the site is can be trusted, right?

[franky1]

I see the problem here, and I think you're right about this. The license is important for the customer to make sure that the site is can be trusted, right?

it suppose to be. but these days the conditions of a licence is less about consumer protection and more about barrier to entry.
positives(1):
you need a team of people to ensure compliance
negatives(1):
they are not cheap to employ these specialists
positive(1):
they are specialists
negative(1):
these specialists went to college and have a certificate, but can still be corrupt a-holes

positives(2):
you need to report everything to regulators
negatives(2):
you pay them, while you are the one doing all the hard work
positives(2):
they ensure losses if your hard work results in a genuine loss
negatives(2):
they do all they can to find holes in your paperwork to not pay out

positives(3):
customers have someone to complain to if things go wrong
positives/negatives(3):
customers still have someone to complain to if things go wrong even more so when they dont have a licence. as the regulators can slam the company even harder
negatives(3):
competitors use their relationship with regulators to slam the competition, monopolizing the market.

no matter if its a licenced or unlicenced exchange.. the customer itself can still go through many avenues to attempt to get recompense.
even licenced exchanges can just disapear (check out cryptsy) without having to make their customers whole

summary:
the whole purpose of licencing needs to change it needs to be 95% consumer protection 5%barrier to entry(prevent scammers starting up boiler rooms)
rather than the current feel of a licence, which is 95% barrier to entry and 5% consumer protection.

[pereira4]

Why do the people still use unlicensed exchangers like Kraken, Xapo, BTC-e, Okcoin, BTC China, Bitfinex and many others? All of them are out law and they can be closed anytime and your money lost...

This is only the most recent example but there are so many like: http://www.coindesk.com/men-plead-guilty-running-unlicensed-bitcoin-exchange/

Most people that are in the know don't care about that, because most people in crypto that know what they are doing buy whatever coin a they want to buy and instantly send the coins to their local wallets. No one should store their coins in exchanges licensed or not.

[mayax]

Why do the people still use unlicensed exchangers like Kraken, Xapo, BTC-e, Okcoin, BTC China, Bitfinex and many others? All of them are out law and they can be closed anytime and your money lost...

This is only the most recent example but there are so many like: http://www.coindesk.com/men-plead-guilty-running-unlicensed-bitcoin-exchange/

Most people that are in the know don't care about that, because most people in crypto that know what they are doing buy whatever coin a they want to buy and instantly send the coins to their local wallets. No one should store their coins in exchanges licensed or not.

don't you want new people to use Bitcoin? how can you convince a normal person to use it? in order to use Bitcoin, you need an exchanger. What do you recommend him/her? BTC-e? BTC China?, OKcoin? The normal people wants to be sure that they sent the money to a real company. I give this example because BTC-e is one of the "biggest", they claimed to be registered in Cyprus(an EU country) which requires a financial license for their activity. BTC-e doesn't have one.  Strage, right?

BTC cannot go mainstream if the rules are not respected. BTC is assimilated with black market, hackers, drugs, etc just because the exchangers allow these categories to use their services.
Once you are licensed, it's much harder. You, as company have responsibilities. You have make a proper due diligence, you have to be sure that the money you receive are clean and so on. Look to Coinbase or Circle or Itbit who are licensed. It's not easy when you are licensed. You have to comply with a lot of things and to pay MANY others....that's why they want to change the Bitcoin... because they will go bankrupt if new people will not start using BTC.

Also, if you want to be taken as a serious company, to talk with banks(you need them and it's impossible to run an exchanger without them), you have to be licensed. Otherwise, you will change the bank account very often and you cannot develop your biz properly.

[Boosterious]

Bitcoin is still not regulated as a currency so anyone could open a Bitcoin exchange if they wish and they can't be closed because they aren't doing anything illegal. If Bitcoin is to be regulated then all the exchanges that want to operate in a given country would need to obtain a license from the government.

that's good,anyone can build exchange,and nothing illegal or legal exchange,just like kraken or others,they invest in big investement,and its long term.
lets wait until bitcoin regulated by goverment,so legal exchange will appear.

[Snail2]

For me the main reason of using "Unlicensed Exchangers" because of they are unlicensed therefore on some level free from banksters and govt thieves. OK, normal thieves are also annoying but at least they aren't paid from my tax for stealing my money .

[mayax]

For me the main reason of using "Unlicensed Exchangers" because of they are unlicensed therefore on some level free from banksters and govt thieves. OK, normal thieves are also annoying but at least they aren't paid from my tax for stealing my money .

you must use the banks in the most important steps : funding and withdrawals

[balu2]

Only a statist could care about that stuff.

[BayAreaCoins]

I got confirmation that the "exchange" from the OP was actually a LocalBitcoin trader...

https://localbitcoins.com/accounts/profile/Internet151/

I guess they were brokering deals... or maybe the FEDS can just charge any Bitcoiner they want who sells coins peer to peer at a flick of the switch.

[mkc]

Why do you trust stinky government and their license?
Some exchanges have been around for a long time and they may go down some day, but this has been okay for a long time. They probably will not open office is USA, hence they will never need a license.

[mayax]

Why do you trust stinky government and their license?
Some exchanges have been around for a long time and they may go down some day, but this has been okay for a long time. They probably will not open office is USA, hence they will never need a license.

a financial license is required anywhere, in any country. ALL the countries have laws for what the exchangers are doing. it doesn't matter if it's USA, Europe, Australia or China... All of them require financial license.