Why is UK so slow to jump on this?

[stereotype]

Wondering what other Brits think about the Bitcoin market in the UK. Specifically, what do you think about not having a professional, fully functioning, recognized Xchange somewhere in the UK, trading high volume GBP/BTC liquidity?

From a forward-thinking, enterprising perspective, im kinda thinking that the usual entrepreneurial Brit with funds, has missed this boat a little. Sure, business opportunities in Bitcoin are going to present themselves, as we go on, but currently, im just bombarded with USD biased experiences/interactions, wherever i navigate. Someone correct me if im wrong, but i don't even think https://bitbargain.co.uk/ is UK owned.

So, any smart UK centric business bods out there, care to share any current projects. Do you need help?
 

Just a thought, and most definitely not a invitation to swap nationalistic nonsense!

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[Vladimir]

I guess red tape is too thick. This is why no viable UK based exchange. Treatment of VAT and FSA licensing probably throwing the spanners in the works.

[BlackBison]

Intersango were shaping up to be a strong UK based exchange, but they got scammed by Zhou Tong when they bought Bitcoinica which ruined them financially and also psychologically may have turned them away from Bitcoin as entrepreneurs.

[stereotype]

I guess red tape is too thick. This is why no viable UK based exchange. Treatment of VAT and FSA licensing probably throwing the spanners in the works.

I get that. We certainly tend to build hurdles for ourselves. So i wonder if/how the FSA have been formally approached in some way....yes i watched Bank Of Dave!

[stereotype]

Intersango were shaping up to be a strong UK based exchange, but they got scammed by Zhou Tong when they bought Bitcoinica which ruined them financially and also psychologically may have turned them away from Bitcoin as entrepreneurs.

Get that also. But also with clever marketing, could be a reason to build an attractive place to trade. I remember when Spread betting companies suffered from the scurge of dodgy operations when it all first took off early 00's, but there are very well and respected run UK/Gibraltar companies, operating now.

[BlackBison]

I didn't make my point clear, I was saying that there was a company making some good headway in the UK so I think it can be done. They had some issues with banks I believe, but they probably did not really try and resolve them after they lost faith in the project.

[Anon136]

Wondering what other Brits think about the Bitcoin market in the UK. Specifically, what do you think about not having a professional, fully functioning, recognized Xchange somewhere in the UK, trading high volume GBP/BTC liquidity?

From a forward-thinking, enterprising perspective, im kinda thinking that the usual entrepreneurial Brit with funds, has missed this boat a little. Sure, business opportunities in Bitcoin are going to present themselves, as we go on, but currently, im just bombarded with USD biased experiences/interactions, wherever i navigate. Someone correct me if im wrong, but i don't even think https://bitbargain.co.uk/ is UK owned.

So, any smart UK centric business bods out there, care to share any current projects. Do you need help?
 

Just a thought, and most definitely not a invitation to swap nationalistic nonsense!

Britons are, for what ever reason, particularly indoctrinated. They tend to be more prone to using government to "solve" societal problems (that were caused by government in the first place but thats neither here nor there) and less interested in accepting market based approaches. Britons tend to see the market and government in polarized light of government being the source of all things good and the market being the source of all things bad. Where as Americans see government as a begrudgingly necessary evil, Britons tend see the market as a begrudgingly necessary evil.

anyway i should expect this to cause the UK to be a bit behind the curve in all things bitcoin

[Vladimir]

A company run by bums and ignoring laws can get some headway but yep problems with banks would be the end of it eventually.

A company with proper financial backing that would not want to risk it all and be clearly unlawful would find it too difficult and expensive to run perhaps.

As the result no proper exchange in GBP space.

[stereotype]

Wondering what other Brits think about the Bitcoin market in the UK. Specifically, what do you think about not having a professional, fully functioning, recognized Xchange somewhere in the UK, trading high volume GBP/BTC liquidity?

From a forward-thinking, enterprising perspective, im kinda thinking that the usual entrepreneurial Brit with funds, has missed this boat a little. Sure, business opportunities in Bitcoin are going to present themselves, as we go on, but currently, im just bombarded with USD biased experiences/interactions, wherever i navigate. Someone correct me if im wrong, but i don't even think https://bitbargain.co.uk/ is UK owned.

So, any smart UK centric business bods out there, care to share any current projects. Do you need help?
 

Just a thought, and most definitely not a invitation to swap nationalistic nonsense!

Britons are, for what ever reason, particularly indoctrinated. They tend to be more prone to using government to "solve" societal problems (that were caused by government in the first place but thats neither here nor there) and less interested in accepting market based approaches. Britons tend to see the market and government in polarized light of government being the source of all things good and the market being the source of all things bad. Where as Americans see government as a begrudgingly necessary evil, Britons tend see the market as a begrudgingly necessary evil.

anyway i should expect this to cause the UK to be a bit behind the curve in all things bitcoin

  We are, and have been, for many reasons, been many things Anon   So there could well be, some reality to your words. Can only hope an entrepreneurial, well funded Brit, has just motivated him/herself to prove those words otherwise.

[stereotype]

A company run by bums and ignoring laws can get some headway but yep problems with banks would be the end of it eventually.

A company with proper financial backing that would not want to risk it all and be clearly unlawful would find it too difficult and expensive to run perhaps.

As the result no proper exchange in GBP space.

Its those bloody banks again, eh? We never have been allowed to exercise our 82% right to tell RBS what we want, have we?!

My experience of exchanges, has been trading them Fx/Futures), so can only surmise how much the overheads and start-up costs are. But how much does Gox pull in, at .5% x 1000s daily? Noticed Gox are currently and urgently taking on staff to cope with the huge spike up in account openings. We should be getting some of that market.

[SBC]

Thought I'd weigh in here. Operating in the UK is not easy - at all. There are two main issues here:

The Payment Services Regulations 2009 - the laws the govern most money businesses with the UK (including banks) lay out clear guidance on the requirements of any business operating in this sector. Now here's where it gets tricky. PSR's 2009 apply to businesses which are generally regulated by the UK Financial Services Authority, but the FSA do not officially recognize BTC as a money service operation - so you can't attain regulation even if your entire operation is wholly compliant. This presents a problem; when a bank does business with you and your account is abused (either with or without your knowledge), because you *don't* have an FSA number - the bank's compliance officer is liable. Effectively the bank is required to demonstrate they were not complicit in the illegal activity. Most banks don't want the hassle or the risk and so they will not sign you up.

      In addition to this there is another wonderful set of regulations that apply to any business that could be used for money laundering, funding terrorism or any unlawful activity which derives from the transmission of money; the Money Laundering Regulations 2007. Any business operating in the BTC/GBP space would also needs to put numerous safeguards in place including full auditing, KYC checks, staff training etc to ensure that - if the proverbial fecal matter does hit the fan - they can prove they've done everything reasonably within their power to prevent it happening.

Now, efforts such as Intersango would have succeeded (it was a great exchange) if they had abided by these laws - even if they didn't technically fall under them. Problem was, they didn't. There were no real KYC checks - at least not initially - customers could transfer money from one account and immediately withdraw it through Intersango; causing them to act as a money launderer. In addition; anyone could sign up with almost no information, there were no real transfer limits imposed or other restrictions and of course, as a consequence, they attracted just the sort of individuals that banks cover in red flags and want nothing to do with.

Its an onerous requirement of any business operating in the UK financial space to ask information about the people it does business with. This costs (alot of) money and requires careful thought to system design, process and procedures from the outset. Nobody *wants* to do it, but the law requires that everybody *has* to do it. If you step outside of BTC space for a second, and check out any other money business (1st Contact Forex, Currency Fair, Tradewise etc) - every single one of them is regulated. Every single one of them requires your entire life history before they'll do any business with you - it's the norm. BTC is only the temporary exception and even then - only as a technicality. Unfortunately technicalities won't keep your bank accounts open or your business going.

If you are willing to consider entering the space as a proper business, attempting to dot all the i's and cross all the t's - certainly the opportunity is there. But it's not a Twitter Bootstrap, WordPress weekend job. At least, not if you want to be around in a month.

[Vladimir]

SBC, thank you for such a comprehensive post.

Indeed, back in Jan 2011 I had a great idea to start a UK/GBP exchange, but after a day of research I decided to move on.

[Lethn]

I suppose I could be counted as a 'company' but really I'm just Self-employed/Home Student, I already have the funds I need which are minuscule and I plan on using my art to support my jewellery and vice versa. The UK is in a bit of an odd place right now because there's a lot of anti-EU stuff going on and everyone is of course bickering about the financial crisis and what to do. I don't think it's a matter of red tape or anything, I just think our country had the industrial revolution, is now post-victorian and hasn't gotten out of that stupid rut ever since. It's been that way since Margaret Thatcher and Labour and it's carrying on to David Cameron now as well.

If it's any consolation I'm jumping entirely into Bitcoin precisely because I think this country has just gone to shit and is in a void of nothingness right now, I can't speak for everyone but I do think a lot of people are trying to decide what the fuck to do because the government just isn't interested in doing any governing and seem content on letting everything slide to oblivion. An exchange like MT.GOX but in the UK would be a nice idea but with companies like Bitspend cropping up I'm beginning to think that exchanges will slowly become irrelevant soon, at least for those of us who don't use Bitcoin purely for speculation and profit taking.

Oh and yes, like SBC has said, there's all sorts of shit crazy regulations here, I'm currently going to have to research all of this if I'm going to be able to operate here legally and make money but I guess I'll have to have a word with a financial advisor at some point because some of the stuff will be beyond me because of all the PR and double speak.

Edit: If you want to know just how hard it is to set up anything financial by the way, take a look at the 'Bank of Dave' documentary, should give you a pretty good idea of the kind of crap we have to put up with on a daily basis.

[stereotype]

Thought I'd weigh in here. Operating in the UK is not easy - at all. There are two main issues here:

The Payment Services Regulations 2009 - the laws the govern most money businesses with the UK (including banks) lay out clear guidance on the requirements of any business operating in this sector. Now here's where it gets tricky. PSR's 2009 apply to businesses which are generally regulated by the UK Financial Services Authority, but the FSA do not officially recognize BTC as a money service operation - so you can't attain regulation even if your entire operation is wholly compliant. This presents a problem; when a bank does business with you and your account is abused (either with or without your knowledge), because you *don't* have an FSA number - the bank's compliance officer is liable. Effectively the bank is required to demonstrate they were not complicit in the illegal activity. Most banks don't want the hassle or the risk and so they will not sign you up.

      In addition to this there is another wonderful set of regulations that apply to any business that could be used for money laundering, funding terrorism or any unlawful activity which derives from the transmission of money; the Money Laundering Regulations 2007. Any business operating in the BTC/GBP space would also needs to put numerous safeguards in place including full auditing, KYC checks, staff training etc to ensure that - if the proverbial fecal matter does hit the fan - they can prove they've done everything reasonably within their power to prevent it happening.

Now, efforts such as Intersango would have succeeded (it was a great exchange) if they had abided by these laws - even if they didn't technically fall under them. Problem was, they didn't. There were no real KYC checks - at least not initially - customers could transfer money from one account and immediately withdraw it through Intersango; causing them to act as a money launderer. In addition; anyone could sign up with almost no information, there were no real transfer limits imposed or other restrictions and of course, as a consequence, they attracted just the sort of individuals that banks cover in red flags and want nothing to do with.

Its an onerous requirement of any business operating in the UK financial space to ask information about the people it does business with. This costs (alot of) money and requires careful thought to system design, process and procedures from the outset. Nobody *wants* to do it, but the law requires that everybody *has* to do it. If you step outside of BTC space for a second, and check out any other money business (1st Contact Forex, Currency Fair, Tradewise etc) - every single one of them is regulated. Every single one of them requires your entire life history before they'll do any business with you - it's the norm. BTC is only the temporary exception and even then - only as a technicality. Unfortunately technicalities won't keep your bank accounts open or your business going.

If you are willing to consider entering the space as a proper business, attempting to dot all the i's and cross all the t's - certainly the opportunity is there. But it's not a Twitter Bootstrap, WordPress weekend job. At least, not if you want to be around in a month.

A great insight. Thanks for that.

Is your site http://speedybitcoin.co.uk within the parameters of your noted above requirements? Just trying to judge how far/close away you could be away from operating an exchange, from what you have done so far with speedybit?
BTW, very nice looking site.

[SBC]

Thanks! - We applied for FSA oversight (book of documentation detailing processes, extortionate legal advice which was pretty worthless frankly etc etc) - and as I mentioned above, they (the FSA) wouldn't give it to us only because Bitcoins don't yet fall within the scope of their definition of money - ergo not regulated by them. The registration fee and three months waiting did buy us an official response indicating that no oversight was currently required however, so it wasn't a complete waste of time.

Regarding the second set of regulations; we do fall under the MLR's and that number from HMRC is still pending (bureaucracy at its finest). Our entire business is compliant to the level of a 'Small Payment Institution' - that's why we ask a lot more information than some of our competitors. Again, it's not that we wanted to do - why would any business want to put potential customers through that? - but we we're not likely to be around very long if we don't.

It remains to be seen how the recent recognition of 'Virtual Currencies' in the US plays out over here - the UK (and Europe) tend to tow the 'special relationship' line, so my guess (and it is a guess) is that within the next few months 'guidance' will be issued by Brussels and consequently the FSA/other European Union countries financial regulatory authorities requiring all businesses in this sphere to become compliant. In many ways, this isn't unreasonable - I guess existing companies that currently deal in the money business but not specifically BTC look on and think "Why do I have to be regulated if they don't?" - it kind of levels the playing field a bit.

[garyrowe]

Thanks, SBC for providing a lot of useful information to anyone wanting to set this kind of business up. From the look of it there will be an uphill struggle that puts it out of reach for the average weekend/hobbyist.

So, an alternative strategy could be to create pure BTC-accepting businesses over here. I don't want to blow my own trumpet too much here but I've been trying to get an open source project like this off the ground for a long time now. It's called MultiBit Merchant (yes, it's affiliated with that MultiBit) and you can find more info here: https://github.com/gary-rowe/MultiBitMerchant/wiki/Introduction

The problem I have (and I'm sure I'm not alone here) is that while I am enthusiastic about Bitcoin, I'm limited by my day job to what I can achieve. I've got several Bitcoin projects on the go and I'd like to see this one get more attention from the community. Is there any Java developer out there who would be interested in pushing it along?

For the technically minded, it's Java + Dropwizard + HSQLDB. I'm planning a migration to MongoDB soon.

Even if you're not a developer, do take a look at the Introduction and see if it triggers your imagination to make something happen.

[stereotype]

Thanks! - We applied for FSA oversight (book of documentation detailing processes, extortionate legal advice which was pretty worthless frankly etc etc) - and as I mentioned above, they (the FSA) wouldn't give it to us only because Bitcoins don't yet fall within the scope of their definition of money - ergo not regulated by them. The registration fee and three months waiting did buy us an official response indicating that no oversight was currently required however, so it wasn't a complete waste of time.

Regarding the second set of regulations; we do fall under the MLR's and that number from HMRC is still pending (bureaucracy at its finest). Our entire business is compliant to the level of a 'Small Payment Institution' - that's why we ask a lot more information than some of our competitors. Again, it's not that we wanted to do - why would any business want to put potential customers through that? - but we we're not likely to be around very long if we don't.

It remains to be seen how the recent recognition of 'Virtual Currencies' in the US plays out over here - the UK (and Europe) tend to tow the 'special relationship' line, so my guess (and it is a guess) is that within the next few months 'guidance' will be issued by Brussels and consequently the FSA/other European Union countries financial regulatory authorities requiring all businesses in this sphere to become compliant. In many ways, this isn't unreasonable - I guess existing companies that currently deal in the money business but not specifically BTC look on and think "Why do I have to be regulated if they don't?" - it kind of levels the playing field a bit.

Thats a solid position the FSA are clearly stating there, which is at least something. Also concur with future compliancy. The market cap of BTC is fast approaching 1$B i think, so i guess there is a level where authorities have to implement processes that officially recognize the market. Moreover, when that day comes, is the day Bitcoin grows up.

Re: MLR. Ive seen the level of deposit on your site, and at those levels, an exchange is obviously not viable. I dont however see a problem with asking for ID etc. other than the over-head of doing so. Like i said, it works for spread betting companies, but i guess they have the correct resources. Are you able to indicate the stated max level of transaction/s, that a Small Payment Institution allows you?

Thanks again for you insight. Maybe, just maybe, it might help someone significant see a way forward.

[Lethos]

I came to the same conclusion as already said, with selling and buying bitcoins in the UK.
It is not easy but the problem stems from regulation issues and the few that did got burned by that, or got burned by an insider scamming them.
I opted to go with a European based company (France) - Bitcoin Centeral, so at the least, it would be less of an issue also one to known to have a good reputation and cooperation with their bank. Something which has been an issue for some in the past where the bank renegades on wanting anything to deal with them, so forced them to shut down operations in their country usually.

I do wish there was a few more in the UK, but on the upside there is so many in the uk, it's not difficult to find a private seller/buyer and do trades directly.

[nwbitcoin]

As a UK based bitcoin enthusiast, and someone with a number of years as a business advisor, I have been looking at the UK bitcoin market to find a way to take advantage of the opportunity.

The biggest problem is that the UK is getting very risk averse and so anything which can be regulated, tends to get regulated as soon as someone can lobby for it.  Its getting very expensive to get into any market which involves anything to do with the finance industry. It is possible to start up under the branding of a partner, however, with no such regulations for bitcoin, its a bit of a zombie industry.

I would like to see if its possible to start an exchange based on bitcoin trading being entertainment and gaming, but that then puts you under the gambling regulations, which are possibly even harder to work with!

The main problem with the UK is that it has two masters.  The EU sets its directives, and UK agencies interpret them into laws and policies.  When it comes to business, bosses have to worry about satisfying both the local enforcing agencies as well as national agencies; all of them have to find things to get involve with to justify their funding - allegedly!

Running a business in the UK is hard work!

[stereotype]

I came to the same conclusion as already said, with selling and buying bitcoins in the UK.
It is not easy but the problem stems from regulation issues and the few that did got burned by that, or got burned by an insider scamming them.
I opted to go with a European based company (France) - Bitcoin Centeral, so at the least, it would be less of an issue also one to known to have a good reputation and cooperation with their bank. Something which has been an issue for some in the past where the bank renegades on wanting anything to deal with them, so forced them to shut down operations in their country usually.

I do wish there was a few more in the UK, but on the upside there is so many in the uk, it's not difficult to find a private seller/buyer and do trades directly.

You're right. There are places to privately trade with, if you look, but its not hard to see the premium added to a UK bit, due to the cost of transit (fees/commission/conversion etc). I like many im sure, has opened a Gox account hoping they can buy in the exchange, and sell bits to the UK. Of course that happens, but you really need scale it up to really make it something approaching viable, and as soon as you do that, bells n whistles start to go off at your bank....which brings us back to laundering laws/regs/authorities etc.
So frustrating.