Jurisdiction for an exchange

[Schrankwand]

I'm not so worried about taxes, rather about confiscation and more. Risks are potentially similar to running a Piratebay in the long term. Hausdorff is in serious trouble for running B24 in Germany. So not only does he have the Bitcoin mob after him (if the laws don't apply people get nasty quickly), the bank accounts were frozen in an instant, and he is charged with money laundering, financial terrorism, etc.

Singapore is one of the most strict regimes. If you look at organizations which are not liked, most countries obey to the US pretty quickly. Megaupload had some special forces come in, on behalf of Hollywood. So I think you need some serious cash for lawyers, and then a very smart strategy. A EU country is definitely not a good option.

Germany is a problem, considering that these are financial instruments with our law. It might be possible he needs a brokerage license to open the exchange and follow procedures after the german "Geldwäschegesetz" which is money laundering law. So it is technically absolutely legal to deal with this, however he did  a few mistakes.

If he didn't follow the common ground rules, he is pretty fucked.


The first ground rule is not to withdraw company money in person. You wire it to yourself, to another account, that is designated personal. You keep money that is customer money ALWAYS in separate accounts and never withdraw cash from them (Red flag for banks).

The second is following AML law. Securing and identifying your customers is not optional. If you want to be a professional company, you need to follow the law.

As for megaupload: See what Schmitz did afterwards. I can't stand him, true. But he made the PRIME MINISTER of New Zealand apologize to him, he sued the FBI and got a court to show he actually cooperated and he is right now setting up new fibre cables for all of New Zealand just because he needs it for his service. THIS is how you deal with situations like these. But you need the money, that is true.

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[QuantPlus]

Risks are potentially similar to running a Piratebay in the long term.

Think outside the box, Pirate Bay is a good example of decentralization.

(1)  An exchange does not have to centralize or deal with Fiat = just be
an Order Book and Account System. Doesn't even need a bank account.
Have your Clients owe each other money and settle their debts to continue
trading. A private citizen sending money to another private citizen is under
the radar.

(2) Gambling sites are ubiquitous. An interesting gambling site with 97%
payout that just happens to accept BTC is a backdoor exchange.

But no, everyone sets up a BIG HONKING "MONEY EXCHANGE".

[btcmind]

Thanks for the input, but (1) that's market place such as BTCde. Which sucks. You want to handle volume, and that's not the way to go. I want to transact without having to judge the counterparty every time. (2). I don't quite get that. You still have bank transactions.

But no, everyone sets up a BIG HONKING "MONEY EXCHANGE".

I'm very much wondering why no one is setting up this properly.

The second is following AML law. Securing and identifying your customers is not optional. If you want to be a professional company, you need to follow the law.

The Bitcoin law? It is unlikely that Bitcoin is even lawful if viewed in this way. If somebody accepts Bitcoin he does not know where the money is coming from!?

[jinni]

I'm not so worried about taxes, rather about confiscation and more. Risks are potentially similar to running a Piratebay in the long term. Hausdorff is in serious trouble for running B24 in Germany. So not only does he have the Bitcoin mob after him (if the laws don't apply people get nasty quickly), the bank accounts were frozen in an instant, and he is charged with money laundering, financial terrorism, etc.

Singapore is one of the most strict regimes. If you look at organizations which are not liked, most countries obey to the US pretty quickly. Megaupload had some special forces come in, on behalf of Hollywood. So I think you need some serious cash for lawyers, and then a very smart strategy. A EU country is definitely not a good option.

I was thinking that Singapore, while strict, might be one of those countries able to quickly respond with clear regulation for Bitcoin exchanges and trading while being legit enough to not be seen as a money-laundering haven within the international community.

If clear regulation is offered by any respectable country there is nothing stopping a bank from partnering with someone to open an exchange and help the exchange comply with the regulations.

The issue at the moment is that no country has issued any clear regulations at all. That's why banks are afraid, because they might be doing something illegal if they get mixed up with Bitcoin as there are no clear regulations in place.

[halfawake]

I'm going to second Iceland.  Here's why: they have a reputation for jailing the bankers for the economic crisis.  Thus, if any country is likely to be favorable to an alternate currency, it's Iceland.  They may even go to bat for you if the US authorities, though obviously, no guarantees of that.

[wilfried]

sealand is an urban myth, just a guy and a platform

Which is not any different than any other government leaders around the world.  They aren't actually special either, and are not ontologically different from you and me.  Just a guy, and a bunch of weapons to make his word "law."

hmmm. it takes some more elements to constitute a state/country. sealand is not a state/country. british police has force over sealand, whereas british police has no force over ie chile. if i am remembering right, sealand was in a bankrupcy proceeding, so no talking of a state for sealand - it´s a marketing gag of a guy owning a plattform. btw think of falkland islands - would you risk fighting the british empire stating "huhu, you cant invade, i am a state"

[Schrankwand]

sealand is an urban myth, just a guy and a platform

Which is not any different than any other government leaders around the world.  They aren't actually special either, and are not ontologically different from you and me.  Just a guy, and a bunch of weapons to make his word "law."

hmmm. it takes some more elements to constitute a state/country. sealand is not a state/country. british police has force over sealand, whereas british police has no force over ie chile. if i am remembering right, sealand was in a bankrupcy proceeding, so no talking of a state for sealand - it´s a marketing gag of a guy owning a plattform. btw think of falkland islands - would you risk fighting the british empire stating "huhu, you cant invade, i am a state"

Until 1987, it was a nation

Germany does nto really acknowledge that. The problem is here that we are talking the 12 mile radius.

And yeah, Teh british navy invading sealand?



I suggest a new server system: A server system using encrypted data that is decntralisied over servers all over the world, which are then decrypted through a DNS System. Basically, Namecoin with decentralized storage.

[stslimited]

Bahamas, Caymans?

they have strong financial regulatory regime on paper, but for getting odd things (that might conflict with existing whims of the legislature) set up and going they have a pretty well structured kickback regime too that would be much cheaper than G8 countries

[wilfried]

europe has sepa, so a huge base of potential customers who can wire fast and cheap (from february 2014). but regulations are hard to meet. imho you would need to register as kind of a banking service, which demands i.e. some 100k-€ as business funds, as any businesses that hold fiat for customers (trading acount) are strictly regulated. regulations are harmonized across europe, so standards are pretty much the same, maybe some "new" members of the EU have less stricter regulations, such as rumania, croatia etc.
holding fiat from customers without appropriate license is a big no go in europe, that is one cause bitcoin24 has troubles, and why the other bitcoin exchange in germany doesnt provide an online market but acts just as a board of offline bids and asks.

see brokerage service provider and see which regulation they meet:

"§ 1 Abs. 1a Satz 2 Nr.1, 1a sowie 1c KWG (Anlagevermittlung, Anlageberatung sowie Platzierungsgeschäft) und Nr.2 (Abschlussvermittlung) zugelassen (BaFin Nr. 127518)";

http://www.flatex.de/impressum.html


http://www.europeanpaymentscouncil.eu/content.cfm?page=sepa_legal_and_regulatory_framework

http://ec.europa.eu/internal_market/payments/framework/

[Zoznoz]

I would run to Monaco or Switzerland, a country that charge low taxes and less likely to pass anti-capitalist laws. It's clear that those who make money off real currencies (US & other merchants) will do anything they can to make sure that virtual currencies do not interfere with their gains.