Banks trying to pull the rug from under us

[malevolent]

I thought it cost like $1M for each state to get a money service business license, and that is just in the US.  Right?  Wrong?  You at least pretend to know something about it.
There is a balance of reason, and the cost of an MSB looks a bit more to me like something which is designed by those who already have their foot in the door to stifle competition rather than a legitimate expense required in keeping us safe from those 'evildoers'...or whatever the excuse for monitoring/managing the serfs happens to be at the moment.

if you cant afford to get the licences/insurance (FDIC) then maybe your not the right person to be looking after peoples investments

$50 million entry fee means only a few state-supported monopolies can stay in business.

but being lazy by ignoring the laws and then blaming the regulators like its a total surprise is just reasons why i see the half assed attempts of making exchanges always fail.

The regulators set up and enforce the stupid laws so they are the ones to blame.

in the UK it does not require holding $50M, this is the problem with people making exchanges.

The US may require. But UK has it's own stupid laws and regulations (just going through it online for a few minutes gave me a headache) and if one wants to remain compliant with all the insane regulation of other countries whilst conducting business internationally (even though it's only accepting or sending electronic funds and accepting and receiving BTC) then suddenly only 1 company may be able to afford to do so.

You write:

no one is locking out bitcoin businesses!!!!!

and then you write:

if your transacting less then £3mill a month then you only need to be FSA authorised... Over £3mill a month then you need to be FSA Accredited.
read the regs involved which mainly concern having code/policies inplace to recognise repeat customers to know how much they transact in FIAT to warn/avoid them going over limits. and require ID if they wish to continue over the limits. validate this information, either using 3rd parties services (credit agencies etc) or by requesting government supplied identification.
store the information as the regulations require of you and have policies to act/react to certain situations.

Don't you think it's a bit contradictious of you now? Who do you think is burdened with costs of time and money with this foolishness?

its not that hard to follow the regulations.

Are you an exchange owner, if so, which one and what is your experience?

the problem is that they dont bother, and then a small problem rears its head such as a scammer talking to their bank asking for a chargeback. which snowballs into bank investigations which lead to finding out an exchange has not even bothered to follow the guidelines. which manifests into the banks making a SARS report, which results in the exchange being shutdown.

simple solution. read the rules, follow them and you wont get shutdown.

Nope

it facepalms me to see all of these so called trusted exchanges cant even follow simple regulations. the banks /regulators are not out to get bitcoins. they are out to protect steal more of the peoples FIAT.

[bitcoinminer]

A possible solution is to BUY THE FED and set regulations promoting bitcoin :

Buy with BTC for $450M

quoted from below article

By law (check the Congressional record), we can buy back the FED for the original investment of the FED's 300 shareholders, which is $450 million (Reference 1, P. 227, Reference 17, P. 36)

http://www.apfn.org/apfn/fed_reserve.htm

The moon is hollow

qouted from the below article

http://the-tap.blogspot.com/2012/02/moon-is-hollow-how-come.html

Think with your head before posting nonsense.  If it could be bought for 450M any one of the hundreds of billionaires in this country would have.

[Bro]

Exchanges should be started in business friendly countries, not in the US/UK/Poland/Germany

[loanexpress]

I think the interim solution is going to be something like the Bitcoin ATM, or physical kiosks and shops selling BTC *for cash*. No dramas about bank accounts or lots of deposits and payments.

Just work in cash. It's how people for example buy prepaid phone credit. The infrastructure already exists - you just need to make a good business case to these shops (typical 7/11 etc).

[franky1]

I think the interim solution is going to be something like the Bitcoin ATM, or physical kiosks and shops selling BTC *for cash*. No dramas about bank accounts or lots of deposits and payments.

Just work in cash. It's how people for example buy prepaid phone credit. The infrastructure already exists - you just need to make a good business case to these shops (typical 7/11 etc).

+1

use local bitcoins or ATMs that have a $1000/euro1000/£850 daily limit and you never need to worry about FSA fincen shutting them down. thats what makes me laugh about these "official" exchanges that exceed the amounts and never follow the regulations to realise what needs to be avoided.  and then they cry when the regulators come knocking.

as for tranferwise.

they should develop a relationship with their bank better. their own statement

Financial firms make choices on the basis of clear rules. Without them, things like Bitcoin fall into the hands of those who use it for illegal activities. This leaves businesses like ours that meet their obligation to anti-money laundering and “Know Your Customer” procedures unable to deal with it.

well if transfer wise has ID on the customer and ID on the bitcoin exchange then the money trail does not end with transferwise so banks wont worry about transferwise as they are following regulations.

the problem yet again is the exchanges. that dont keep logs of the money trail above the limits to keep the banks sweet. so the banks advise middle men to stop dealing with exchanges.

exchanges need to up their games, pure and simple

[oblongmeteor]

It is naive to think that Transferwise halted transfers to Bitcoin exchanges because of perceived competition to their own business model. Transferwise is an internet business - to adapt its model to integrate Bitcoin would be trivial. They have the business, software and regulatory foundations making them better placed than any existing Bitcoin business to take advantage should Bitcoin prove popular.

A more plausible answer is that their banking provider noticed an increase - or was notified of an increase - of funds that had been flagged moving through Transferwise's account. Bitcoin provides those with unlawful access to funds the ideal opportunity to 'break' the paper trail. By funneling money through Transferwise and then into a Bitcoin exchange, the money can be laundered and effectively pass the fiat liability onto the last link in the chain. It is fairly clear that Eastern European banks are not particularly concerned about the provenience of funds that are deposited to their accounts (this was a prime concern of the Germans with regards to the Cypriot banking systems "Ask no questions, hear to lies" attitude) so this likely leaves the liability in the lap of the preceding link in the chain... in this case Barclays. Money service businesses are categorized in the highest risk bracket by the banking sector - those who are lucky enough to exist with a banks grudging blessing - do so at the banks pleasure.

Transferwise was likely told that due to an increase in fraudulent transactions entering their account and an increase in funds leaving to high risk endpoints (Mt Gox Poland or Bitstamp Slovenia), they either cease directing funds to these accounts or their account would be terminated. If they lost their account, it would likely severely hinder their ability to do business in the UK. Sure, it was profitable, but they have no real power in the relationship and that in essence, is the irony of Transferwise's rhetoric; they spout about how much "Banks are bad" "Banks have had their fun" etc etc, when infact they are completely and utterly at the mercy of the banking sector...

[franky1]

It is naive to think that Transferwise halted transfers to Bitcoin exchanges because of perceived competition to their own business model. Transferwise is an internet business - to adapt its model to integrate Bitcoin would be trivial. They have the business, software and regulatory foundations making them better placed than any existing Bitcoin business to take advantage should Bitcoin prove popular.

A more plausible answer is that their banking provider noticed an increase - or was notified of an increase - of funds that had been flagged moving through Transferwise's account. Bitcoin provides those with unlawful access to funds the ideal opportunity to 'break' the paper trail. By funneling money through Transferwise and then into a Bitcoin exchange, the money can be laundered and effectively pass the fiat liability onto the last link in the chain. It is fairly clear that Eastern European banks are not particularly concerned about the provenience of funds that are deposited to their accounts (this was a prime concern of the Germans with regards to the Cypriot banking systems "Ask no questions, hear to lies" attitude) so this likely leaves the liability in the lap of the preceding link in the chain... in this case Barclays. Money service businesses are categorized in the highest risk bracket by the banking sector - those who are lucky enough to exist with a banks grudging blessing - do so at the banks pleasure.

Transferwise was likely told that due to an increase in fraudulent transactions entering their account and an increase in funds leaving to high risk endpoints (Mt Gox Poland or Bitstamp Slovenia), they either cease directing funds to these accounts or their account would be terminated. If they lost their account, it would likely severely hinder their ability to do business in the UK. Sure, it was profitable, but they have no real power in the relationship and that in essence, is the irony of Transferwise's rhetoric; they spout about how much "Banks are bad" "Banks have had their fun" etc etc, when infact they are completely and utterly at the mercy of the banking sector...

+1000

if exchanges want to help bitcoin be legit then they too must be legit, which will ensure any middle men wont have issues dealing with exchanges. if a exchange doesnt want to be legit, then stop dealing in FIAT as they are becoming the problem of making bitcoin look bad

[zvs]

Exchanges should be started in business friendly countries, not in the US/UK/Poland/Germany

those are business friendly countries.  if they weren't, they wouldn't have some of the highest per capita incomes in the world

i suspect you're getting privacy laws confused with business friendly

[franky1]

also using transferwises own quote

But to gain any of these benefits, the financial regulators need to take a stand.[1] They have many questions to answer - how should the banks treat Bitcoin?[2]  Should it be regarded as cash or something new?[3]  Are new and specifically tailored “Know Your Customer” rules necessary?[4]  Unless the banks are told what is expected of them,[5]  they will happily keep on blocking Bitcoin, and consequently blocking our hope for financial innovation.

[1] regulators do take a stance.. on FIAT
[2] banks dont have to care about bitocin, banks are in the FIAT business not the cans of baked beans business so it doesnt matter what you buy with your FIAT, they jsut want to know where and with whom the FIAT ends up
[3] banks dont care, as long as they can follow the money (FIAT) trail
[4] hmmmmmmmmm big revealing point... the KYC rules are NOT new and not specifically tailored. KYC rules have been the same for many years. its only national media that has hyped it up as being new. which to me shows that transfer wise has not read the regulations fully to know this. but instead just read about it in newspapers. and why is it also revealing.. because as a irish company transfer wise is managed by FSA which does not use the term KYC. they use the term CDD (customer due diligence)
[5] banks know exactly what is expected of them. any amounts over $1000 in a smal period of time needs to have available tracking information.

transfer wise obviously didn't have enough knowledge of the rules or the information of exchanges to pass onto banks if the banks asked for details of "who is bitstamp"

[TimJBenham]

[2] banks ... jsut want to know where and with whom the FIAT ends up
[3] banks dont care, as long as they can follow the money (FIAT) trail

That must be important to be worth two numbered points. Why would they care about that? largely because the state threatens to punish them if they don't "care".

[4] hmmmmmmmmm big revealing point... the KYC rules are NOT new and not specifically tailored. KYC rules have been the same for many years. its only national media that has hyped it up as being new. which to me shows that transfer wise has not read the regulations fully to know this. but instead just read about it in newspapers. and why is it also revealing.. because as a irish company transfer wise is managed by FSA which does not use the term KYC. they use the term CDD (customer due diligence)

Transferwise's headquarters is in London, not Ireland. The FSA was a UK regulator. It has been abolished. Google site:fsa.gov.uk KYC.

[5] banks know exactly what is expected of them. any amounts over $1000 in a smal period of time needs to have available tracking information.

They use dollars in Ireland (or is it the UK) now?

[franky1]

[2] banks ... jsut want to know where and with whom the FIAT ends up
[3] banks dont care, as long as they can follow the money (FIAT) trail

That must be important to be worth two numbered points. Why would they care about that? largely because the state threatens to punish them if they don't "care".

[4] hmmmmmmmmm big revealing point... the KYC rules are NOT new and not specifically tailored. KYC rules have been the same for many years. its only national media that has hyped it up as being new. which to me shows that transfer wise has not read the regulations fully to know this. but instead just read about it in newspapers. and why is it also revealing.. because as a irish company transfer wise is managed by FSA which does not use the term KYC. they use the term CDD (customer due diligence)

Transferwise's headquarters is in London, not Ireland. The FSA was a UK regulator. It has been abolished. Google site:fsa.gov.uk KYC.

[5] banks know exactly what is expected of them. any amounts over $1000 in a smal period of time needs to have available tracking information.

They use dollars in Ireland (or is it the UK) now?

not caring as in banks don't mind if your buying 2000 cans of baked beans or bitcoin, banks just want to know where and who the money is going too. i have a bank manager and thats what they said to me:
to keep logs of who is doing large payments and to fill out a sars report (which goes to serious organised crime agency not the bank, if theirs suspicions of a illegal use of funds) FSA have also confirmed this.
cheers for the correction on the london office, sorry i was checking up on several businesses at once. but british rules still apply. FSA are not abolished. and CDD is what is wrote in the UK/EU REGULATIONS not in the laymens leaflets which tries to be more internationally user friendly.

[malevolent]

Exchanges should be started in business friendly countries, not in the US/UK/Poland/Germany

those are business friendly countries.  if they weren't, they wouldn't have some of the highest per capita incomes in the world
i suspect you're getting privacy laws confused with business friendly

I'll add something.

US, UK and Germany are quite business friendly but they have some inconvenient regulations for companies wanting to do business involved with handling fiat.
Poland is generally NOT business friendly but in term of finances they have less of those regulations (AML/KYC/other BS). In the case of the recent Bitcoin-24's Polish bank account closure, it only happened because the German authorities investigating asked the Polish authorities to do so.

[agaumoney]

it seems like there are probably a fair number of talented people who could make a positive contribution to certain usability issues, but having them locked out by a banking/regulatory cartel because they don't have ... excess funds kicking around is wrong.  It detracts from my ability to select value-adds for my investment by quashing them before they start.

Now you are getting the idea.  This is what happens when you give power to gov't.  Any power.  As soon as the gov't has power, groups will form to convince government to use that power to enhance their group.

From the nail salon or hair dresser to the construction trades to the doctors and lawyers, they all have their regulations and requirements to limit and discourage competition.  And all done in the name of public safety, courtesy of the government paid for by that same public.

If it were really a matter of public safety the issue could be solved by information instead of force - the "authorized" business could display their gov't license, gov't could confirm that any business is or is not authorized.  But information instead of force means anyone would be free to start a business and anyone would be free to choose to use an unauthorized business at their own risk.

Competing groups could form and then provide those same services of authorization (accreditation and validation).  If the competing group(s) proved more trustworthy than the government accreditation then gradually the gov't business would drop off because nobody would care to obtain the gov't certification.

But no, instead the group with guns gets more and more powerful and claims the right to choose what business people can start by setting arbitrary restrictions and waving their guns if you forge your own path.

[tvbcof]

it seems like there are probably a fair number of talented people who could make a positive contribution to certain usability issues, but having them locked out by a banking/regulatory cartel because they don't have ... excess funds kicking around is wrong.  It detracts from my ability to select value-adds for my investment by quashing them before they start.

Now you are getting the idea.  This is what happens when you give power to gov't.  Any power.  As soon as the gov't has power, groups will form to convince government to use that power to enhance their group.

From the nail salon or hair dresser to the construction trades to the doctors and lawyers, they all have their regulations and requirements to limit and discourage competition.  And all done in the name of public safety, courtesy of the government paid for by that same public.

If it were really a matter of public safety the issue could be solved by information instead of force - the "authorized" business could display their gov't license, gov't could confirm that any business is or is not authorized.  But information instead of force means anyone would be free to start a business and anyone would be free to choose to use an unauthorized business at their own risk.

Competing groups could form and then provide those same services of authorization (accreditation and validation).  If the competing group(s) proved more trustworthy than the government accreditation then gradually the gov't business would drop off because nobody would care to obtain the gov't certification.

But no, instead the group with guns gets more and more powerful and claims the right to choose what business people can start by setting arbitrary restrictions and waving their guns if you forge your own path.

I hope you've not fooled yourself into thinking that anything you said is not something I've not considered over the last 25 years or so.  Everything is so binary with you people.  It gets tiresome.