2013-06-21 AmericanBanker.com - In-Person Bitcoin Exchanges Are Thriving

[Stephen Gornick]

In-Person Bitcoin Exchanges Are Thriving
by Jon Matonis

In-person bitcoin transactions allow you to meet interesting new people in your area – and discuss bitcoin.
[...]
For the casual traders seeking more privacy, I recommend in-person trading through LocalBitcoins.com.
[...]
LocalBitcoins has steadily added new cities and market depth. 'We currently have 142 countries and 1700 cities,' [founder Jeremias Kangas] recently told Bitcoin Magazine, 'but that most definitely isn’t enough. We want to expand to at least 170,000 cities'.
[...]
LocalBitcoins offers an escrow facility and a rating system both of which can be extremely valuable for the first-time trader.
[...]
The bitcoin provider sets the price markup and types of payment that will be accepted. [...] Given the robustness of trade in some large urban areas, it is entirely possible to earn a living from buying and selling bitcoin using the LocalBitcoins matching platform.
[...]
In the general classification of commodity, bitcoin's trade is similar to any other collectible item, such as antique diamonds, celebrity autographs, moon rocks, Buddha figurines, and baseball cards.
[...]
Ultimately, until physical paper cash is outlawed, bitcoin will still be bought and sold in person just like any other commodity.

 - http://www.americanbanker.com/bankthink/in-person-bitcoin-exchanges-are-thriving-1060061-1.html?zkPrintable=1&nopagination=1

[Stephen Gornick]

In the U.S., FinCEN's guidance describes trading bitcoins or cash as being a money transmitter.  Money transmitters are required to register with FInCEN as a Money Service Business (MSB).    There is an exception however.  There is a limitation in the regulations for infrequent trading (i.e., five times or less per year, and not done for profit):

Limitation On MSB Regulations For Infrequent Trading
 - http://www.bitcoinmoney.com/post/52305091840

Thus there is then valid reason for (most of) these thousands of traders to be active without regard to FinCEN's guidance.  

[Bitware]

In the U.S., FinCEN's guidance describes trading bitcoins or cash as being a money transmitter.  Money transmitters are required to register with FInCEN as a Money Service Business (MSB).    There is an exception however.  There is a limitation in the regulations for infrequent trading (i.e., five times or less per year, and not done for profit):

Limitation On MSB Regulations For Infrequent Trading
 - http://bitcointalk.org/index.php?topic=240015.0

Thus there is then valid reason for (most of) these thousands of traders to be active without regard to FinCEN's guidance. 

that link goes to this thread...

[Stephen Gornick]

That in American Banker, cheeky fecker This Bitcoin things getting way out of hand, better put on more pressure on the branches to close the accounts of these exchange sites.... and unleash a hydra.

It gets to be diminishing returns.

Like when Dwolla enacted the 30-day probation before transfers could be made to Mt. Gox and other Bitcoin exchanges the result was the "Dwolla <--> Mt. Gox" thread in which person-to-person trading between forum users absorbed much of that demand from those with less than the thirty days.   Then Dwolla proceeded to try to figure out which of their customers were performing these person-to-person trades  and extend the "high risk merchant" status to those accounts.  It is kind of like whack-a-mole.

So banks close the accounts for Bitfloor, Bitcoin-To-Cash, Bitspend, etc.  but at the same time they operate account-to-account (A2A) transfer methods which facilitates person-to-person trading of Bitcoins via the banking system:
 - http://en.bitcoin.it/wiki/A2A_Transfer_Methods

[Stephen Gornick]

that link goes to this thread...

Doh, sorry!  Fixed.   The link is:
 - http://www.bitcoinmoney.com/post/52305091840