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Author Topic: 2013-07-25 Banking Day: Bitcoin Exchange Opens in Hong Kong  (Read 1310 times)
n8rwJeTt8TrrLKPa55eU
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July 25, 2013, 12:06:10 PM
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Australian banking portal behind a regwall so I'll save you the trouble.

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Anti-money laundering and know-your-customer compliance is easier for banking and financial institutions when they deal with virtual currency exchanges rather than cash, says the founder of what may be Hong Kong's first licensed Bitcoin exchange.

Aurélien Menant, a former investment banker at Société Générale and now chief executive and founder of Gate Digital Services, said Bitcoin's traceability feature would help institutions with compliance and risk management.

"It is very similar to what they do now. If you applied the same AML, KYC and counter-terrorist financing [CTF] rules that banks now have, [Bitcoin transfers] are even more reliable than cash because there is record of the transaction and you can trace the internet protocol addresses of the two parties to the transfer," Menant said.

Gate Digital Services is the parent company of Gatecoin, which aims to be Asia's first licensed digital currency exchange.

"You can really know where the money was, where it went and who was the final recipient of the funds. It is more traceable than cash," Menant said. "The only different thing so far, for banks, is that they will be dealing with people [who are] not in the same country as them, so they need to find alternative ways of identifying and certifying they are who they claim to be."

His said financial institutions should handle Bitcoin in the same way that they would treat normal currency cash, adding that since Bitcoin was more reliable and traceable than cash, it should please regulators.

"It is just like a bank account, although the registers are different. There is [for Bitcoin] a block chain register of all transactions, so you can see the IP addresses [of participants]," Menant said.

Trading in virtual currencies is likely to be covered by Hong Kong's anti-money laundering (AML) laws.

The use of virtual currencies and their potential AML risks was highlighted in May, when the US government closed Liberty Reserve, a digital currency exchange, and arrested several of its founders on money laundering charges.

Sydney-based Technocash was forced to close its doors and put its business up for sale after banks cut off its accounts in the wake of the Liberty charges.

While the use of Bitcoin and other related electronic currencies raises AML and customer due diligence issues, they may not necessarily be the same thing.

"AML is not an issue related to Bitcoin, but to a lack of KYC and transaction-monitoring policies, as we saw recently with Liberty Reserve, which was a regular money transmitter," Menant said.

"Liberty Reserve was not applying any AML and KYC procedures, it was transferring US dollars, and [it] was actually much closer to Western Union than to Bitcoin," he said.

Although some see Bitcoin as an investment, Menant said that at its core it was a secure, traceable payment mechanism. "If exchanges were fully compliant with international AML standards, it would be safer and cleaner than cash."

Menant said that the Liberty Reserve case had had a considerable impact on Bitcoin-related activities.

"On one hand, and in a short-term perspective, it makes it harder for Bitcoin exchanges like us to develop and to find partnerships with financial institutions. On the other hand, and from a longer-term point of view, it puts the stress on the need to apply – and the benefits of – AML policies," he said.

Menant said he understood the bad reputation Bitcoin had acquired and said it was well deserved. However, this was mostly due to a lack of control and regulation, he said.

"It is true that in the past, because there were no AML or records requirements [imposed] on Bitcoin, money laundering was possible because there were... no controls. So, it may have been a nice tool to launder money," Menant said.

"AML issues in each country are different, and, so far, only the US considers it [Bitcoin] like a real currency," Menant said. He said that when all exchanges abided by AML rules, money laundering would no longer be possible.

This article was first published by the Compliance Complete service of Thomson Reuters Accelus.
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Raoul Duke
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July 25, 2013, 12:09:30 PM
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"There is [for Bitcoin] a block chain register of all transactions, so you can see the IP addresses [of participants]," Menant said.

We have a Bitcoin expert there, that Aurélien Menant... Roll Eyes

n8rwJeTt8TrrLKPa55eU
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July 25, 2013, 12:24:39 PM
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"There is [for Bitcoin] a block chain register of all transactions, so you can see the IP addresses [of participants]," Menant said.

We have a Bitcoin expert there, that Aurélien Menant... Roll Eyes

Have never met him or had any clue this exchange was being built until now, but I'd like to think that he knows better and is just giving the press a more "optimistic" interpretation in order to not cause controversy or get shut down.  The whole article reads like a giant piece of rear-covering in advance.  Good luck to him, we need more exchanges, especially in China.
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July 25, 2013, 01:00:29 PM
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"This article was first published by the Compliance Complete service of Thomson Reuters Accelus." - interpret the story with caution, that source has a huge vested interest:

http://thomsonreutersaccelus.wordpress.com/tag/bitcoin/
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July 25, 2013, 01:44:52 PM
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"There is [for Bitcoin] a block chain register of all transactions, so you can see the IP addresses [of participants]," Menant said.

We have a Bitcoin expert there, that Aurélien Menant... Roll Eyes

I would venture to guess there are around 5 people using Bitcoin who are sufficiently privacy-oriented to cover every trace of their transaction. Even something as simple as broadcasting a transaction would completely reveal IPs, and patterns of transaction broadcasts, even if addresses are not invoked directly, can easily link an address to an IP.
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July 25, 2013, 10:14:40 PM
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I have met him... In Hong Kong...

Unfortunately the IP quote is complete nonsense......, he was also unfortunate enough to use  budget hosting for his website...
Which promptly went off line for 24 hours whilst the DNS was switched over... heady days for bit-coin over here in Hong Kong.

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