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Author Topic: A suggestion to Bitcoin businesses as Bitcoin grows up ... Business Accounts  (Read 825 times)
TangibleCryptography
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July 11, 2012, 01:23:12 PM
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It is important to design for the creation/registration of  business accounts when designing Bitcoin websites and services.  AFAIK no exchange has an option for making an account under the name of a business.  The same limitation applies to sales portals like bitmit.net.  Kudos to bitpay.com they are ahead of the game (which makes sense given their likely clientele). If you go to Bank Of America website you can open a checking account in the name of an individual, jointly between two individuals, in the name of a trust, and in the name of a company.  If you buy gold from APMEX you can purchase it in the name of a business or other legal entity.  Hell even Dwolla & PayPal (with all their faults) gave us the capability to register our account under the name of our LLC.  Bitcoin related accounts shouldn't be handled any differently. Sure we have and can continue to "get by" using personal accounts of directors or employees for company business but it is sloppy.   There should be an option at registration to create an account in the name of the actual legal which will be using the account.  For AML/KYC requirements, information on the person(s) who have the authority to act of behalf of the entity can still be collected.


There are a couple of reasons the status quo just won't cut it.  The first is perception; it just looks sloppy.  "Oh business account? Just create an account under the name of the person who will be using it."  What if that employee leaves?  What the employee decides to take the funds in "in their name" when they leave? Smiley  Does anyone thinks Amazon is going to accept the risk of have $10,000,000 in accounts receivable under an employees name?


Another reason is the legal implications of inaccurate account registration.  I am not sure about other countries but in the US there are certain legal and tax implications of co-mingling business and personal funds.  The most severe would be the IRS or courts considers the LLC/Corp to not be a distinct legal entity and strips away the tax and liability shield.  To safeguard against this I have two accounts at most exchanges.  One for my personal assets and one for assets owned by Tangible Cryptography.  Still I would feel better if on the profile page it said

Quote
Account Type: Business Account
Entity Type: Limited Liability Company
Name: Tangible Cryptography LLC


We also need to consider that inaccurate records increase the chance of human error. I recently had $13K in international wires bounce because of a clerical error.  The bank account is in the company's name but when the exchange wired out funds they accidentally used the name on the account profile not the name on the bank account.  Accidents happen and I am relieved that the funds will arrive (albeit delayed) but if the account was properly recorded it likely never would have happened.  Yes we really are an LLC and the bank accounts are owned by Tangible Cryptography LLC, a distinct legal entity under US law from the founder and owners.


Proper account registration decouples access from ownership and that paves the way for the development of more robust enterprise grade platforms.  Eventually it will be important to have exchange (and other online service provider) accounts that have multiple logins and allow granular permissions/rights.  As employees join, leave, or have their roles change the permissions and RISK that comes with them could be managed.  An employee acting as a trader doesn't need the ability to remove funds from the account so the account is more secure if he can't. Multiple logins also eliminate the need for password sharing, enable independent 2 factor authentication, and provide better auditing capabilities.  Using shared accounts is just all around bad from a risk management and auditing perspective.  Imagine a scenario where ten employees of a hedge fund all share the same MtGox login and then a quarter million bitcoins are removed from the account.  Whodunit?  Given the irreversible nature of Bitcoin platforms which allow good risk management and auditing are a requirement not an optional feature.


No I don't expect this tomorrow and I am not slamming anyone for not having that capability but hopefully it is something that Bitcoin service providers are thinking about.  I am also curious how other companies handle the lack of business account registration for their own accounts.
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July 11, 2012, 03:22:03 PM
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Excellent points.
Bitcoin businesses mostly run by amateurs (not that it's bad or anything) so there definitely a learning curve how to set up and run a business properly and to deal with customer accounts/records.

Multiple logins per account and user rights management is an added extra cost on development side so new non-established services naturally dismiss it when getting off a ground.

But for well established and reputable businesses it is definitely something worth considering to implement.
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