State Regulation Changes the Game for Bitcoin Sellers in ...

Which crypto exchanges are usable by residents of Washington State?

Washington state put in place some strict regulations on July 23 of this year that prompted many exchanges (e.g. Bitfinex, Bitstamp, Kraken, Poloniex) to stop doing business with customers who reside in Washington state. The regulations require crypto exchanges to operate as a "money transmitter" under Washington state law, which requires things like: holding a certain amount of currency in reserve, having a surety bond of a certain value, and registering with the state's Department of Financial Institutions. The regulation exists ostensibly to protect consumers, but many just see it as a hindrance to crypto trading. I don't want to discuss the law itself, but did want to provide background for those not in Washington that may not know about our regulatory restrictions.
These are the exchanges that I know do business in Washington state:
Are there others?
submitted by zax9 to CryptoCurrency [link] [comments]

China's recent guidance great for Bitcoin in China, terrible for the US.

America believes that yesterday's People's Bank of China statement on Bitcoin constituted a "crackdown." They said it's not a currency, banks can't touch it, and payment processors can't facilitate transactions. Therefore, China is trying to reign in Bitcoin. This is completely false. With this announcement, China now has one of the most favorable and friendly regulatory environments in the world. China has acted quickly and decisively, and established very clear permissible behaviors re: Bitcoin (esp. vis-a-vis the US). And the US, be it the media or the government, doesn't understand this development.
Generally speaking, China had to balance two vital concerns. One, how to mitigate Bitcoin's potential to circumvent the State Administration of Foreign Exchange. (People's Bank controls all foreign exchange for the Chinese banking system). And two, how to corner and keep as much Bitcoin wealth as possible.
In declaring Bitcoin a "virtual commodity" AND expressly saying Bitcoin is NOT a currency, they avoided the utter mess of having to integrate Bitcoin into current foreign exchange controls. It's a pretty sizable challenge to both allow internal Chinese bitcoin transactions, and forbid all international bitcoin transactions. Even if that was possible, they certainly have no idea how to do it at present. Further, had they permitted banks and payment processors to do anything involving Bitcoin whatsoever, they would've tremendously exacerbated the wealth flight problem. They can't declare it a currency without regulating it as a fiat currency, and they can't permit banks and payment processors to handle it w/o risking capital flight. Assuming China's goal is to not blow up their own foreign exchange controls, which seems likely, a strict separation between Bitcoin and bank is really the only option they had.
In addition, by declaring Bitcoin a virtual commodity and placing its regulation under the Ministry of Industry and Information Technology (MIIT), China hasn't burdened Bitcoin's growth with banking regulations and controls. Now, exchanges like BTCChina know they don't have to become a bank or financial institution - they are simply a virtual commodity company. MIIT is the regulatory body that approves and manages, essentially, anything having to do with the internet (save for content). While "payment processors" cannot handle Bitcoin because it's not a currency, facilitating virtual commodity (which is "private property") trading and exchange (even for goods and services) looks to be perfectly legal. Expect the MIIT to approve a "payment processor" for BTC as something like a "virtual commodity processor." This would now be a "natural" expansion of BTCChina's business platform.
So this guidance achieves both goals; China reduces the risk of capital flight while also establishing the regulatory future of BTC as free of undue financial institution regs. The US has effectively gone in the opposite direction - since BTC can be defined various ways, and there have been multiple "official" declarations of what it is, various federal agencies / regulators are involved, and most are bewildered. Exchanges must have banking relationships, have state-by-state money transmitter licenses, surety bonds, etc... BTC faces nearly all the financial services barriers-to-entry the US can muster. Not so in China.
Separating Bitcoin and bank, expressly defining BTC, and assigning a regulator are brilliant moves by the Chinese. The rules and regulations around "virtual commodities" are now free to develop unencumbered by the Banking system's controls. Unlike the US, China has laid the legal and regulatory framework that can best facilitate Bitcoin growth.
EDIT:
A currency is a contract. The terms and conditions of state currency are: 1) issued and managed by a central government, 2) used to pay debts to the state. China used these two contractual conditions to DEFINE a "currency." Therefore, BTC cannot be a currency: "Bitcoin...does not have equal legal status with currency, and it cannot and should not be circulated as currency on the market."
Nevertheless, China did not ban CONTRACTS. In fact, they created a new one, a "virtual commodity." BTC is a virtual commodity. Virtual commodities, such as BTC, can be used for transactions between people.
submitted by gidbit to Bitcoin [link] [comments]

China's recent guidance great for Bitcoin in China, terrible for the US.

(Originally posted to bitcoin...the 10th circle of hell since Wednesday) (Thank you mods for this board.)
America believes that yesterday's People's Bank of China statement on Bitcoin constituted a "crackdown." They said it's not a currency, banks can't touch it, and payment processors can't facilitate transactions. Therefore, China is trying to reign in Bitcoin. This is completely false. With this announcement, China now has one of the most favorable and friendly regulatory environments in the world. China has acted quickly and decisively, and established very clear permissible behaviors re: Bitcoin (esp. vis-a-vis the US). And the US, be it the media or the government, doesn't understand this development.
Generally speaking, China had to balance two vital concerns. One, how to mitigate Bitcoin's potential to circumvent the State Administration of Foreign Exchange. (People's Bank controls all foreign exchange for the Chinese banking system). And two, how to corner and keep as much Bitcoin wealth as possible.
In declaring Bitcoin a "virtual commodity" AND expressly saying Bitcoin is NOT a currency, they avoided the utter mess of having to integrate Bitcoin into current foreign exchange controls. It's a pretty sizable challenge to both allow internal Chinese bitcoin transactions, and forbid all international bitcoin transactions. Even if that was possible, they certainly have no idea how to do it at present. Further, had they permitted banks and payment processors to do anything involving Bitcoin whatsoever, they would've tremendously exacerbated the wealth flight problem. They can't declare it a currency without regulating it as a fiat currency, and they can't permit banks and payment processors to handle it w/o risking capital flight. Assuming China's goal is to not blow up their own foreign exchange controls, which seems likely, a strict separation between Bitcoin and bank is really the only option they had.
In addition, by declaring Bitcoin a virtual commodity and placing its regulation under the Ministry of Industry and Information Technology (MIIT), China hasn't burdened Bitcoin's growth with banking regulations and controls. Now, exchanges like BTCChina know they don't have to become a bank or financial institution - they are simply a virtual commodity company. MIIT is the regulatory body that approves and manages, essentially, anything having to do with the internet (save for content). While "payment processors" cannot handle Bitcoin because it's not a currency, facilitating virtual commodity (which is "private property") trading and exchange (even for goods and services) looks to be perfectly legal. Expect the MIIT to approve a "payment processor" for BTC as something like a "virtual commodity processor." This would now be a "natural" expansion of BTCChina's business platform.
So this guidance achieves both goals; China reduces the risk of capital flight while also establishing the regulatory future of BTC as free of undue financial institution regs. The US has effectively gone in the opposite direction - since BTC can be defined various ways, and there have been multiple "official" declarations of what it is, various federal agencies / regulators are involved, and most are bewildered. Exchanges must have banking relationships, have state-by-state money transmitter licenses, surety bonds, etc... BTC faces nearly all the financial services barriers-to-entry the US can muster. Not so in China.
Separating Bitcoin and bank, expressly defining BTC, and assigning a regulator are brilliant moves by the Chinese. The rules and regulations around "virtual commodities" are now free to develop unencumbered by the Banking system's controls. Unlike the US, China has laid the legal and regulatory framework that can best facilitate Bitcoin growth.
submitted by gidbit to BitcoinSerious [link] [comments]

Prediction: Coinbase will be shut-down...Do not keep coins or funds in Coinbase (or any other exchange or startup) .

I predict that at some point unless something changes, Coinbase (And many, many other Bitcoin related businesses) will eventually be shut down/investigated just like Mutum Sigillum LLC currently is.
The reason is simple: Almost all of the current wave of bitcoin -related startups (even well-funded ones) seem to be simply ignoring the plain-english wording in the FinCEN and State guidelines for the regulatory environment.
For example: From Coinbase's FAQ:
Coinbase is not a money transmitter. Coinbase assists its users in Bitcoin transactions.
Then, from FinCEN regulations and guidelines:
By contrast, a person that creates units of convertible virtual currency and sells those units to another person for real currency or its equivalent is engaged in transmission to another location and is a money transmitter. In addition, a person is an exchanger and a money transmitter if the person accepts such de-centralized convertible virtual currency from one person and transmits it to another person as part of the acceptance and transfer of currency, funds, or other value that substitutes for currency.
What does coinbase DO if not *accept virtual currency from one person (itself or sellers) and transmit it to others in exchange for USD?
Even if there was no USD involved, EVER, (which it clearly is), then we have
The definition of a money transmitter does not differentiate between real currencies and convertible virtual currencies. Accepting and transmitting anything of value that substitutes for currency makes a person a money transmitter under the regulations implementing the BSA.
The term "money transmission services" means "the acceptance of currency, funds, or other value that substitutes for currency from one person and the transmission of currency, funds, or other value that substitutes for currency to another location or person by any means.
This strongly implies that even if you simply assist users to transfer BTC, or hold BTC, or manage online wallets (like blockchain.info), then you are operating as a money transmitter under the law.
So what do money transmitters have to do to comply?
1) they have to be licenced, in EVERY state which they do business in.
2) They have to register with FinCEN and are subject to FinCEN regulations.
3) In particular, among other things, they must:
Before concluding any transaction with respect to which a report is required under § 1010.311, § 1010.313, § 1020.315, § 1021.311 or § 1021.313 of this chapter, a financial institution shall verify and record the name and address of the individual presenting a transaction, as well as record the identity, account number, and the social security or taxpayer identification number, if any, of any person or entity on whose behalf such transaction is to be effected. Verification of the identity of an individual who indicates that he or she is an alien or is not a resident of the United States must be made by passport, alien identification card, or other official document evidencing nationality or residence ( e.g., a Provincial driver's license with indication of home address). Verification of identity in any other case shall be made by examination of a document, other than a bank signature card, that is normally acceptable within the banking community as a means of identification when cashing checks for nondepositors ( e.g., a driver's license or credit card).
When was the last time you supplied a drivers licence and Photo ID to buy bitcoin? Hell coinbase even says EXPLICITLY that they don't intend on obeying this regulation:
We do not guarantee the identity of any user or other party or ensure that a buyer will complete a transaction.
And this doesn't even cover the dozens of different STATE laws, all of which are significantly more complex and onerous, including minimum-asset requirements and surety bond requirements.
Of course, all of this is absolutely asinine. Its totally useless and causes extreme regulation that stifles innovation.
HOWEVER, unless the bitcoin community and bitcoin startups start lobbying to get some of these rules changed, then you have two options if you want to operate a bitcoin-related business in the US:
1) comply with the (idiotic) regulatory environment of legitimate businesses in the united states.
2) Run a black-market business until you get caught and your assets are seized and your customers get shafted by the Fed.
Since all of the current Bitcoin-related enterprises seem to be aiming for option 2), I strongly recommend that anyone in the community avoid storing or holding any kind of long-term value in these systems until a startup shows up that has an interest in actual regulatory compliance or the asinine laws are changed.
submitted by Steve132 to Bitcoin [link] [comments]

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