Thursday, June 4, 2015
Users Outraged Over PayPal Terms and Conditions That Allow ‘Robocalling’
The Bitcoin Community Reacts to the NY BitLicense
JUN 4 DIGEST: California Approves Bitcoin Bill; Kim Dotcom Beats the US in Court
Coinbase to Stop Service in Wyoming Due to ‘Impractical’ Regulations
China Releases World's First ATM with Built-In Facial Recognition
Wednesday, June 3, 2015
Moneytis Launches Open Beta of Global Bitcoin Remittance Service
A new consumer remittance startup is on the block, and it’s bringing bitcoin to new corridors in Europe, China and Mexico.
Freshly out of private beta, Moneytis has now opened its beta to the public. The service allows users to send international transfers from their bank accounts to the receiver’s for a fee of two percent or less. The startup uses bitcoin to send the money to its destination, but users would never know because Moneytis keeps it all in the background.
Users first create an account by filling in basic info and bank account credentials. Next, they select the amount and the type in the email address of the recipient. The money is then deducted from the sender’s account and sent to the person receiving the money. In order to access the money, the receiver has to create his or her own Moneytis account. The startup also claims to use an algorithm to test its fee against other providers, and if a cheaper deal is found, Moneytis will redirect to the competitor’s website.
A Bitcoin Backbone
According to Moneytis co-founder, Etienne Tatur, the idea behind Moneytis came to him after having a difficult time sending money to a friend in China. According to Tatur, they had hard time finding out if his bank would do the transfer and then how much it would cost. After figuring it all out and sending the transfer, they were hit by a sudden change in the foreign exchange rate, adding a huge unseen cost.
When the time came to send his money again, the two decided they would use bitcoin, which for them turned out to be more complex, but cheaper. The bitcoin transfer was enough to inspire them to found Moneytis in early 2014 and make a bitcoin-based solutions without the user-experience issues.
Since then, Tatur and his co-founder Christophe Lassuyt have been developing the company’s money-transfer technology and refining its user experience from feedback gathered from the private beta.
“We are thrilled to release publicly our online solution and to see the feedback of our first users,” said Tatur, Moneytis CTO. “Some of them already used the solution to send money to their family and to pay education fees.”
Niche Market
If you added up all the remittance corridors the startup is operational in, it would come to a sum of tens of billions of dollars, according to 2012 data gathered by the World Bank. But the actual potential remittance market for Moneytis is much smaller.
First, it is a pure digital remittance provider, which is a very small section of the market. Estimates vary, but Ismail Ahmed, CEO of digital remittance provider WorldRemit, said digital represented only of 5 percent of total remittance volume. Second, it currently provides only bank-to-bank transfers, which is probably more limiting as it alienates a large amount of remitters who send and receive cash via physical stores and the online remitters who favor quickness.
All things considered, if Moneytis was a remittance provider where the user actually needed to use bitcoin it would be in a much more niche market.
But it’s a start, and already, in terms of number of corridors, Moneytis is among the head of the pack when it comes to bitcoin remittances. In order to grow, the startup is planning to expand beyond bank-to-bank transfers and add more payment options in the future.
Chamber of Digital Commerce: More Action from FinCEN is Inevitable
The FinCEN action against XRP II LLC (Ripple) took many by surprise early last month, although many in the Bitcoin community were not shocked to see an organization with such close ties to a digital token face backlash for “willful violations” of the Bank Secrecy Act (BSA) and failure to implement appropriate anti-money laundering (AML) procedures.
The Chamber of Digital Commerce has been quick to gain an in-depth understanding of the action taken against Ripple Labs, and the Washington, D.C.-based trade association plans to discuss the implications of the regulatory action in a public briefing June 4th at 1 p.m. EDT.
Before their briefing, the Chamber of Digital Commerce was willing to answer a few questions related to the Ripple case via email. Chamber of Digital Commerce President Perianne Boring provided input on the Ripple case with added assistance from Carol Van Cleef of the trade association’s advisory board.
Changes to the Ripple Protocol?
In the minds of many digital currency advocates, the most troubling aspect of the Ripple action was the agreement to make regulatory compliant changes to the Ripple protocol. Of course, as Boring pointed out, Ripple Labs seemed to disagree with this assessment of the deal with FinCEN via a piece in the Wall Street Journal. The WSJ article contained statements from Ripple Labs Bank Secrecy Act Officer Antoinette O’Gorman:
“All that Ripple had agreed to, she said, was to build enhanced ‘analytical transaction monitoring tools for monitoring transactions across the protocol’ and to furnish information drawn from that monitoring to U.S. authorities upon request. The changes had ‘nothing to do with the protocol itself,’ she said.”
Boring added that this would be a key point of discussion during the Thursday briefing. When speaking specifically about what changes Ripple Labs would have to make due to their agreement with FinCEN, Boring stated:
“This is consistent with FinCEN’s minimum standards for money service businesses, which states that ‘money services businesses that have automated data processing systems should integrate into their systems compliance procedures such as recordkeeping and monitoring transactions subject to reporting requirements.’ Given these expectations, as a practical matter, the analytical tools must either be incorporated into the protocol or be built on top of the protocol to enable the company to monitor transactions.”
More Action to Come from FinCEN
Due to the swift action from FinCEN and their partner agencies on the Ripple situation, it should come as no surprise to find that the Digital Chamber of Commerce also finds more action from FinCEN against various businesses involved with token issuances and crowd sales to be “inevitable.” Boring pointed to a May 6th keynote speech by FinCEN Director Jennifer Shasky Cavalry at the West Coast AML Forum in which the director indicated that a series of supervisory examinations of virtual currency businesses has recently been launched by the IRS.
Boring added:
“Please note that it is the IRS that conducts such examinations for FinCEN. Any deficiencies detected in these examinations are then reported to FinCEN. FinCEN then may decide to take enforcement action. With the laser focus right now on these businesses, we expect more actions are inevitable.”
The president of the Digital Chamber of Commerce also noted, “IRS examinations are not the only way that virtual currency businesses may find themselves vulnerable to enforcement actions by FinCEN.” She pointed to ongoing criminal investigations and even press coverage as two other activities that could trigger an investigation by another regulatory body such as the SEC.
Public Briefing on the Ripple Action
In an effort to bring more clarity to the current regulatory environment in terms of token issuances, crowd sales, and other activities surrounding digital currencies, the Chamber of Digital Commerce is holding an industry briefing on Thursday, June 4 at 1 p.m. EDT (10 a.m. PDT). The key points of the briefing will be to:
- Discuss the implications of the first civil money penalty action against a digital currency company;
- Gain a more in-depth understanding of what it means for companies in the ecosystem;
- Evaluate what steps need to be taken immediately to minimize or eliminate potential violations;
- Assess how to prepare for upcoming Bank Secrecy Act (BSA) examinations by the IRS.
The briefing will be held via telephone, and participants can register before the start of the event to receive the dial-in information.
As part of her final comments, Boring added a few notes about the importance of regulatory clarity in the digital currency ecosystem:
“Investors don’t fear regulation; they fear uncertainly. Gaining regulatory clarity is an important part of the development and growth of this industry.”
In order to help with the ever-changing regulatory landscape in the digital currency industry, the Chamber of Digital Commerce has put together the first AML compliance course specifically designed for businesses involved with bitcoin and other digital assets. Boring noted, “The Chamber will continue to take a leadership role by advancing the public-private sector dialogue, offering educational webinars and training sessions, and serving as a clearinghouse for information sharing within the industry.”
Final BitLicense Rules for New York State Released Today by NYDFS Superintendent Ben Lawsky
New York State Department of Financial Services (NYDFS) Superintendent Benjamin Lawsky today released the final version of the BitLicense regulations, saying that his “gut feeling” was that digital currencies are here to stay.
The BitLicense program to require digital currencies businesses in New York state to operate with a license and report to government has long been in the making and included two revisions with comment periods to allow for public criticism and input.
Many felt that Lawsky had to find a reasonable balance between protecting consumers and allowing digital finance innovators to develop without unnecessary red tape and restrictions.
Lawsky Defends the Need to Regulate
Saying it often “seems like technologists are from Venus and regulators are from Mars,” Lawsky defended the need to “protect consumers” and “root out illicit activities.”
Answering the criticism that anti-money-laundering and fraud regulations already existed, he maintained that digital financial systems are very different from the traditional “disco era” banking system and don’t fit the new reality of fintech.
Changes to Final Version of BitLicense Framework
Lawsky said there were five minor changes to the BitLicense program between the second and third versions:
- Companies do not need to report on minor changes in the way they do business, but do need to report on a “material change” such as changing from making wallets to running an exchange.
- Companies working on fintech software do not need to report, only companies that are holding other people’s money in trust.
- Companies do not have to “cross satisfy” under different programs. If you have a trust charter, you don’t need a BitLicense and vice versa.
- Companies reporting suspicious activities to federal authorities do not have to also report to NYDFS.
- “Passive investors” joining companies do not have to report or get approval. Only a “control person” will need to report to the regulators.
Lawsky noted that his office received 4,000 comments after the first draft was released but only 35 comments after the second draft was released, so they figured they must be closer to “getting it right.”
Who is covered under the BitLicense program
Businesses covered include those “controlling, administering or issuing a virtual currency” with the following exemptions:
- Blockchain technology for noncurrency purposes
- Software developers that aren’t engaged directly in money transmission or exchange
- Miners
- Individual investors
- Merchants who accept bitcoin
- Licensed banks
Criticisms from the Digital Currencies Community
Many businesses and organizations in the Bitcoin space submitted comments to Lawsky’s office noting that the regulations would create a “bitcoin backwater” as digital currency businesses simply move elsewhere to friendlier jurisdictions.
Organizations such as Coin Center and companies such as Coinbase noted that the BitLicense rules simply added another layer of regulations to laws that already exist at the federal level to cover money laundering and fraud.
In addition, many commented that Lawsky’s rules put too high a financial burden on new startups, requiring them to buy a license and pay for reporting to government.
The Revolving Door
As was reported earlier, the Cato Institute and others have criticized Lawsky for taking advantage of his role in developing the BitLicense rules and then moving to the private sector to offer consultation and advice on these same regulations.
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