— Covering digital currencies, precious metals and online payments
Complementary currencies can help eradicate poverty.
Proving that may be difficult in complex economies, due to the high number of factors influencing outcomes. But in an African slum with little of the national currency available, supplying residents with an alternative currency has a positive effect that is obvious, immediate and incontrovertible.
As Bitcoin continues its move towards the mainstream and Bitcoin businesses experience rocky relations with bankers and regulators, now is a good time to look at previous leaders in the digital currency world.
In the late 90’s and early 2000’s, e-gold was the industry leader. As one of the world’s first successful online payment systems e-gold was a pioneer using many now standard practices such as SSL connections and API’s. Brought down by a run in with regulators in 2008 the e-gold story is required reading for anyone involved in the digital currency world.
Sent in by Wikipedia editor Cadwallader, below is a thoroug review of the e-gold story.
Last month the GAO, Government Accountability Office, produced a report on ‘Virtual Currencies’ and tax compliance. The report urges the IRS to look into the use of virtual currencies and release guidelines on taxation of income earned via these currencies.
The report correctly notes that virtual currency transactions are similar to cash or barter transactions. There are no third parties involved whose responsibility it is to report the transaction and transactions of this sort making “underreporting, mischaracterization, and evasion” much easier.
This does signal that the IRS will be keeping a closer eye on the Bitcoin economy, but there is nothing terribly surprising here; the IRS wants a share of your income…however you earn it.
US authorities have begun to enforce regulation on Bitcoin businesses making some Bitcoin related services illegal or simply not feasible. Regulators have also expressed, and demonstrated, a willingness to prosecute off-shore financial businesses who do not adhere to their policies.
In this situation many Bitcoin businesses are faced with a choice, comply or go underground. But how can you run a business ‘underground’? How do you establish trust when there is no authority to give you a stamp of approval? How do you gain customers when your users know that you can simply disappear with their money?
In part two of a three part series on market manipulation GoldBroker’s CEO Fabrice Drouin Ristori interviews Jim Willie. Via GoldBroker.com
Fabrice Drouin Ristori: How long can the manipulation of the precious metal markets last ?
Jim Willie: Rather than focusing on the time spectrum, think instead on the event spectrum. Focus not on a sequence of time, but instead on an event schedule in a chain. Systems are sustained by the corrupt players, institutions, and policies. The Gold manipulation will continue until the Gold market is totally broken, until the big banks that control it are totally broken, or until the USDollar & USTBond structures are totally broken.
Read More about Part II of GoldBroker’s interview series on gold market manipulation
One of the more worrying aspects of the Liberty Reserve takedown was the constant insistence by US authorities that Liberty Reserve was only a money laundering service with no legitimate use.
Regulators were very concerned with LR’s anonymity which was a serious draw to the service for many people. But what was likely an even bigger factor in LR’s success was its irreversible payments. This is a very important feature for businesses that are at risk of payment fraud or chargebacks, and it’s a feature that is not available in the current regulated financial system.
In the case of Liberty Reserve, It’s not the individual infractions committed by clients of Liberty Reserve that are worrisome to the regulators, it’s the fact that a semi-reliable platform for private payments existed in the first place.
Liberty Reserve provided a service that had a true market demand from legitimate business sectors and from non-criminals, notwithstanding the government’s claim that “virtually all” its business was illicit. If banks and traditional financial institutions still respected basic client privacy and facilitated some form of digital payments that did not always involve harmful reversibility to the merchants, then companies like Liberty Reserve wouldn’t even be necessary.
Read More about Liberty Reserve’s irreversibility was a legitimate and important service
CoinDesk does an excellent job of pointing out the very different standards that entrenched TBTF financial institutions are held to as compared to those outside the system. Those choosing to operate alternative financial businesses are going to face many challenges. In fact, if you’re considering running a digital currency exchange you have only 3 choices…
Indeed it is time for digital currency businesses to grow up and make some tough choices.
The relationship between big banks and their regulators is pretty dubious, to put it mildly. But expecting federal investigators to give Bitcoin exchanges the same free ride is childishly naive.
When HSBC got caught laundering money for drug dealers and terrorists, it promised regulators it would improve controls.
It didn’t.
Read More about CoinDesk: Bitcoin exchanges need to grow up fast
The Defendants
Liberty Reserve S.A., Arthur Bodovsky (owner), Vladimir Kats (left the business in 2009), Ahmed Yassine Abdelghani (left the business in 2009), Allen Esteban Hidalgo Jimenez, Asseddine El Aminr, Mark Marmilev, Maxim Chukharev.
The Charges
The Asset Company’s Head of Research Jan Skoyles explains where the gold price is set by looking at the three different gold markets; the futures market, exchange traded products and the physical gold market
On April 12th 3.4 million ounces (100 tonnes) of gold was sold in the US futures markets. This was just for starters, the main, side and dessert appeared over the following hours and the next session on the Chicago Mercantile Exchange (COMEX).
As those in the West holding paper gold stood frozen watching the price tick further downwards, those in the East and others looking to buy physical gold, went on a shopping spree. Premiums on physical gold in China, India, Vietnam and across Asia hit highs associated with economic and geopolitical crises. Dealers struggled to keep up with demand.
Read More about The Real Asset Co: Unveiling the gold market’s working parts
As a part of a three part series GoldBroker’s CEO Fabrice Drouin Ristori will be asking the same market manipulation questions of Chris Powell, Egon Von Greyerz and Jim Willie. Below is the interview with Chris via GoldBroker.com
Fabrice Drouin Ristori:How long can the manipulation of the precious metal markets last ?
