DGC – Page 5 – — Covering digital currencies, precious metals and online payments

Mt. Gox registers with FinCEN

Julia Dixon on July 1, 2013

Late last week the Japan based exchange received an MSB license from US financial regulator FinCEN, license #31000029348132.

The exchange market leader had a run-in with US regulators earlier in the year when their US subsidiary, Mutum Sigillum LLC, had its bank account and Dwolla account shut down due to a lack of licensing. Soon afterwards the site changed their policies requiring all customers wishing to perform any USD withdraws/deposits to first verify their identity. As the majority of Mt. Gox’s businesses is in USD/BTC trades, their decision to appease US regulators is unsurprising.

The e-gold story

Julia Dixon on June 27, 2013

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.

California Accuses Bitcoin Foundation of Unlicensed Money Transmission, Issues Cease and Desist Order

Julia Dixon on June 23, 2013

Update: Read the Bitcoin Foundation’s responce here.

Via Jon Matonis/Forbes

Directly following last month’s Bitcoin 2013 conference event in San Jose, CA that brought decent revenue into the state, California’s Department of Financial Institutions decided to issue a cease and desist warning to conference organizer Bitcoin Foundation for allegedly engaging in the business of money transmission without a license or proper authorization.

Bitcoin merchant service BitPay temporarily stops using Mt. Gox for Bitcoin exchange rate

Julia Dixon on June 23, 2013

Via the BitPay website…

Effective immediately, BitPay has temporarily stopped using Mt. Gox for determining the exchange rate for our invoices.

The rate calculation that BitPay uses for each invoice is now as follows:

1. Pull the full Level II market depth, on the bid side, from multiple exchanges.

2. Merge the market depths into one Consolidated Level II table.

3. Calculate the blended clearing price for the amount of the invoice, assuming an auto-routing market sell order across all exchanges, with zero commission.

BitPay is committed to offering the fairest possible rate to the buyer, while minimizing our counterparty risk.

Mt. Gox ‘suspends’ US dollar withdrawals

Julia Dixon on June 23, 2013

In an announcement made late last week, Mt. Gox said that they have temporarily halted US dollar withdrawals from the exchange due to increased volume and the pressure this has placed on their banking partners.

Over the past weeks Mt. Gox has experienced rising volumes of deposits and withdrawals from established and upcoming markets interested in Bitcoin. This increased volume has made it difficult for our bank to process the transactions smoothly and within a timely manner, which has created unnecessary delays for our global customers. This is especially so for those in the United States who are requesting wire transfer withdrawals from their accounts.

Bitcoin and the IRS

Julia Dixon on June 20, 2013

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.

Can you trust an anonymously run business??

Julia Dixon on June 20, 2013

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?

Part II of GoldBroker’s interview series on gold market manipulation

Julia Dixon on June 18, 2013

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.

Ukraine freezes WebMoney bank accounts

Julia Dixon on June 17, 2013

Late last week the Ukrainian Ministry of Incomes and Fees froze bank accounts of WebMoney in the Ukraine.

A search of WebMoney’s Keiv office allegedly revealed a number of regulatory violations. It seems authorities are concerned that WebMoney was issuing electronic money without authorization from The National Bank of Ukraine.

Authorities seized computer equipment and “Over 60 million Hryvnas ($7.5 million) held in the bank accounts of companies which were part of in the illegal system,” according to the Ministry of Incomes and Fees.

Update: WebMoney Ukraine resumes transactions.

Bangla-Pesa: Kenyan community currency faces legal action

Julia Dixon on June 12, 2013

Bangla-Pesa is a community currency used in the settlement of Bangladesh in Kenya. The currency is only used among roughly 200 small businesses which are members of a community group. The projects co-founder, Will Ruddick, describes Bangla-Pesa as “a business to business voucher system and simply helps business record their exchange of excess capacity, … which provides a means of payment that is complementary to official money.”

The currency drew the suspicions of local police late last month after a news report linking the currency to a Kenyan separatist group, Mombasa Republican Council or MRC. Ruddick responded to this claim saying “Ours is a noble cause of helping the locals and not what was reported in the media last week, … We are not MRC and we do not support any cause of going against the government’s wish.”