Re: Intro

Dwolla partnered with a credit union so they fall under their compliance. A
lot of Bitcoin companies want to partner with a bank or credit union so
they are operating legally but also to hold the US dollars. There have been
a bunch of bitcoin exchanges where they didn't have a partnership with the
bank and the bank decided they didn't want to hold their money. They then
closed the bank account and sent the exchange a check. Bitfloor was an
exchange that happened to but the credit union is actually sending payments
to the users individually and first verifying their identity.
http://news.cnet.com/8301-1023_3-57580163-93/bitcoin-exchange-bitfloor-halts-operations-shuts-down/
As
I was sending this email, I just saw that Tradehill announced their
partnership with a credit union.

Partnering with a bank, credit union or a company that already has the
money transmitting licensing seems to be the fastest and least expensive
way to become compliant. Also I've heard that it may be the best way to
eventually get CA and NY state licensing because you can legally
demonstrate how you are a legitimate business (of course stringent KYC and
other regulatory compliant procedures are in place). For CA, you have to
apply to even apply for licensing and I believe the company needs a million
dollars in the bank.


On Sun, Aug 25, 2013 at 10:19 PM, Manu Sporny <msporny@digitalbazaar.com>wrote:

> On 08/23/2013 12:05 PM, Margaux Avedisian wrote:
> > I just recently joined the group. My background is from the startup
> > world on the business side opposed to technical. I've known about
> > Bitcoin for a while but really got into it when I helped relaunch the
> > first American digital currency exchange as VP of Business Development
> > and Client Services, Tradehill.  I then was CEO and Co-founder of
> > another digital currency exchange.
>
> Hi Margaux, welcome to the group!
>
> I spoke w/ Margaux last week and she has a really interesting, and
> potentially very helpful background for the work that this group is
> doing. Specifically, she adds something that this group doesn't have a
> very good grasp on, which is an understanding of the legal landscape
> around running what's called a Money Service Business (MSB) and
> knowledge about Money Transmitter law in the USA.
>
> In a way, the technology side of what we're doing is much easier than
> the legal side of it. The more we get involved with building these
> technologies and trying to bring Bitcoin into the mix, the more we keep
> bumping into regulatory issues that need to be addressed. Some of these
> regulatory issues may be solved by technology that this group is working
> on. Some of it is a human problem, which no technology can address.
> Teasing one out from the other will be important to the success of the
> technologies that this group is working on.
>
> There is the basic Know Your Customer (KYC) and Anti-Money Laundering
> (AML) stuff that comes with running a money transmission service on the
> web, which most of the stuff we're working on either brushes against or
> runs into head-first. Then there are the trickier Money Service Business
> (MSB) and Money Transmitter (MT) regulations, which are difficult to
> interpret on a state-by-state basis.
>
> For example, why is Dwolla allowed to transfer money between people, but
> is not classified as a Money Transmitter?
>
>
> http://www.themembersgroup.com/news/tmg-in-the-news/dwolla-veridian-cu-describe-and-defend-their-strange-symbiosis/
>
> It's questions like these that we've had a hard time answering in the
> past with any amount of certainty.
>
> -- manu
>
> --
> Manu Sporny (skype: msporny, twitter: manusporny, G+: +Manu Sporny)
> Founder/CEO - Digital Bazaar, Inc.
> blog: Meritora - Web payments commercial launch
> http://blog.meritora.com/launch/
>