Bitcoins Join Global Bank Network 84
another random user writes "Bitcoin-Central, a currency exchange that specialises in virtual cash, has won the right to operate as a bank. They got the go-ahead thanks to a deal with French financial firms Aqoba and Credit Mutuel. The exchange is one of many that swaps bitcoins, computer generated cash, for real world currencies. The change in status makes it easier to use bitcoins and bestows national protections on balances held at the exchange. Under European laws, the deal means Bitcoin-Central becomes a Payment Services Provider (PSP) that has an International Bank ID number. This puts it on an equal footing with other payment networks such as PayPal and WorldPay. As a PSP it will be able to issue debit cards, carry out real-time transfers to other banks and accept transfers into its own coffers."
As we speak... (Score:5, Funny)
The NSA are digging their tunnels underneath the bank's head office as we speak.
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You realize "one bitcoin exchange" != "bitcoin", right?
Re:As we speak... (Score:4, Insightful)
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This doesn't create its own currency, either?
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Paypal doesn't create its own currency. There are no "PalBucks". This is just baffling.
One word overdrafts.
PayPal is not a bank (Score:2, Informative)
...It is a soul-less monster.
Re:PayPal is not a bank (Score:5, Insightful)
...It is a soul-less monster.
...there's a difference?
Re:PayPal is not a bank (Score:5, Funny)
Yes. Banks have souls. Many, many souls. Usually sold to them for a new car, nice house, pretty girl, etc. You know, the usual.
With relaxed lending rules, you don't even have to sign in blood anymore.
Re:PayPal is not a bank (Score:5, Funny)
[souls] sold to them for a ... pretty girl
What - you can buy those with a soul? Darn it! Why did I have to be born without one. Curse my ginger genes!
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There are soul-less monsters that are subject to banking laws, and there are soul-less monsters that are not subject to banking laws.
Given a choice, I prefer the first as it's the lesser of evils.
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Actually, it's not really a bitcoin bank (Score:5, Informative)
"However, he said, this protection only applied to balances held in euros rather than bitcoins."
So either you have an Euro account which is treated as a real bank account, or you get a Bitcoin account and are outside those regulations.
In other words, they now have an Euro bank and a Bitcoin exchange combined in the same company, but not a Bitcoin bank.
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They don't claim to be a Bitcoin bank.
Re:Actually, it's not really a bitcoin bank (Score:5, Informative)
They don't claim to be a Bitcoin bank.
But the story title does.
Re:Actually, it's not really a bitcoin bank (Score:5, Funny)
t+1.3 seconds: (after reading the title) Hmmm... this might actually be interesting
t+1minute: (after reading the summary) this is actually cool, a bitcoin bank!
t+3minutes: (after reading the above)... actually it's not that cool at all
t+5minutes: (after replying) I feel like I should get a life...
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They don't claim to be a Bitcoin bank.
But the story title does.
My title says "Bitcoins Join Global Bank Network", which is only half true. You can transfer Bitcoin to your Bitcoin address, and have it set up to convert them to Euro on your bank account instantly as they arrive, and this bank account is joined with the global bank network. Bitcoin can not travel through the global clearing systems banks use for fiat money and arrive at another bank as Bitcoin on a bank account. Bitcoin-Central is now an European Payment Services Provider which exchange Bitcoin as wel
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I'll switch to this bank (PSP for the nitpickers) for my daily banking until my old bank can handle Bitcoin in the same way.
So, never?
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... ponzi scheme!
For Ponzi schemes, "nb4" is indeed the correct strategy.
Not so fast (Score:1)
Ok but if I accept a donation in Bitcoin will US and EU law view it is donated money or thing other than money?
And if as money, then what is the official exchange rate to Euro, USD, or other convertible currency?
Those questions are actually critically important. How do you calculate gift tax if you don't know the real official value of the bitcoins?
Also, if it is not *real* money yet, you will be taxed twice (once you will need to ask an expert to assess the market value of the bitcoin and then pay gift tax
Re:Not so fast (Score:5, Interesting)
I'm not an accountant or tax lawyer, so treat this with suspicion:
US tax law doesn't do much to distinguish between receiving cash and anything with a market value. If it's a gift, you pay the gift tax based on the cash value when you received the gift. If it was compensation for employment, you pay income tax. If it was for an investment, you pay capital gains rate. If it was reimbusement for a business expense, you don't pay tax. If it was for, well, you get the idea. It's not quite that simple, but for a Slashdot explanation, it'll do.
The good news is that you only pay one tax. You can estimate the value yourself. If you estimate too low, the IRS may come knocking. If you estimate too high, thank you for helping to fund our wonderful government with your kind donation.
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Recipients Pay Tax (Score:2)
It's not the case in European countries, the gift recipient obviously pays the gift tax. I think the anonymous comment is entirely wrong.
The EU doesn't write tax laws as Europe doesn't have a "federal" tax. We're still individual nations and taxes are national and local.
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True. But for the single transaction of gift giving, only one tax.
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There is no official exchange rate from EUR to USD either. The only currencies operating with official exchange rates are IRN (Iran), KPW (North Korean won), and a few others. For those there is a black market using completely different rates.
If you check the currency rates from different banks, you will see they differ. Usually by very small amounts, because every time a robot discovers it can buy USD with EUR in one bank and sell in another at a profit, the market rates at both banks will even out. Th
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There is a reference rate [ecb.int] which is "based on a regular daily concertation procedure between central banks across Europe and worldwide". That's what I used when I was earning GBP and paying income tax in EUR.
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As others have said, there is no official exchange rate. I've traded currencies (not very well, but I have), and have done UK tax returns based on the same. Unless there's a more applicable rate (as in, if you're trading at one rate, obviously you can't claim another), any consistent process for calculating the exchange rate can be used (so you can use the average of high/low from a Barclays as long as you always use that, you couldn't suddenly start using the high from another data source halfway through y
PCI Compliance (Score:1)
So it's just a matter of time until they can be audited for PCI compliance [wikipedia.org] then?
Well, passing such an audit would certainly lend legitimacy to Bitcoin, but I think they'd have a lot of hurdles to jump through before they got there...
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PCI compliance is only for credit card payment processors. Bitcoin Central does not (as far as I know) accept deposits with credit cards because of the fraud risks from the completely insecure card-not-present payment system, so PCI compliance is irrelevant. Also, as far as I can tell it doesn't actually mean much beyond basic best practices like having firewalls, being up to date with the latest patches, encrypting card data at rest, having access controls etc. It's hardly a magic bullet.
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On a more serious note, when are you guys going to wake up and see that this is just an old fashioned ponzi scam baited for geek and camoflaged with some handwaving in the direction of a cool bit of Cryptonomicon that was really describing something else? It's not going to pass any sort of compliance without some bribes or other sort of dodgy deal.
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On a more serious note, when are you guys going to wake up and see that this is just an old fashioned ponzi scam ...
Do you have a drop dead simple explanation that would prove that fact to all comers? Does anyone?
That's why this is still going on. Lots of people (not me) are out there playing with this stuff trying to determine if there's any "there" there. I enjoy the show, and think it would be a good thing if it pans out, but the jury's still out. Ponzi Scheme [wikipedia.org] is a fairly definitively defined concept. What's your proof that Bitcoin == Ponzi Scheme, and what exactly is it that proves to you that all those dabbling
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On a more serious note, when are you guys going to wake up and see that this is just an old fashioned ponzi scam...
Using "ponzi" to describe something that's not a ponzi scheme, even if it is a financial scam of some sort, just makes you look like an idiot who can't tell the difference between ponzi schemes and other kinds of scams.
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So yes, I suppose to a pedant a lot of people are going to look like idiots.
Have you noticed that a "bitcoin" has no physical value in itself? That
Not A Ponzi Scheme (Score:2)
The answer is "never" because it does not meet the definition of such a scheme.
Bitcoin does not take money from later investors to pay early investors, nor does it promise a high rate of return. It also does not have a promoter who takes a cut from investor funds. It also does not need to "pass any sort of compliance" because it is not a security. It is an accounting system, similar to what you can do with a spreadsheet, just distributed and cryptographically secured.
There is one global Bitcoin account b
Re:PCI Compliance (Score:5, Funny)
Better than that, Bitcoins generated on graphics cards have PCI Express compliance
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1. They do not claim to be a Bitcoin bank.
2. They do not claim to be a bank (just licensed to operate as one).
3. They are technically a PSP, which means they are not allowed to issue credit, i.e. increase the money supply.
4. Bitcoin banks are not impossible, just not necessary. You see the difference?
My thought on value movements: (Score:2)
I would expect that it will rise on the news - it usually does - but this story broke a few days ago, and, yes, now I remember it, it did rise.
Medium term, though, it may well push it back down. Part of the price at the moment is because they are difficult to buy, so there is a premium. If it becomes easier, then the price may fall.
So, I predict temporary instability, on top of the usual long term instability. And yet I still think it, or a tweaked successor, will succeed. Am I not loopy?
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Why would the price go down if BTC became easier to buy?
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"Part of the price at the moment is because they are difficult to buy, so there is a premium. If it becomes easier, then the price may fall."
Wait, what?
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"So, while making it easier to buy might bring the price down a bit,"
Errr, what?
Making it easier to buy makes the demand increase. Increased demand causes prices to go up, not down.
What you wanted to say is "making it easier to sell might bring the price down".
OK, 'Easier to trade' might make more sense. (Score:2)
Yeah, that's probably my point. But, also, yes, I may have it wrong. Maybe if I explain it, it will get clear in my mind.
At the moment, it is hard to get funds into the bitcoin economy, but relatively easy to sell out. So available cash to buy coin is scarce. Therefore cash is currently expensive, so flipping it around, according to this reasoning, coins are currently undervalued.
So, yes, I'm wrong, and it should rise, all things being equal and predictable. Mea Culpa.
Re:Why is this good news? (Score:4, Interesting)
You don't need a bank if you are using Bitcoin. However your existing money does and your existing trading partners do. Therefore you need a way to move between the Bitcoin and banking worlds. Hence, exchanges (which already exist, but a new one has launched).
Of course, with no banks, this leads to the question of how you can get credit from the Bitcoin economy. I explored these topics in a talk I gave at the London conference [youtube.com], the latter part covers distributed markets [bitcoin.it], ways to use modern cryptography in P2P networks to implement things like low overhead bond and stock markets. Consumer credit financed by individual bond issues isn't really practical today, but technology could make it so.
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Bitcoin Central is NOT a bank or PSP (Score:1)
From the horse's mouth (Score:4, Informative)
There seems to be some confusion about our recent announcement of a partnership with Aqoba allowing us to hold Euro balances legally. There has been an overwhelming response to this development, unfortunately some of the information quoted by journalists is factually incorrect.
This shall serve as a clarification.
In short, Paymium is neither a bank, nor a PSP. And it doesn't need to be.
Paymium, the company behind Bitcoin-Central has partnered with Aqoba, which is a registered PSP. The Crédit Mutuel Arkéa bank (not to be confused with the Crédit Mutuel bank) is the bank that Aqoba is associated with to provide the financial infrastructure a PSP needs.
This allows Aqoba to keep funds on behalf of third-parties in payment accounts ("comptes de paiement") which are different from bank accounts ("comptes de dépôt"). The difference between these is that funds deposited on a payment account may not be used for investments or loaned out. Additionnaly, these accounts have no overdraft capabilities.
These accounts will soon get their own IBAN number, be able to be associated with a debit card, but remain distinct from what is legally referred to as a "bank account".
In short :
Crédit Mutuel Arkéa is the bank that is used by Aqoba for its financial infrastructure needs,
Aqoba is a registered PSP,
Paymium works with Aqoba in order to operate as an intermediary when individuals and corporations wish to engage in the exchange of Bitcoins,
The "Garantie des dépôts" mechanism (which resembles the FDIC) covers our clients against a collapse of the Crédit Mutuel Arkéa bank.
Funds deposited with us will still remain clearly separated from Paymium's funds.
It is still a big development for a Bitcoin exchange to be able to operate legally within the European regulatory framework. Bitcoin-Central is leading the way in this respect. But we're neither a bank, nor a PSP. And we intend to keep it that way.
Research your articles /. (Score:5, Informative)
Don't just help spread rumors from other sources.
There seems to be some confusion about our recent announcement of a partnership with Aqoba allowing us to hold Euro balances legally. There has been an overwhelming response to this development, unfortunately some of the information quoted by journalists is factually incorrect.
This shall serve as a clarification.
In short, Paymium is neither a bank, nor a PSP. And it doesn't need to be.
Paymium, the company behind Bitcoin-Central has partnered with Aqoba, which is a registered PSP. The Crédit Mutuel Arkéa bank (not to be confused with the Crédit Mutuel bank) is the bank that Aqoba is associated with to provide the financial infrastructure a PSP needs.
This allows Aqoba to keep funds on behalf of third-parties in payment accounts ("comptes de paiement") which are different from bank accounts ("comptes de dépôt"). The difference between these is that funds deposited on a payment account may not be used for investments or loaned out. Additionnaly, these accounts have no overdraft capabilities.
These accounts will soon get their own IBAN number, be able to be associated with a debit card, but remain distinct from what is legally referred to as a "bank account".
In short :
Crédit Mutuel Arkéa is the bank that is used by Aqoba for its financial infrastructure needs,
Aqoba is a registered PSP,
Paymium works with Aqoba in order to operate as an intermediary when individuals and corporations wish to engage in the exchange of Bitcoins,
The "Garantie des dépôts" mechanism (which resembles the FDIC) covers our clients against a collapse of the Crédit Mutuel Arkéa bank.
Funds deposited with us will still remain clearly separated from Paymium's funds.
It is still a big development for a Bitcoin exchange to be able to operate legally within the European regulatory framework. Bitcoin-Central is leading the way in this respect. But we're neither a bank, nor a PSP. And we intend to keep it that way.
Re:Research your articles /. (Score:4, Informative)
Source, from the horse's mouth: https://bitcoin-central.net/s/aqoba-partnership [bitcoin-central.net]
that makes no sense (Score:3)
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