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Bitcoin The Almighty Buck Your Rights Online

Bitcoins Join Global Bank Network 84

Posted by timothy
from the now-you're-totally-untraceable dept.
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."
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Bitcoins Join Global Bank Network

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  • by Joce640k (829181) on Saturday December 08, 2012 @07:34AM (#42224289) Homepage

    The NSA are digging their tunnels underneath the bank's head office as we speak.

  • PayPal is not a bank (Score:2, Informative)

    by Anonymous Coward

    ...It is a soul-less monster.

  • by maxwell demon (590494) on Saturday December 08, 2012 @08:09AM (#42224389) Journal

    "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.

    • by sturle (1165695)

      They don't claim to be a Bitcoin bank.

      • by maxwell demon (590494) on Saturday December 08, 2012 @09:11AM (#42224513) Journal

        They don't claim to be a Bitcoin bank.

        But the story title does.

        • by Razgorov Prikazka (1699498) on Saturday December 08, 2012 @09:34AM (#42224599)
          t+0.1 seconds: fucking hell, not ANOTHER bitcoinstory
          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...
        • by sturle (1165695)

          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

          • by iroll (717924)

            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?

    • by jythie (914043)
      True, and an important distention... still, having the two services in a single entity is something new and might indicate a trend. Though I would assume that in general states only protect accounts that are in their own currency... hrm.. now I wonder about that... would a bank holding US dollars in the EU have the same regulation and protection as one holding Euros?
  • 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)

      by jbeaupre (752124) on Saturday December 08, 2012 @08:27AM (#42224433)

      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.

    • Re: (Score:3, Interesting)

      by sturle (1165695)

      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

      • by pjt33 (739471)

        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.

    • by Xugumad (39311)

      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

  • 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...

    • 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.

    • by dbIII (701233)
      Only if it's old hardware, for newer stuff it's PCI express compliance.


      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.
      • by tqk (413719)

        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

      • by osu-neko (2604)

        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.

        • by dbIII (701233)
          To the pedant if the object with no material value used in the scam is not actually called a ponzi then it can be argued the it is not a ponzi scam. To everyone else, there is no requirement to more correctly call it a "ponzi-like scam" because they assume that everyone can work out the "like" bit themselves and that it doesn't really matter if it's not there.
          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
      • 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

    • by fa2k (881632) <pmbjornstad@@@gmail...com> on Saturday December 08, 2012 @10:58AM (#42225047)

      Better than that, Bitcoins generated on graphics cards have PCI Express compliance

  • 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?

    • Why would the price go down if BTC became easier to buy?

    • by mestar (121800)

      "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?

    • by Rassah (2789619)
      "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." There may be a premium, but there is also a limit on the total available for sale. So, while making it easier to buy might bring the price down a bit, suddenly having way more people be able to buy it, and way more euros chasing the same limited available amount, will likely cause the price to go way up.
      • by mestar (121800)

        "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".

        • 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.

  • As usual the summary is incorrect. But then so is the BBC article and it also vastly simplifies the regulatory framework defining what it means "to operate as a bank" (or even a PSP) -- anybody with more than a month within the finance industry could have told them that. There are various types of bank licenses for different kinds of businesses that very clearly define what you are allowed to do and under what kind of regulations. The term "bank" is too imprecise in that regard. But anyway, Bitcoin-Central
  • by Anonymous Coward on Saturday December 08, 2012 @01:35PM (#42226057)

    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.

  • by bogidu (300637) on Saturday December 08, 2012 @01:38PM (#42226081)

    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.

  • by slashmydots (2189826) on Sunday December 09, 2012 @02:12AM (#42231269)
    That exchange is so small, I haven't even heard of it and I eat, breathe, and sleep bitcoins. EVERYONE uses MTGox to the order of about 95% of all trade volume last I heard. Once Tradehill was shut down by the state of California and the Feds based on BSA regulations, MTGox took over as the ultimate super power exchange. They're based in Japan and don't give a damn if they're part of some...whatever the hell this is. So in reality, I absolutely guarantee you with complete certainty that this exchange did it as a publicity stunt to try and convince people it has a better reputation and to use it instead.

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