Thursday, May 23, 2013

BitInstant: We Have Money Transmitter Licenses in 30 States

BitInstant We Have Money Transmitter Licenses in 30 States - New Bitcoin World, Latest Bitcoin News, Free  - New Bitcoin World, Latest Bitcoin News, Free Bitcoins info, ASIC mining, ASIC bitcoin miner
Vitalik Buterin | On 21, May 2013. Regulation has been a hot topic in the Bitcoin community since the FINCEN guidance in March, and in the Bitcoin conference that took place this past weekend an entire quarter of the conference was dedicated to economic and regulatory issues. The guidance evoked strong feelings of both relief and uncertainty throughout the Bitcoin community; although ordinary Bitcoin users are now almost certainly clear of regulation, a fact that has allowed the Humble Bundle and the Electronic Frontier Foundation to feel comfortable accepting the currency, Bitcoin exchanges will now likely be required to have money transmitter licenses in all 48 states to operate across the country – an extremely onerous procedure that has repeatedly stymied even businesses outside the Bitcoin space. Many figures have been thrown around as to just how much that process costs; a common understanding was that it takes millions of dollars of legal effort and surety bonds, and Jeff Berwick said in his resignation from the Robocoin Bitcoin ATM project that the main obstacle too US participation was “a $25 million “insurance bond” necessary as being deemed a “money transmitter” in the US.”

However, a deeper examination into the issue at play shows that things are not nearly so bleak. The requirements for becoming a money transmitter largely fall into two separate categories: bureaucratic legal effort and surety bonds. With surety bonds, a common requirement is that you need to be insured for 2% of the total volume that you plan to be processing over the next year. If you go over, you need to buy more surety bonds. The cost is thus less prohibitive for small businesses, although there are usually minimums; the Florida regulations specify a minimum of $50,000. In order to get insured for this amount, most insurers charge about 2%, so a money transmitter in Florida would need to pay at least $1000 per year in order to operate. Other states have similar requirements, and altogether the minimum amounts add up to about $7 million. Of course, one also needs to convince surety bond brokers to deal with Bitcoin exchanges, although some are appearing now specifically to serve the legal industry. - Read motre here:

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