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Bitcoins Join Global Bank Network
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."
The NSA are digging their tunnels underneath the bank's head office as we speak.
No sig today...
The russian mobs are ecstatic !! CRYING !! We Own Your Money Now !!
...It is a soul-less monster.
"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.
The Tao of math: The numbers you can count are not the real numbers.
... ponzi scheme!
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 on that donation). Then, later, if you want to sell bitcoins for USD or EUR, you will have to pay income tax on the money!
So it's just a matter of time until they can be audited for PCI compliance 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...
The whole point of bitcoin was that the currency doesn't need a bank. And now we celebrate that ... we have a bitcoin-bank? So bitcoin has a bank, can have (will have?) fractional reserve banking, you can speculate on stocks, ... Seems like all the bad characteristics of traditional fiat-currencies are being ported to bitcoin.
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?
Prediction for end of Universe #42: Fencepost error in Quantum_bogosort.cpp
Bitcoins cannot 'join global bank network', it's an exchange that operates as a bank in Euro while allowing Bitcoin accounts.
Saying that Bitcoins join a bank is like saying that Euros join a bank or Australian dollars join a bank. Banks operate in certain currencies, if there is more than one bank that allows Bitcoin accounts then they can exchange Bitcoins between their accounts directly without converting one currency into another for transfers.
You can't handle the truth.
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, the latter part covers distributed markets, 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.
http://www.positivemoney.org/2012/12/banking-101-video-course
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 is neither a PSP nor a bank and they have put up the corresponding clarification on their website: https://www.bitcoin-central.net/s/aqoba-partnership "In short, Paymium is neither a bank, nor a PSP. And it doesn't need to be."
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.
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.
you forgot to state that the bitcoin is a fiat currency, just like every other currency in the world today. hence you forgot to tout it as an evil socialist scheme. are you not on your medications today, or perhaps you forgot to go to church?
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 book that records every transaction ever made, and which account numbers got how many arbitrary units credited (bitcoins or BTC). It takes work to verify transactions and secure the transaction history from tampering. That work is rewarded with fresh bitcoins for whoever finishes a chunk of work (block) first. That is similar to an accountant getting credited for work keeping a company's books by an entry to pay himself added to the books themselves.
Adding fresh bitcoins to the system this way is different than how the Federal Reserve creates dollars, but is no less valid. The Fed buys Treasury bonds and bad mortgages, and pays for them by crediting the seller with new dollars it magically creates, then backing those dollars with the bonds and mortgages it bought. If the Fed wanted to reduce the money supply, it would sell the assets it holds for dollars, and the dollars vanish back into thin air. Since these days all of that happens by computer between the Fed and private banks, the new dollars are merely data entries, just like bitcoins.
Maybe, but I see it as more of an online payments system that scales down to micropayments and up to large, multi-million dollar transactions.
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.
Prediction for end of Universe #42: Fencepost error in Quantum_bogosort.cpp
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.
If I have some cash and I put it in bitcoins, will the IRS be able to know how much I have?
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.