Another packed week in Bitcoin land. When isn’t it? So this week I thought I’d recap on five big stories that caught my interest over the last week. Maybe that’ll be of interest to some people who read this blog but don’t spend every waking hour perusing the crypto-press and forums like, ahem, “others I know”…
Mastercard. Oh dear.
Last week, we watched the Western Union v Bitcoin meme spread online. This week, we watched a rather spirited attempt by Matthew Driver, President (South East Asia) of Mastercard to dismiss the value of crypto-currencies provoke a similar kind of response.
With Mastercard actively petitioning the legislators in Australia for increased regulation (whilst Australia’s largest Bitcoin startup CoinJar was already announced the relocation of its headquarters to the UK due to the onerous nature of the existing regime), it was unlikely that Mastercard were ever going to be treated kindly by the Bitcoin faithful.
However, cut through some of the more simplistic criticisms of the multinational financial services organisation and read through Samual Patterson’s line by line response to Mastercard. It’s a valuable exercise in pointing out the areas in which Mastercard appear to have fundamentally (wilfully?) misunderstood the technology.
And, of course, the cynical out there might see why a company that has come under fire for tracking its US customers’ purchases and selling the data to advertisers might see (perceived) anonymity to be something of a problem.
HSBC. Oh dear.
Back in August, I asked Daniel Masters from Global Advisors Bitcoin Investment Fund to come up to Edinburgh to speak at the inaugural Scottish Bitcoin Conference that I was organising. A good account he gave of himself too. GABI were just going live on the world’s first regulated Bitcoin hedge fund. Since then, it’s been interesting to watch Jersey really make a play to become a world-leading Bitcoin location.
And then last week, HSBC pulled the plug on its banking relationship with Global Advisors, the Jersey-based hedge fund that runs GABI. The indications are that the risk profile of being associated with a Bitcoin business were perceived to be too problematic for the bank. As Danny writes on LinkedIn, it appears that “innovation is indeed well supported so long as it doesn’t impinge on the prospects of HSBC collecting fees”.
Now, whether this just represents one turkey that doesn’t want to vote for Christmas or not, it’s particularly galling for many within the Bitcoin community. Few are unaware that HSBC paid out $1.9 billion to settle a case in 2012 in which they’d been shown to be “lax in money laundering” (to put it extremely charitably – the US Senate investigation stated that they’d been a “conduit for drug kingpins and rogue nations”, with criminals depositing money in boxes specifically designed to fit through the tellers’ windows of Mexican HSBC branches).
HM Treasury Consultations Closes
The deadline passed for HM Treasury’s Digital Currencies Call For Information on Wednesday. A number of submissions were made and you can check out the UK Digital Currency Association’s submission here. From my involvement, it’s clear that the two key areas are a call for light-touch regulation under existing laws and a plea for the Treasury to ease one of the biggest problems that UK Bitcoin startups face today – securing banking relationships with existing financial institutions that don’t suddenly get closed with no notice being given.
BitLicense Comments Published
Within the next couple of weeks, all manner of hell will break loose online when the final draft of New York’s BitLicense gets published. To recap, in January, the New York Department of Financial Services held a hearing into Virtual Currencies. Initially positive, New York listened to entrepreneurs, investors and other knowledgeable individuals from within the Bitcoin ecosystem. Benjamin Lawsky, Superintendent of Financial Services for New York then came out with the idea for a BitLicense for digital currency businesses. Draft regulations were published and comments were requested – to an almost unanimous wave of criticism.
Lawsky tweeted this week that all 3,746 comments received had been published with the final regulations coming out later this month. If you want to read through some of the commentary, here are some highlights: the Bitcoin Foundation (and here), the Chamber of Digital Commerce, BTC China, Coinbase, BoostVC, Circle, UK Digital Currency Association, Amazon, BitPay, Ripple Labs, Walmart, Western Union – not to mention Chris Odom’s response.
It’s hard to say which way this will go. However, the impact of getting this regulation wrong for New York at this stage (and I have no idea how someone can regulate something correctly – in the sense of being comprehensive and flexible enough to cover the technology as it continues to evolve), could be severely damaging. I suspect UK regulators are watching with as much interest as the rest of us.
ChangeTip Raises Funding
Finally, let’s end on some really positive news. ChangeTip, a business that has gone from niche to mainstream in the last couple of weeks announced $3.5 million in seed funding led by Bitcoin investment pioneers Pantera Capital. I’m a big fan of the Pantera team, I think they’re doing a great job (their daily BitFlash update service is both free and valuable – sign up here) and I thoroughly recommend you take a read through their most recent Bitcoin Letter to really learn more about the importance of tipping within the overall Bitcoin ecosystem. Well done to the ChangeTip team.
That’s it for this week. As ever, there’s plenty of other stories – a week sometimes feels like a month in Bitcoin Land – but these are the ones that stood out for me.
Now. Let’s see what this week brings.