That day the U.S. Financial Crimes Enforcement Network (FinCEN) released "interpretive guidance" stating that those administering or exchanging virtual currencies such as bitcoin should be considered "money transmitters," subject to state licensing, federal registration and Bank Secrecy Act rules designed to help the feds uncover money laundering, tax fraud and other crimes.
On March 18, 2013, the government dropped a bombshell on Coinbase, a two-man San Francisco startup that had attracted 30,000 users to its cloud-based "wallet" service for buying, storing and spending bitcoins.
That week the pair fired their lawyer and hired a new one. They had been operating with $600,000 from angel investors and were trying to raise Series A funding. The decision to register would add millions to Coinbase's costs but also give it a strong selling point. At that time the most well-known venture capitalist who had publicly expressed interest in bitcoin was Union Square Ventures partner Fred Wilson. When Ehrsam and Armstrong pitched USV, Wilson grilled them on their approach to regulation. Their compliant stance helped win them a deal.
Coinbase president Fred Ehrsam immediately called the company's lawyer. "He said, 'It's [only] guidance, and you guys are small, and it's going to be a pain in the butt to comply. It's going to take a lot of your time and money to do it,' " Ehrsam recalls. "So his advice to me was to try to make a good argument as to why it [registration] didn't apply to us and avoid it for the time being."
But that night Ehrsam and Coinbase CEO Brian Armstrong had a come-to-Jesus discussion. They agreed that skirting registration was wrong for their brand. While beloved by tech-savvy libertarians, bitcoin had taken a hit to its reputation after being sullied by hacks, Ponzi schemes and its use on the Silk Road dark-net drug market. Coinbase wanted to be seen as the easy, safe and legitimate way for a wider population to use cryptocurrency.
Hyq – The Four-legged Robot For Disaster Zones
Coinbase CEO Brian Armstrong (Christian Peacock for Forbes)
Coinbase president Fred Ehrsam (Christian Peacock for Forbes)
Surging Bitcoin Price Affects Exchange and Trading Platforms
These past two months have been a crazy ride for the Bitcoin community. As the cryptocurrencyâs value continues to increase, the number of people trading Bitcoin and the frequency of such trades
Bitcoin Price Rebounds to Near $2,640 Following Yesterday's Losses
The price of bitcoin has rebounded after a notable fall yesterday that saw the digital currency lose over $400 to a low of around $2,352.
Today's resurgence sees the price back up at $2,626 at
Keep it Simple: HitBTC Helps Digix DAO Users Receive ETC Bounty With Ease
HitBTC an exchange based in Hong Kong will start the process of refunding Digix DAO (DGD) users whose tokens were formed on Ethereum main Blockchain before the hardfork took place. It is pertinent to
Bitcoin ‘Has No Intrinsic Value’: Business Insider CEO U-Turns On Digital Currency
As analysts predict Bitcoin’s price anywhere from $1,470 to $6,000 in days, Business Insider CEO told CNBC the virtual currency “has no intrinsic value.” “Bitcoin is the perfect asset for a
Bitcoin Demand Explodes in India, Overwhelmed Exchanges Put Limits on Purchases
The demand for Bitcoins has increased across the world, leading to a surge in its price to all-time highs. In India, with thousands of new users flocking to Bitcoin every day, exchanges have been
US Defence Research Agency To Integrate Blockchain-Based Crypto-Chat Platform
The US Defense Advanced Research Projects Agency (DARPA) has signed another Blockchain innovation deal, this time with Crypto-Chat developer ITAMCO. Under plans published Thursday, ITAMCO will
ConsenSys Academy Debuts With 10-Week Dubai Blockchain Dev Challenge
Blockchain venture platform ConsenSys has announced the launch of its ConsenSys Academy with a 10-week developer challenge. Dubbed the “2017 Challenge,” ConsenSys is giving student and
Dubai Regulator Lowers Regulations with FinTech License
The Dubai Financial Services Authority (DFSA) is lowering the barriers for FinTech firms with a new license to foster and encourage innovation in financial technologies in Dubai.