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)
Bitcoin Core Roadmap Unveils Signature Optimization Plan
Bitcoin Core developers released a new technology roadmap today that charts the project's planned transition from its current digital signature algorithm to a more advanced alternative.
Bitcoin Has Grown beyond Volatility Issues
The volatile nature of Bitcoin and other cryptocurrencies has worked both ways. Traders peg their hopes on volatility to make money while those who prefer investing long-term dread the price fall.
Report: Bitcoin Social Media Scams Are On the Rise
The rise in popularity and price of bitcoin has led to greater instances of scams perpetrated through social media, according to a new report.
Released by ZeroFOX, the report categorizes these new
BATS Objects to Bitcoin ETF Ruling, Plans to Appeal Decision
BATS Global Markets, a global stock market exchange based in the US, plans to appeal the March 11 decision of the Securities Exchange Commission to turn down the approval of the Winklevoss twins’
Blockchain is Overhyped and Not Quite Applicable: VC Andrew Parker
Andrew Parker, a partner at Spark Capital, a New York-based venture capital firm which transformed various early-stage startups including Twitter, Tumblr, Stack Exchange and Foursquare into
Forking is Easy, Maintaining Bitcoin Unlimited is Hard: Andreas Antonopoulos
Bitcoin and security expert Andreas Antonopoulos noted that the execution of a hard fork solution like Bitcoin Unlimited isn’t necessarily the difficult stage of development. The challenging task is
Canadian Regulator: Blockchain & Fintech Needs Open Data Access for Development
Canada’s largest securities regulator has stated that open access to data is fundamental to developing fintech solutions like blockchain technology, in a white paper, reports Reuters.
(+) Investment Recommendations: March 23rd
Bitcoin, Daily Chart
The long-term picture is still clearly positive for the most popular cryptocurrency, despite the recent volatile correction. The major trend channel is still in play, with