In the past year, the Bitcoin community has seen a significant increase in regulations. These anti-money laundering guidelines are state-based across the US and are imposed by the Financial Crimes Enforcement Network (FinCEN) as well as the SEC. This means that most companies dealing with Bitcoin will now need MSB (money services business) and KYC (know your client–anti-money laundering) compliance in each state they wish to provide their services.
Companies must be heavily invested in compliance laws to provide services across the US; becoming compliant in the whole country costs between $5 million and $10 million according to Charlie Shrem, founder of BitInstant. Many companies, however, have not registered with FinCEN; only recently have exchanges, Bitcoin processors and agents been considered money transmitters.
This will stunt the growth of companies that haven’t been preparing for compliance, who will be forced to allocate larger resources and structural changes to meet new government guidelines. To register in each state, the process can take up to 1-3 years depending on the individual state.
Few companies have been as diligent with compliance as Trucoin–a Florida-based company and authorized agent that received a voucher of support from Gavin Andresen–which has taken strong measures to ensure their services are not impacted by these new guidelines by registering as an authorized money transmitter. They have been creating a legally compliant company for over three years, and have been through many procedures to ensure their services are transparent to both the government and end-users to avoid any mishaps.
As of November 3rd, 2014, thousands of people signed up for Trucoin gained full access to their brokerage services 26 such as Washington, Florida and Michigan after their recent partnership with CoinX, one of the most reputable exchanges in the US know for extensive state-by-state compliances with 30+ money transmitter licenses. Their goal is to offer the fastest way to buy Bitcoin using money processors such as MasterCard, Visa and directly through your local bank account.
On the other hand, companies that are not individually registered in each state’s office of financial regulation as a money transmitter or meeting legal KYC requirements may face legal actions. Since they were not already registered as money transmitters in all of the states in which they operate, businesses like CoinBase and Circle are in serious trouble; this could have serious effects on their company valuations, as they now must immediately invest in KYC, insurance, and other forms of compliance to qualify for each state’s MSB license, which can currently take upwards to 1-3 years for certain states. Failure to do so could incur fines or even jail time.
In the past exchanges, such as Mt.Gox who were not being frequently audited or complying to strict regulations went bankrupt, which had a significant impact on the community as millions in Bitcoin went missing overnight. During this time, Mt. Gox was running a fractional reserve system without anyone knowing–similar to a traditional (corrupt) banking institution–which was not discovered due to a lack of transparency.
Chris Brunner, president and founder of Trucoin, recently told CoinDesk:
“We’ve put a great deal of effort into putting in place a fraud mitigation system that allows us to accept debit and credit cards, so for new customers it takes less than two minutes to set up. There’s no waiting for a human to manually review your account in almost every case, and once you’re a customer you’re able to make purchases in seconds, as many times as you want.”
Interestingly, they also accept account login integration with Facebook, LinkedIn and Google to streamline their product to all types of users including “the average Joe” and newcomers to Bitcoin. This is advantageous for spreading Bitcoin adoption, as they can easily discover and join the Bitcoin economy.
In addition to being the fastest provider of Bitcoin with the strongest anti-fraud measures in the United States, Trucoin boasts services such as live chat, email and telephone support to its customers. All users are notified on their desktops and mobile wallets as soon as each purchase order is filled on the CoinX exchange.
They aim to offer their services in 10 languages and serve 100 nations in the near future through a single brokerage system. As Trucoin continues to solidify its partnership with CoinX, they promise to deliver a service which satisfies both federal and state government bodies while providing its users with the fastest means to purchase Bitcoin securely.
Young Buffet is a visionary, entrepreneur & enjoyer of life. He is into VR, Bitcoin, Altcoins, Stocks, Economics, Snowboarding & Adrenaline. Follow him on Twitter @Yngbuffett