The biggest event in Bitcoin last week was the closure of the NY Department of Financial Services “BitLicense” comment period on Tuesday. Many companies and individuals held off on submitting comments until the very last day. BitPay urged the NYDFS to not implement new rules that would create an uneven playing field with existing payment systems. The NYDFS will review these comments then submit a revised BitLicense proposal, which will be followed by another comment period. Superintendent Ben Lawsky said that the BitLicense is on schedule to go into effect by the end of 2014, or beginning of 2015.
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Summary of Government Related Initiatives
Today the US Department of the Treasury Financial Crimes Enforcement Network (FinCEN) issued two administrative rulings regarding virtual currency. These rulings apply to Bitcoin exchanges, trading platforms, and payment processors and give additional clarity as to what type of digital currency companies, products and services and should be registered with FinCEN as money services businesses (MSB). Some companies that originally thought they were exempt from such regulations may now have to register with FinCEN and enact compliance programs.
Summary of Industry Initiatives
Coinbase has been encouraging white hat hackers to help improve Coinbase’s security with bug bounties. Just recently, however, Coinbase announced a partnership with HackerOne that would not only help Coinbase’s security but also let ethical hackers collect their bug bounties in bitcoin. Hackers who choose the bitcoin option are encouraged by the 5% bonus that is passed on from the savings in fees. So far Coinbase has paid 62 hackers for the 88 bugs that have been discovered.
Cryptsy, a popular digital currency exchange that features bitcoin, USD, and many other altcoins, is facing a lawsuit filed by Silver Law Group. The Florida law firm is also bringing a lawsuit against Trendon Shavers and Bitcoin Savings & Trust, a Bitcoin-related HYIP that has previously been prosecuted by the SEC. The law firm hopes that this lawsuit against Cryptsy, which documents a security breach that might have affected more than one customer, will inspire a class action suit. Cryptsy responded to the lawsuit on their blog and said the compliant “is without merit.”
An SEC Form D filing from earlier this month reveals that Canadian company Blockstream has already raised over $15 million in funding, although the funding round is still not over, and the final numbers are not yet set. The SEC filing also revealed that Reid Hoffman, the co-founder of LinkedIn, sits on Blockstream’s board of directors.
Newly founded this January, Bitnet, an enterprise-scale digital currency platform, secured $14.5 million in their Series A round. This brings the total investment in Bitcoin companies up to $288.75 million in the year-to-date, according to a CoinDesk VC report. The Series A round was led by Highland Capital Partners and included Webb Investment Network, Bitcoin Opportunity Corp., Stephens Investment Management, Commerce Ventures, Buchanan Capital Management, and former VISA CEO Carl Pascarella. Rakuten, the Japanese e-commerce company, also made an investment and plans to begin using Bitnet’s services.
Personal loaning company BitLendingClub announced this week they have raised $250,000 in a recent investment funding. The funding was led by LAUNCHub, a European VC group. BitLendingClub allows for peer-to-peer lending where lenders and borrowers can agree upon interest rates for loans. The company launched in May and has loaned over 2,500 Bitcoins. LAUNCHub believes the expansion of a loaning company in Eastern Europe is a powerful way to expand Bitcoin in the region.
BitFury Capital, the investment wing of the BitFury Group has announced that they are investing in the digital currency processor GoCoin. GoCoin enables businesses to accept bitcoin and other digital currencies and can immediately transfer them into local fiat currencies. BitFury believes that by investing in GoCoin it can enable merchants to grow and allow for greater adoption of digital currencies.
Draper University, an entrepreneurship program led by Tim Draper, is offering a free Bitcoin education course on Udemy, an online learning platform with over 4 million students. The course is taught by ZapChain’s Matt Schlicht and features interviews from thought leaders in the industry with venture capitalists, engineers and Bitcoin company founders. The course is designed for individuals who are new to Bitcoin. Interested participants can sign up here.
A recent study by the University of Montreal and University of Manchester reported that drug related crime was reduced by the use of the online drug market, Silk Road. Research produced by the team has detailed a significant amount of drug transactions were between different drug dealers, and not drug users. Using a digital market such as Silk Road enables dealers to make more peaceful transactions between consenting parties, wherein both parties can avoid potential violent confrontation that is all too common in drug transactions.
Picture of the week
Our picture of the week was submitted by Jenna Lash, Neo-Pointillist Currency Artist.
“Bitcoin is the opposite of PayPal, in the sense that it actually succeeded in creating a currency.” Peter Theil, PayPal Co-Founder
“Should governments regulate Bitcoin or should Bitcoin regulate governments?”
— Peter Todd (@petertoddbtc) October 20, 2014