Bitcoin accidentally solved my startup's international banking problem
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For a while as an experiment, I decided to see how easy it would be to break the Argentina ban on foreign exchange or money leaving the country. I simply signed up to a bunch of services like Inpay (Agentine soft bank transfers), Rapipago and DineiroMail and accepted payments in exchange for Bitcoins. I had all these payment gateways just dump into an Okpay account and then traded it on IRC. Worked flawlessly, though high fees. Still were cheaper fees than what it costs on the black market there to move money.
I also have a decoy software store that I sell to a circle of friends there Bitcoin for Argencard. I wouldn't do this for the general public of course that's risking fraud.
Poland, Belarus, Moldova, Italy, any of these countries walk into a bank with corporate docs and open an account in an hour or so. Bitcoins are of course, better suited for this guy's business of reselling software but he barely tried to get around silly bank laws in the UK.
Edit: To get money back to yourself cheaply from the Latvian bank after your payment gateway dumps funds into it (because SWIFT can be expensive with correspondent banks robbing you a percentage in fees), buy Bitcoins with SEPA from Bitstamp or another EU exchange or p2p trade. Then cash the bitcoins out locally.
can you comment on the kind of fees you ended up generating when you were experimenting in Argentina? i expect that fees would be different depending on the direction you went from ARS.
a bank account in an hour? opening a bitcoin business account in the US takes easily 1.5 hours, if not twice that.
If you want a surreal experience open a bank account in Belarus. A bulletproof limo picks you up at the airport and you go directly to the bank and receive your unlimited debit card and privacy statement they will never give your info to anybody no matter what, unless you commit crimes in Belarus. Azerbaijan is the same thing.
I'm surprised there isn't a gigantic European exchange using a Belorussian bank account. Could accept all the US wires you want and they wouldn't respond to angry requests from NY state to seize your funds because you don't have a MSB license. Of course you could end up kidnapped though for extraordinary rendition back to the US like they did all those Russians who ran gambling payment gateways :P
Min deposit was 25,000 Euros but I was told other banks it's a lot smaller, like 5,000 Euros but this is the best bank. Be aware this is Belarus, and it's a dictatorship so you're flying by the seat of your pants finances there's nothing to stop the government just taking your money but then again, US does this all the time too. If you want to open a mega bitcoin exchange there ya go. Getting permanent residency in Belarus is easy too. Plus there's no tax on worldwide income there. I hired a Belorussian lawyer to set this up.
Privatbank in Ukraine will also open for non residents if you visit in person and english is widely spoken. Small minimum deposit $100 http://old.privatbank.ua/info/index3.stm?fileName=5_2_35e.ht... however any transfer over $5,000 is reported to the tax police.
Belarus seems to have no financial police whatsoever if you wanted to withdraw a million in cash they would do it no questions asked. In fact, they didn't even ask me the source of the income when I opened the account. While getting the account you wait in a lounge while somebody pours you free drinks and watch shady Russian businessmen walk out with bags of cash and private security to take back to Moscow.
hayksaakian writes: > This seems completely legit.
I find myself unable to tell whether you (hayksaakian) are being serious or ironic.
As for payment gateways, I wanted to stick to well-known gateways like PayPal and Skrill that consumers would already have accounts with.
I'm sure that walking into a bank in Europe probably would have quickly resulted in the opening of an account, but getting to Europe posed a problem for me as I'm based in the US and didn't have the funds to make the trip. Thus, Bitcoin!
I also live around a few Chinese banks that opened in my country. Got an Alipay account through them in a couple of minutes by walking inside and depositing $1000 and showing corporate papers. Alipay is Chinese paypal equivalent but no chargebacks (well.. hard to do chargebacks).
There's also companies like The Currency Cloud. Although I'm not sure if this is against their rules but I used them to receive gateway payments as well.
Also I'm not an American, maybe that's why you had problems. Guess things have changed with the new very strict laws
i have myself had a number of issues with banks in the past and can speak to the irritation it can cause when you're trying to do business. Bitcoin is a great way to get around banks that are uncomfortable with your line of business or that add too much complexity to your business.
i'll have another think about it, but i expect that accepting credit cards is not going to happen. additionally, the fees would have to be pretty hefty for running such a payment gateway since it would (our fee) + (credit card processing fees).
iirc there were like 15 different billing addresses and card numbers in a few month period. once i saw that i knew i was going to get fucked on chargebacks.
his fraud scheme was so creative i'm not going to describe it here, for wont of someone decided to imitate it.
This is better than cash deposit directly to your bank account because of MITM fraud attacks, and because banks hate people coming in to deposit cash and quickly try to shut down the account. Again I'm not a lawyer so I don't know if you'd need a license for this in the USA but overseas it would work in countries that need this service, like Pakistan/Philippines/India.
EDIT: I would imagine, if you do quite well, you could sign a 1:1 agreement with companies like Bitpay who are looking for USD, and have BTC, and you have USD and are looking for BTC. win/win
I would recommend a more bulletproof domain, and hosting in Germany or with PRQ in Sweden, who has lawyers to defend DRM claims. A good German host is BS web run by Henning Brauer an OpenBSD developer. http://www.bsws.de/en/
Also I think you're right this might fall under import/export laws
Adobe has moved to a subscription based model, which makes the UsedSoft v Oracle ruling irrelevant. Microsoft may actually let you resell your used software, many companies do. In fact Adobe actually used to let you resell your used software so long as you didn't keep a copy of it.
The main companies that don't let you resell your used software are Valve (Steam), Apple (App Store), Google (Google Play) and Autodesk. I think that all of these companies are violating the UsedSoft v Oracle ruling by not allowing EU users to resell their apps, games and software, which is why I started halfpricedigital.com
The difference between my site and ebay is that because my company is based exclusively in Europe, my site isn't bound by the Vernor v Autodesk ruling and instead relies on the UsedSoft v Oracle ruling, at least when it comes to EU citizens. This is what allows my site to let EU citizens resell their used iOS apps or even their used Steam games. Other than the UsedSoft v Oracle issue, my site operates pretty much like ebay regarding software usage restrictions.
The result is that any non-US financial entity that don't want to incur the wrath of the US government is required to report information about their US customers to the IRS.
See this PDF for HMRC guidance for the UK regarding this: http://www.hmrc.gov.uk/drafts/uk-us-fatca-guidance-notes.pdf
As a result, smaller US customers are particularly undesirable for non-US banks these days.
I mean if it's possible, then every online business should incorporate in HongKong and avoid Taxes, VAT and several other complications that the IRS put.
Just so long as you report foreign income paid out to yourself. The foreign corporation doesn't have to report anything (this might have changed, i'm not a lawyer). That's why you see all those shady collector coin ads on latenight TV and they are always based out of Liberia.
additionally, he will need to file a TD 90-22.1 with the department of treasury by june 30th of the year after the account has more than USD 50K in it.
tax avoidance is a complex beast and simply incorporating a business in another jurisdiction does not in any way exempt you from US tax liability.
Nitpick, but the TD 90-22.1 threshold ("FBAR") is $10,000. As an expat with a foreign bank account, I only really know about it because TurboTax flagged it, which was pretty fortunate.
Note, though that theres still nothing illegal with it (unless you try to explicitly hide what you're doing) - it may "just" impact your tax bill.
If the company hosts it's service in Europe, sells to European customers and otherwise does not have much of a footprint in the US, chances are good they'd accept that the company is foreign.
Of course any income he takes out - whether salary or dividends - will still be taxable in the US (subject to any tax treaties if he were to do the work in the EU too).
Any money repatriated to the U.S. (e.g. if he pays himself) is taxable income.
Also I have serious doubts UK court would just accept ruling of German court. In software law UK is closer to US.
I also contacted SVB (branch in London) and they said they could do it without requiring a trip to the US.
HSBC have a decent international banking department and can open accounts in different countries last time I checked.
I once opened a Chase account from Norway, and had to go to the US Consulate in Oslo to get an apostille on the application form (basically the consulate had to attach a document by seal that confirmed they had seen my id and matched the details to what I claimed on the application, and watched me sign the form - apostilles are expensive, I had to pay about $100 that time, and it's unusual to require it to be done at a consulate or embassy rather than "just" a recognised notary public).
TD Bank is another alternative I have more recent experience with - it's a Canadian bank group with branches in lots of US states, including Delaware, and a company I'm involved with had them open US accounts for a US company we set up, though we also had an account with them in Canada opened from Canada by a Canadian citizen, so I don't know how easy or hard it'd be to get an account set up by them from elsewhere - they did fedex me documents to the UK to sign, though. And didn't require any apostilles or other expensive verification.
Depending on your location, you may also find it possible to open a US held bank account from your home country by looking at which (if any) of your local banks have branches in the US (this applies in general for many country pairs, but especially if you want to open accounts in major financial centres - my old Norwegian bank has a branch in London, for example). Note that in many cases they will have "branches" that are not generally open to consumers and may not be advertised, so you'll want to check online and call their business banking people. Major international banks like Barclays or HSBC for example may often be an alternative.
It is also easier if you "only" need a dollar account as opposed to a US held account - many banks offer accounts in the major currencies without offer a general banking service in the relevant countries -, though I'm assuming you actually need a US account.
I've contacted SVB by phone. They told me to email them some details, but then they ignore my email.
If you are small, your risk can be small. But if you are looking to be the next big thing or raise capital this would be a "risk" not a "solution" in most VCs eyes.
(Disclosure: international tax lawyer; have fought this battle with the IRS before).
And yes. The banking problem is the hard problem to solve.
In both directions. U.S. banks can be giant poopy-heads. Bank of America just closed the account of a foreign client of mine who had banked with them for 33 (!) years. "We don't have to give you a reason, and we are sending you a check for your money." The second such client to experience this. Both are moving to Citibank, for what that's worth to you.
while i can appreciate that any business can choose to not do business with any 3rd party for whatever reason, the inability to bank can be crippling, especially if you get blacklisted by chexsystems et al.
https://en.wikipedia.org/wiki/Controlled_Foreign_Corporation
I know that may be non-ideal for you from a risk POV, but you may also find the UK amusingly (or infuriatingly..) bureaucratic and byzantine in that having a UK bank account is the best way to prove to another UK bank that you are worthy of opening a bank account with them afterwards.
If you still live in the U.S. I assume you are connecting remotely to your servers and then writing and executing code that the U.S. might consider illegal behavior.
I'm not putting you down- I am glad people are pushing the boundaries. I just wouldnt feel comfortable taking that risk personally.
btw, would the ruling also cover in-app purchaes? Also, does the law which requires a mechanism to transfer ownership to be built in software (DRM etc)
I don't know if the law requires a mechanism for transfer as much as it requires the software maker not to prevent transfers. So the process could be manual (via email), as long as a process exists. But a mechanism in the software or marketplace would make everyone's lives easier.
(Is there a pastebin-like service that focuses on plain text readability?)
His bigger problem is likely to be US reporting requirements as I've mentioned elsewhere, that makes it very unattractive for non-US banks to handle smaller US clients.
nice response
Used. Software.
That's like selling used poems, or used voicemail greetings.
Hey guys! This particular hard copy of Ezekiel 25:17
from the bible is almost new! It's only been seen by human
eyes three times! Verified as authentic via flatbed
scanner and then CRC32 checksumming it's OCR results!
Hardly any wear and tear! $150 and it's yours!
The part that's odd is that, as with any digital media, it's trivial to make copies. Traditionally, things have only been property if it's possible to possess them and keep them from others. In an industrial society with a powerful government, that's true of things like the right to print books containing a given text, but it isn't true of publicly-distributed digital media.
Bitcoin has very specific flaws compared to country-backed currencies. More specifically:
* Doesn't devalue - which means that it's inherently BAD for transactions.
* You can't readily cash out: How are you going to make your BTC dollars? Even MTGOX has very low hard-limits.
* What about taxes and sales? Okay in Germany BTC is somewhat regulated. But what happens to other countries?
The 3rd issue, is non-existent if your turn-over is from small to non-existent but it's a huge deal if your turn-over becomes more than 15k per year.
Not to mention that a currency that fluctuates that much is semi-suicidal for any long-term business.
Apart from all the above, I wish you all the best in the world mate. Seriously, nothing personal.