My Experience using a Bitcoin ATM
grantammons.me
grantammons.me
no. you're not. If you were, you would absolutely not have gone through this crazy procedure.
>But I couldn’t help but think that they were shifting the exchange rate to their favor (which happened to be the case for my transaction)
Of course they are - that's how they pay for actually providing you with a service. Running that ATM, filling it with actual bank notes, (sometimes manually) approving new accounts, all of this costs money which they make by "shifting the exchange rate to their favor"
But anyone who fails to collect all this information while engaging in money transmission, as is the case with a Bitcoin ATM, puts themself at risk of SWAT raids and long prison sentences.
I'm also seeing that some of the same people who were mocking Bitcoin businesses before for their failure to comply with regulations _now_ are mocking Bitcoin businesses because complying with these regulations takes a really long time and is onerous. In this regard, I really have no comment beyond just pointing it out.
Is this required for foreign currency exchange? Because that's all I think this machine is really doing.
The bank doesn't have to do that because a human being can be reasonably confident that he/she isn't repeatedly serving the same person using different identities.
Also, note that the federal government has asserted that Bitcoin doesn't fall under the same laws as foreign exchanges, but rather as banks (see FinCEN's first guidance document on virtual currencies). A court could rule against this interpretation, but it's pretty unlikely.
EDIT: I should add there's a lot of grey area here as to what constitutes proper KYC procedures in this instance. I personally think a simple photograph would probably satisfy's FinCEN's concerns, but I've decided not to operate this kind of device, so it's not my own ass that's on the line. I can certainly sympathize with anyone who wants to be extra careful here since federal prosecutors and agents have been so zealous in this area.
To be a money transmitter, it requires that you have a license, and it sounds like Robocoin is trying to mitigate their risk (e.g. losing their license and going out of business) by being able to prove who you are, in case they become party to illegal activity.
State money transmission laws have traditionally been oriented toward consumer protection and not toward prosecuting money laundering (and so they traditionally didn't require any IDs or other proof of identification from anyone except the business owners).
> For the whole fingerprint, photo, ID, social security, etc. dance, let's place the blame squarely on the proper shoulders here: the U.S. government.
I don't have to take a photo, give social security, or scan a hand print when I exchange foreign currency with a money transmitter...
1. FinCEN has declared that a Bitcoin exchange (such as this ATM) is not subject to the same laws as foreign exchanges, but rather is a money transmitter, and thus subject to much stricter regulation (such as identification required starting at $0 instead of $1000).
2. When was the last time you exchanged foreign money in the U.S.? When I last exchanged foreign currency in the U.S. (in the past few years), I needed to provide a photo ID and my social security no. I believe this is strictly required only when you exchange over $1000, but many exchanges require them for all transactions.
3. Note that when you provide a photo ID, the end result is the same as if they had taken a photograph on the spot (your photo is copied and filed).
It has been two years since I was last at a foreign currency exchange here, and things could have changed since then as well.
It's naive to think we'll resolve this overnight, but until then there's no point to using a robocoin ATM.
[1] http://www.jauntworthy.com/blog/2014/2/21/first-impression-o...
Fuck banks, fuck their anti-money-laundering regulations and fuck the politicians for the "war on drugs" which actually led to the creation of said anti-money-laundering rules.
No change to the sentiment, I just wanted to be sure you were damning the correct politicians for the correct reasons.
Oh, and indeed I forgot another point, the "OMG child porn!" faction...
edit: Oh, of course no amount of KYC regulations prevented big banks from doing business for and with big drug cartels... I wonder whom those regulations were drafted for, anyway. Can't be drug lords or terrorists, so whom else?
This isn't a new problem; FX traders call them restricted currencies. It's actually pretty hard to get large amounts of things like Russian Rubles and Indian Rupees; it's possible to get large amounts of currency if you're a big bank; but you often have to work a deal with the government/central bank that's not going to be in your favor.
Basically, with restricted currencies, you can often trade easily one way but not necessarily the other. The idea behind this is to make it easy to bring your money into the country on favorable terms, but hard to take it out (so you have to spend it there and repatriate the money through transfer of goods). In an inflationary system, you often have a capital class in power in a country, and high inflation keeps them in power since they own all the means of production. Unfavorable exchange rates and high prices discourage foreign investment, which can be desirable in corrupt or autocratic regimes. More often than not though, long-term high inflation is unintentional and a sign of bad monetary policy.
Banks have traditionally resisted those rules, because they know people don't like them.
Either you go the full route and demand compliance from everyone, or you go the full-opposition route and do everything in your power to really fight the regulation.
The "hybrid" approach chosen by many banks is just criminal.
1- Needed to create an account for "their" exchange. 2- Needed to transfer bitcoin into their exchange. 3- Needed to wait for transaction to get validated in the blockchain 4- Get money.
You could reach and say that all the PII and initial setup was to comply with laws about banking/money laundering. But that took 7 mins of a 45 min process.
This process is slow and I don't see how it can possibly get faster.
The best I've come up with is you have a second money-apparatus that moves more quickly. It probably wouldn't have a lot of the currency-like properties of bitcoin. I guess the analogy is that sending bitcoin is like writing a cheque, and this faster thing would be like using a credit card.
I went down to the corner to get some money out of the ATM. I walked up and stuck in my card and the ATM wouldn't give me any money: said something about my card not being supported. So I walked into the bank building adjacent to the ATM and asked them about it.
Well, first I had to wait in a line: there were two people in front of me so that took about 5 minutes. Then they explained that the ATM didn't work because I didn't have an account with that bank, and would I like to open an account? I said sure, go ahead, then they started asking me all kinds of intrusive questions.
They wanted to see my driver's license and they even wanted to know my social security number! I asked them why they needed this information and they muttered something about the "US Patriot Act"[1]. Anyway, it took another few minutes for them to collect all this, then they said they needed a few moments to run it past some lists. (Apparently the US government keeps some lists of terrorists and whatnot -- I told them I wasn't on any of the lists but they insisted on checking anyway.)
After a few more minutes they came back and said I was fine. They transferred money from my existing bank and handed me a new ATM card. I tried it and everything worked smoothly this time.
I don't think anyone should use this bank. The process took me half-an-hour or more and it was really awkward.
And there is a big difference between giving basic proof of ID information to a regulated financial institution, vs. handing it over to an unknown entity.
The fact that this device wanted to establish and verify my identity seemed unnecessary to me and counter to what I think are bitcoin's strongest qualities.
Why do you think the device needed to establish and verify your identity? Do you think they installed all those expensive ID verifying devices for the hell of it?
I'll be blunt: they only did it because they know they'll likely go to jail if they don't collect that information.
They don't collect that data because they want to, they collect it because they are forced to by the US government. This is a similar process that you would have to go through to open a bank account at any US bank. You make it seem like "It took over 45 minutes" but this was your first withdraw, subsequent withdraws would only require the ~10 minutes to confirm your deposit of BTC into the robocoin wallet. 10 minutes to (reliably) convert BTC to cash is unheard of. As I said in another comment, the only faster method would be to use Local Bitcoins (The people running the ATM you used) but I doubt you could finish one of those transactions in less than 20 or even 30 minutes.
Of course, placing the blame on the government instead of the ATM operator doesn't invalidate your observations, but it may alter your view of the solutions.
I'm not convinced that Bitcoin ATMs will be able to get past these restrictions in countries with hyper-complex financial regulatory structures. However, if digital currency succeeds, paper money is sort of a backwards compatibility feature, since the majority will be using their phone (or future unknown digital device) to transfer money independent of a centralized banking network.
I agree, I know several btc enthusiasts in Austin that won't use the thing b/c biometrics.
may not be original source [0]-http://computer-medics.biz/robocoin-rolling-out-first-bitcoi...