UPDATED 10:20 EDT / AUGUST 12 2015

Bitcoin Weekly with SiliconANGLE NEWS

Bitcoin Weekly 2015 August 12: New York BItLicense provides cold comfort as Bitcoin business exodus begins

As New York’s BitLicense became official on Saturday, the reaction of the Bitcoin community has become front and center news. While some Bitcoin-related businesses have signaled their intent to apply for and comply with the license, numerous other businesses have begun to leave New York and block customers from the state.

Keep reading to get a detailed examination of the current progress of the BitLicense fallout.

Other news includes Bitcoin’s use in Venezuela and a partnership between Bitcoin exchange CEX.IO and QIWI that brings Russian Rubles to the exchange. Also check out Gyft.com for 5 percent in points rewards for the month of August.

Bitcoin businesses react to New York BitLicense

The implementation of BitLicense in New York by the New York Department of Financial Services (NYDFS) has come with mixed reception from the Bitcoin industry (echoing past criticism): several exchanges have announced that they will stop working with customers in the state, while others have prepared to submit to the license.

BitLicense, known as 23 NYCRR 200 in New York, officially came into effect on Saturday, August 8th. The regulation includes customer identification requirements (as part of anti-money laundering), numerous regulatory agreements, and a $5,000 fee.

New York-based Bitcoin exchange Coinsetter announced Tuesday that it has submitted an application for BlitLicense. In the announcement, Coinsetter’s CEO Jaron Lukasiewicz cited this as a commitment to maintain coverage for New York residents.

Coinsetter is not alone amid businesses applying for BitLicense. Bitstamp has tweeted that it will be applying. MonetaGo is applying as well—it is a bitcoin exchange launched in January this year that supports fixed exchange values. Coinbase may most likely be applying as per previous comments.

The Digital Currency Group posted an image of the BitLicense documentation in a tweet—the license paperwork really takes up quite a bit of space.

This comment resonates as several exchanges have decided to cease supporting New York customers citing BitLicense regulations as too onerous. Over the past week worldwide exchange Bitfinex and San Francisco-based Kraken announced exits from New York. Bitfinex alone represents almost 20 percent of Bitcoin trade volume (jostling with China-based OKCoin and UK-based Bitstamp).

Kraken and Bitfinex are not the only exchanges leaving New York. Amidst those leaving are Bitcoinpaygate, BitQuick.co, Coinfloor, Paxful, Poloniex, and even ShapeShift.io.

“$5,000 for a new startup is a deep expense. When you’re talking about many companies who are in pre-seed stages, they don’t even stand a chance to try,” said BitQuick.co Founder Jad Mubaslat.

LocalBitcoins.com warning posted to New York residents, captured by Dinbits XBT News, news.dinbits.com/2015/08/localbitcoincom-joins-exodus.html

LocalBitcoins.com warning posted to New York residents, captured by Dinbits XBT News

Also today, LocalBitcoins became the newest Bitcoin venture to block New York customers. In a message to users, the ad hoc trading platform warned users about BitLicense and signaled a farewell to NY in a blog post.

“From today onwards users from New York are no longer allowed to use LocalBitcoins because of the legislation known as the BitLicense (23 NYCRR 200),” said the LocalBitcoins team, “which makes it a federal offense to sell virtual currency to people living in New York unless you have applied for the license.”

It’s hard to say if OKCoin will be leaving New York or not, but previous comments from its CTO Changpeng Zhao suggest a negative reaction from the Chinese exchange. Finally, Circle, another Bitcoin wallet service, has previously shown strong misgivings for BitLicense and may be moving forward in blocking New York customers.

Reddit user /u/Future_Prophecy did a great job of running down the rest of the companies who said anything about Bitlicense and their current stance on New York. Much of the above data comes from that post.

PleaseProtectconsumers.org displayed to New York residents visiting Bitcoin-related businesses protesting BitLicense

PleaseProtectconsumers.org displayed to New York residents visiting Bitcoin-related businesses protesting BitLicense

What is PleaseProtectConsumers.org?

Some of the Bitcoin businesses listed above have begun to re-direct IP addresses of New York residents to the website PleaseProtectConsumers.org.

This website opens with a large, red page with the message, “This service is censored in New York State due to regulations which mandate the extraction of your personal, private information. This jeopardizes your safety, so we refuse to do it.”

It goes on to describe that whatever service was accessed is now “blocked” for New York and says this is the case because BitLicense is “reckless and ethically impermissible” due to invasive requirements for private personal information about users. The page goes on to argue that New York’s new regulations (referring to BitLicense) endangers consumers due to these requirements.

Visitors to the website are further directed in how to contact New York State representatives and media such as the Wall Street Journal and the New York Times.

Those businesses currently participating include ShapeShift.io, GoCoin, BitQuick.co, and HolyTransaction.

Coinbase cites Premise as use-case for Bitcoin in Venezuela

Premise Data Corporation is a San Francisco-based technology company that seeks to bring visibility to lesser-understood economies. The company collects and delivers this data via Android apps distributed to people within those economies. In one use case, spotlit by Coinbase, Inc. in a blog post, Premise used bitcoin as a micropayment system to award informants who provided data on product prices, shelf stocks, line lengths in supermarkets, etc. in Venezuela.

Normally, Premise pays tiny amounts to informants who deliver this data to incentivize use of the application. In Venezuela the local currency, the bolivar, has depreciated so much that it makes it less desirable to users. This added with a weak central banking infrastructure makes it hard to pay Venezuelans using cheap, efficient micropayment systems.

Thus, Coinbase argues, makes for an excellent market to use bitcoins as a micropayment system. Premise pays out bitcoins to users who provide data and via a payment gateway, such as Coinbase, users can exchange bitcoins for local currency whenever they like.

According to Coinbase, Premise “has paid out over 45 bitcoin to over 150 people,” which is approximately 12 thousand USD to date.

CEX.IO partners with QIWI to bring Russian rubles to its exchange

CEX.IO Ltd. seeks to expand into the Russian market with rubles on its trading platform. This implementation of BTC/RUB trading is ushered in by a partnership with QIWI, CEX.IO announced on Monday. QIWI is headquarted in Nicosia, Cyprus and a popular payment system in Russian and the Commonwealth of Independent States.

CEX.IO previously suspended its cloud-mining concern, but still persists as a Bitcoin exchange.

QIWI will limit deposits by customers to 25,000 RUB (approximately $400) per day and to 120,000 RUB (about $2,000) per month, but it is possible to exceed those limits if customers are willing to submit to identity verification. QIWI also allows customers to deposit and withdraw funds in RUB with CEX.IO accounts, but also charges a 5.5 percent fee for depositing and a 1.5 percent fee for withdrawal.

As a company QIWI operates electronic payment systems in Armenia, Azerbajdzjan, Estonia, Georgia, India, Israel, Japan, Kazakhstan, Kyrgyzstan, Latvia, Lithuania, Moldavia, Panama, Russia, South Korea, Tajikistan, Thailand, Turkey, Ukraine, United Kingdom, Uzbekistan, Vietnam.

August is Coin Month at Gyft: 5% in Gyft Points with Bitcoin

Gyft Inc., gift card e-retailer that takes Bitcoins for e-cards, has made August Coin Month. As a result, users will receive 5 percent Gyft Points, up from 3%, for Bitcoin purchases.

Coin Month lasts from the beginning of August and ends 9pm PST on August 30, 2015.

No promo code is necessary to participate. Points are automatically added once the payment is processed. iTunes still cannot be bought with bitcoins and gift cards are only redeemable in the U.S.

For more information on Coin Month visit Gyft.com.

Image credit: Bitcoin Logo, thelastminute

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