BitPay wants to become their own bank.

stompix

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Quote from: o_e_l_e_o on December 12, 2020, 03:36:59 AM

What kind of insurance will BitPay be providing to customer's crypto and fiat deposits? What will their reserve requirements be?

I guess they will have to comply with the $250 000 FDIC insurance for every account but that would only apply to fiat deposits, there is no requirement for them about crytos. Coinbase has the same stuff, but they claim to have their coins in cold wallets (whatever this means and what percentage it is) insured to full value.

Quote from: o_e_l_e_o on December 12, 2020, 02:42:06 PM

Completely. Given all the shady stuff they already do with abandon, it isn't exactly a stretch to imagine that they will start with fractional reserve and soon move to investing and loaning out customers' deposits without their knowledge.

I'm a bit optimistic here or let's say half optimistic, they are entering a territory with is dominated by Coinbase in the US, and Coinbase has a habit of kissing whatever authority ass comes into their visual range, if they get wind of BitPay playing even a bit dirty they will probably use everything at their disposal to get rid of them. So I guess that for a while BitPay will play by the book, that is if they are allowed to do so in the first place, I've read more articles since my last posts about what Maxine Waters thinks of this and the future is a bit bleak.
Also, I'm rather curious there is absolutely no discussion on bitcointalk about her and her plans.

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Quote from: OROBTC on December 12, 2020, 02:05:24 PM

So, even with their clunky card and payment service, it is still useful for me.

If they set up a bank, their services may become easier to use.

It isn't ease of use that makes me hate BitPay. I'm sure other bitcoin debit card providers have similar requirements (although their terms giving them the ability to "revoke Card privileges or cancel your Card with or without cause or notice" (emphasis mine) is more than a little concerning). It's their general anti-bitcoin and anti-privacy ethos, their support of attacks on bitcoin such as Segwit2X, their security vulnerabilities, which means users should avoid them.

Quote from: NeuroticFish on December 12, 2020, 02:24:00 PM

I don't know how far can they go, but I can easily expect them from selling KYC info and users' buying habits to going onto fractional reserve based banking-like services.

Completely. Given all the shady stuff they already do with abandon, it isn't exactly a stretch to imagine that they will start with fractional reserve and soon move to investing and loaning out customers' deposits without their knowledge. If you keep your coins with a bank, then expect the full range of banking activities.

NeuroticFish

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Quote from: DaveF on December 10, 2020, 12:11:13 PM

Good? Bad?

BitPay is not fair play with bitcoiners and I don't trust them.
I don't know how far can they go, but I can easily expect them from selling KYC info and users' buying habits to going onto fractional reserve based banking-like services.
Although it may sound good, I see it as bad for the ecosystem.

OROBTC

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Quote from: o_e_l_e_o on December 12, 2020, 03:36:59 AM

Kraken already gained approval to turn in to a bank a few months ago, although I've not seen anything since to say they have actually made any progress in doing so.

BitPay already offer debit cards and custodial accounts, so it's not really a huge step for them to form a bank. Not that I would touch it with a 20 foot pole, though, but I'm sure it will help to on-ramp more people in crypto. Hopefully they will quickly discover how terrible BitPay is and move their assets out to their own account.

What kind of insurance will BitPay be providing to customer's crypto and fiat deposits? What will their reserve requirements be? Will they be operating fractional reserve like other fiat banks?

I have been using a debit card (MasterCard) from BitPay for a month or so. BitPay's card can (only?) be loaded from their wallet app, and they have a fairly strict KYC procedure. The system is still a little clumsy to use, but you can take up to $1000 out of an ATM and keep up to $25,000 on your card.

The two merchants I use the most with BTC payments have BitPay as their payment service provider. So, even with their clunky card and payment service, it is still useful for me.

If they set up a bank, their services may become easier to use.

o_e_l_e_o

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Kraken already gained approval to turn in to a bank a few months ago, although I've not seen anything since to say they have actually made any progress in doing so.

BitPay already offer debit cards and custodial accounts, so it's not really a huge step for them to form a bank. Not that I would touch it with a 20 foot pole, though, but I'm sure it will help to on-ramp more people in crypto. Hopefully they will quickly discover how terrible BitPay is and move their assets out to their own account.

What kind of insurance will BitPay be providing to customer's crypto and fiat deposits? What will their reserve requirements be? Will they be operating fractional reserve like other fiat banks?

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I kinda knew that this is coming due to the ramp up on their policies regarding KYC and AML compliance as of late. Either way, Bitpay’s decision to become a fully-pledged bank is still up to the decision of the regulators ultimately, and we as consumers have the decision to utilize them or not. Personally I wouldn’t, and would just stick to my current bank as they can still offer and provide the service that I need from them: savings.

It seems as if bitcoin services are slowly gravitating towards a more traditional setup for their firms, and have left the ‘disruptive tech’ companies that they once belonged to.

stompix

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Quote from: DaveF on December 10, 2020, 12:11:13 PM

Good? Bad?

Neither, everyone is free to choose the path his business will take and everyone is free to decide if they want to sue a service or not.
I've always stayed away from every service that uses bitpay to accept crypto as much as I could not that others are flawless, especially coinpayments with their time window and their optional refunding mechanism which I find laughable at best.

For all the customers the change will not be visible even if they get approved, this is a move more for them to try and anticipate regulations but seems like it's going to be a hard road ahead, especially if Waters will get what she wants, I thought Mnuchin was bad, seems that I underestimated the new financial revolution the democrats are bringing on.

Quote from: DaveF on December 10, 2020, 12:11:13 PM

Everyone says that with bitcoin you can be your own bank. They just took it 1 step more.

Yeah, unfortunately, it's a step back, but again, nothing unexpected, deep down we all knew it and we all know that crypto banks will start appearing and will probably in terms of funds held outweigh private wallets in few years.

mk4

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Not a bad thing as far as I know. Probably nothing different from Square being allowed to operate a bank: it just makes things easier for them in terms of regulations, rather than them needing to bend the knee just to be able to operate.

Doesn't really change the fact that I have a huge distaste for BitPay though.

exstasie

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Quote from: DaveF on December 10, 2020, 12:11:13 PM

Good? Bad? not sure have to think about it for a while.

This may be of no great consequence. According to the article, becoming a national bank would allow Bitpay to bypass the state-by-state money transmitter licensing regime. Maybe that's all this is, a substitute for obtaining state licenses.

If Fincen implements the FATF's new rules as expected, new AML/KYC requirements and other Bank Secrecy Act stuff will be piled on payment processors like Bitpay. I think they're just getting all their ducks in a row so they can continue doing business in the US after that happens.

dunfida

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Its their service and its been a while that they do have that centralized behavior kind of things which means this news isnt really surprising anymore

if they decided to become a bank.For current users that had been using up their service for a while now or to those who had complied on each things that
had been requested then this thing wont really be an issue.

We do love privacy and we do have our own will on simply skipping out if we do look for some service to be heavily centralized to say that not
only Bitpay do exist on giving out such service yet theres still others.

DaveF

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https://www.nasdaq.com/articles/crypto-startup-bitpay-files-to-become-federally-regulated-us-bank-2020-12-09

Start with humor: Everyone says that with bitcoin you can be your own bank. They just took it 1 step more.

Serious, BitPay has has a lot of people (myself included) rag on them about becoming insane with KYC requirements and other things that are not privacy friendly. Now we know why, look like they have been planning this for a while and wanted to get all their i's dotted and t's crossed so as not to get tripped up in some way.
Good? Bad? not sure have to think about it for a while. If they have a seamless integration between BTC and fiat it might not be all bad.

-Dave

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