Topic: Why is UK so slow to jump on this? - page 2. (Read 7726 times)

It will be interesting to see exactly who will be involved and how they will overcome the numerous obstacles described here. Of course, anything with Keiser's name on will be received favourably and may attract more business than the actual offering deserves.

As the noose of legislation (worldwide) tightens, perhaps all the benefits of bitcoin/trading (pseudo-anonimity, portability and circumvention of the state) will be degraded to a point where trading in person and with cold hard cash (until that is taken away too!) is the only useful option?

BB.

Ladies and Gentleman. Max has just spoken on twitter....

Max Keiser ‏@maxkeiser

So - pleased to announce that I'm now in discussion re: setting up a UK based exchange (as I've been saying the 'exchange piece' is weak)

LOL.  Brilliant post!

I agree also that Amir isn't giving Bitcoin a good run for its money in the public's eye with the way he looks.

Fact is that like it or not, people judge by superficial appearances.  For the average person, they can get the impression that Bitcoin is run from a squat in East London, by dropouts for dropouts.

Im not saying he should wear a suit and tie, just not to look so way out for the cameras, as it freaks out the average joe q. public.

Especially when the subject matter is about money, which involves matters of confidence, reliability, security and so on.

Eh, no stress, right? Don't we expect bitcoin for more than a couple of weeks? All infrastructure won't appear overnight.

Thought I'd go through and summarise some of the stuff said in this thread and add some extra thoughts as to why Bitcoin isn’t as widely traded and accepted in the UK as elsewhere and a bit on places to get bitcoins in the UK.


Legal
Bitcoin is subject to AML/KYC laws. This has caught out a lot of people in the UK. (e.g. http://bitcoinmagazine.com/interview-with-glbses-nefario/ )

On top of that AML/KYC is expensive to do properly and is a very unsure market. Try going to raise some capital from investors for an idea that revolves around a currency which can fluctuate 25% in a day, and could (and has) loose half of it's value in a matter of days and remain below that level for nearly a year.

Most of us here have faith in Bitcoin. But nobody can deny it's risky. There have been a lot of cases of people losing a lot of money with Bitcoin through hacks, market crash and fraud and unfortunately, they're the sort of stories that make the news in the UK. This makes it harder to get the cash required to overcome the AML/KYC hurdles, as well as money for proper legal and financial advice

It's not formally recognised as a currency, but it is recognized as a virtual currency scheme (http://www.ecb.int/pub/pdf/other/virtualcurrencyschemes201210en.pdf) but that comes with very little legislation.

For VAT, someone wrote to HMRC. It may have been in the thread, or another, the tab was still open in my browser and I can’t figure out where I found the link, but here it is (https://www.dropbox.com/s/wmpjyym7xztqygx/IMG_20130324_131647.jpg) suggests that if your turn over is over the VAT limit then you must pay VAT.

In theory, Bitcoin shouldn't be affected by Electronic Money Regulation 2011 (because it's not technically e-money according to EU definition - see ECB document above.) EMR is targeted at emoney issuers, if Bitcoin was covered, I suspect the issuer may technically be Satoshi, since an issuer refers typically to initial distribution (e.g. you local shop isn't a money issuer when they give you change.)

With laws governing money, people really need to NOT take the “shoot first, ask questions later” with regards to applicable laws like a lot of now defunct UK Bitcoin services have. If you make any money with anything, your bank and HMRC will be after you for their cut and ignorance is not an excuse. Services that have done such things like Britcoin/intersango do more harm than good, inconveniencing themselves, their customers and the entire Bitcoin community.

Some other laws related: we are protected by the Fraud Act. If you've been scammed with Bitcoin, there is a law that in theory can be used in court. Fraud Act revolves around "misrepresentation of value." Pick any site handling Bitcoin as your evidence for value.

Also protected (as above) from wallet theft via Computer Misuse Act '98 unless you gave the person permission to use your computer (in which case, you could probably still get them with Fraud.)

Another interesting little law overlooked but worth mentioning: Regulation of Investigatory Powers Act 2000, part III. It’s basically a crypto key disclosure law. The police can legally force you to hand over all your private keys or face 2 years in prison. I don’t think this has been used in a case with Bitcoin yet, but I wouldn’t be surprised to see it happen in the future. This could be used to prove that a person received or sent Bitcoins or effectively steal or recover bitcoins gathered through perceived illegitimate methods.



 Social
bank/government and customer relations
There's a lot of mistrust of the banks right now in UK as well as the rest of the EU. As you're all aware Bitcoin got quite a boost from the Cyprus hoohaa, so lack of faith in UK banking is a good thing for Bitcoin uptake in the UK to some extent.

However, the Banks and Government don’t trust us as customers. Bitcoin makes it very challenging to do tax. Initially most people will say “why is it a problem? Stick it on your tax return and all is good.” With the exception of figuring out how to put it on the tax return, that would be true. However, the problem arises in that the Banks and Government can’t/won’t/don’t trust us to all be honest.

Bitcoin makes doing a tax audit more challenging. E.g. they audit Alice because they believe Alice is not being honest with regards to the value that she holds, specifically the amount of BTC. HMRC (the taxman) can’t just go to the banks and ask for a bank statement of Alice’s BTC because banks don’t have that info. Also, they can’t just ask the bank for a log of all transactions out to an exchange, because that doesn’t account for bitcoin price rises or money paid to them through Bitcoin.

There’s also the argument that “Blockchain is public, go look it up on there” – that again relies on Alice being honest about her keys. They could try getting the keys through RIPA, but it’s not hard for Alice to write down a few private keys with a huge balance in UTXOs and hide it behind some wall paper or something and deny all knowledge.

This point is a little bit void though because one could argue that it’s just as easy to set up off shore bank accounts and hide money there to avoid tax. True, it is, and offshore banks are a massive pain in the ass for govs/banks, so why would they encourage another system that causes the same problems?

(I may generate some hate here, but here goes) This all again comes back to trust. One could say “well they should trust us to be honest with our tax.” Why should the gov/banks trust us to pay our taxes or fees, just look at this thread. There’s a lot of talk about how to wing it to not pay tax. I, like the next person, dislikes paying tax. However, it’s a necessary evil (alright, maybe not in the amounts they charge) and I think morally, if we’ve ever walked on a road, been to a public school, been treated by the NHS etc.etc.etc. then we should all pay at least SOME tax.  However, the tax issue is not really specific to the UK. UK gov apparently needs all the money it can get these days.

In the news
Interest in Bitcoin is definitely going up. The news is featuring it more, particularly BBC, with articles that aren't all bad - although a good portion are related somehow to hacking. (To any non regular BBC-UK news readers, on behalf of the people of the UK, please accept my apologies for the lack of spelling, grammar or fact checking in any of the articles linked to in the link below.):
http://lmgtfy.com/?q=site%3Awww.bbc.co.uk%2Fnews%2F+Bitcoin

Although the general tone is getting more positive, most people were aware of the first few articles about silkroad, mtgox hack, and other hacks. Now, even a good article is probably acknowledged by lots as “oh that currency that got hacked and is used for drugs.” That is changing I think, but it’s a hard image to shake off.


 Spokes people for Bitcoin and its image in the UK
http://www.guardian.co.uk/technology/video/2013/mar/22/bitcoin-currency-video
People like Amir Taaki. As much as I appreciated him when Britcoin was going fine, I don’t think Amir is a suitable public character for Bitcoin in the UK. Videos like the one above mean when people think of Bitcoin, they think of people like Amir.

 Imagine if your bank came out with a promo, and spokesperson lived in a squat, wears a beanie, speaks with AQI, say things like “I had loads of Bitcoin, but I sold them for $100 and I was like ‘woooo!’  then it went up to $30 and I was like ‘fuck they’d be be worth like half a million dollars – but whatever, but it’s not about the money...” and “stopping people taking drugs is like stopping people having sex”  and “I feel responsibility because I have this skill that not many other people have.” Whilst I agree with the sentiment of most of what he’s saying, and his style of dress and presentation is not too dissimilar to my own, I don’t think he presents the right image for larger adoption in the UK. Having Amir do high profile videos in UK news relating to Bitcoin I think is generating an image which is not an image 75%+ of the UK like, agree with or are willing to follow or subscribe to. (Just to clarify, I have no problem with how Amir chooses to live or present himself – I even have some respect for him in some way – I just don’t think it’s the image to help Bitcoin in the UK.)

Similar to what someone said earlier in the thread, people are to some extent indoctrinated in that they haven’t questioned the alternatives to the current system. I’m not sure they’re wanting or willing to either. As a result I think Bitcoin adoption in the UK would be helped if it wasn’t sold as an anarchists wet dream to overthrow the banks, but more as a fast cheap way of sending and receiving money or paying for things, as well as a potential investment opportunity.


usability
Due to the lack of large adoption, there are not many convenient UK based Bitcoin services, very few online wallets or genuine legitimate exchanges or places to buy things. A lot of people aren’t tech savvy and may not inherently trust themselves to look after a single file that maybe worth a lot of money. I think it would help if there were some services or documents targeted specifically at the UK luddite. “Transfer money from your bank to this account, see your bitcoins here” level of simple, non of this “first go download a client, wait for the blockchain to finish synching, go try find an exchange, figure out the niche obscure payment system they accept etc.etc.etc.”

Also, I believe the average Joe likes a lot of features provided by services such as PayPal. I don’t think they want to be under the impression that if they pay for something, they don’t have a bank or similar to complain to if they’re scammed or lose their money. There’s no reason a decent centralised 3rd party system that offers protection such as PayPal couldn’t be setup for Bitcoin. For users of Bitcoin now, that may undermine the point of Bitcoin as a decentralised system with no authority of transactions, but the average UK citizens doesn’t care for that sort of stuff too much right now, they want to know their money is safe, regardless of the own incompetence.


For buying bitcoin
WikileaksDude posted earlier this url which seems really useful – takes 48 hours to get money into Bitstamp, and minimal fees along the way (maybe 1 – 2%):
www.bitcoinuk.blogspot.com

Also:
https://bitbargain.co.uk/
https://localbitcoins.com/

If you’re feeling risky:
http://www.ebay.co.uk

Thanks,
Dom.

Disclaimer: above is largely my own (and others) opinions and observations, not legal advice or even necessarily objective facts.

The only advantage as i see it, is the leverage. But then, 95% of FX traders, do not turn a mid-long term profit!

From a quick look, the first site (VenetFX) is an actual FX trading platform, regulated by the FSA, whereas the second is a separate, non-regulated service, that piggybacks on VenetFX's platform to provide trading on FX pairs (probably with pass-through prices). Accepting only BTC as payments, and counting PnL in BTC, is a way to bypass the requirement for FSA regulation (no need for regulation if you don't take deposits, and because bitcoin is still not recognised as currency in the UK, they are not technically handling clients' money). Personally, if I wanted to trade FX, I would prefer to deal with an FSA regulated platform.

Just found this...... http://venetfx.com/ + http://bit4x.com/ which are affiliated.
 
Isnt quite what we are after, as you cant trade bitcoins....you trade with, bitcoins. Progress though, i guess.

For the past week or so I have been going through the OKPay process - this seems to be a good system so far to convert your bitcoins into fiat.

Obviously, its not good as a long term aim, but until I can buy stuff in bitcoins, this is the best option for me!

Next danger is being accused of tax evasion! At least this system has an audit trail so that any accusations can be dealt with quickly!

It would be nice if you read what I wrote instead of putting words on my mouth.

On point 1, I said it's free and practically instant to use Faster Payments, not debit/credit cards. Isn't this the case?
Debit/credit card usage of course is NOT free, but this is not an apples to apples comparison, as these methods offer a certain degree of protection so it's really a different product. To compare on similar terms, you can set up a system where you accept payments via Faster Payments, then you won't have to pay a fee. As a professional, you can certainly be paid that way, I have paid people like this many times.
For transfers abroad, you can use services as transferwise or similar ones, for a total cost less than the one it currently takes to transfer back and forth between fiat1 -> BTC -> fiat2. I've transferred between GBP, EUR and USD several times paying a total of 0.5% for the FX conversion compared to interbank prices, for example, if GBP=1.5338USD right now, I would pay 10k GBP to get USD 15261 in the US without any other transaction fees. Admittedly, this transfer is not instant, so clearly BTC has an advantage there, but at a significant cost, currently >3% in total to transfer across all the exchanges/currencies (which may be even more costly than doing a wire transfer from a bank). If you use Lloyds (or any other bank) for transfering money to other countries/currencies, you should check the alternatives, and currently the cheapest one is not BTC.
Either way, the original point was about loss of transactions for banks, which doesn't really seem to be the case, as people still use them despite those fees and the abundance of cheaper alternatives (I forgot the mention an even cheaper alternative, Interactive Brokers, where it would cost you practically nothing, maybe 2bps, to transfer between your different currency accounts - of course if you don't use their trading platform it's very costly due to inactivity fees).
It would be very nice to evolve to a point where BTC exchange fees are driven close to zero from increased competition and economies of scale, and then it becomes practically free to move money across countries with BTC, and I certainly hope this will be the case soon. But within the UK for example I can't see why I would prefer it over Faster Payments (same for within the Eurozone for SEPA etc).

On point 2, read again what I wrote. Deposits are not capital, they are liabilities. Withdrawals of deposits reduce the bank's balance sheet, by removing cash from the asset side and deposits from the liability side. They do not reduce the bank's capital, nor its capacity to lend.

And maybe instead of swearing, you should try arguing a little more politely. Just saying.

An interesting series of videos posted by another individual in another thread: http://www.youtube.com/watch?v=bE8i-4HpKlM (Applies to the UK banking sector)

Totally possible under current UK laws.

IF someone with a large amount of btc wished to sell/transfer, then they can as a 'Sole Trader', they do not have to declare anything (as UK does not recognize btc as currency) - UNTIL they transfer the money into fiat, well, which is done straight away as an exchanger.

What you have to declare (and show) is your profit (and how you came about it), when you pass xxx amount you get taxed. You are perfectly entitled to use your own personal bank account as a sole trader.

The trick is - counter balancing profit with expenditure - If you're having just a ton of fiat money show up and you declare it all as profit, then you're gonna get taxed sooner and more rather than later and less.

You counter the profit by stating 'expenditure' - Your expenditure in this case can easily be rental, equipment buying, petrol, lighting (for your own house even), electricity, etc.

Expenditure can even be linear backtraced. Meaning, maybe you borrowed a ton of money, or owe/promised back rent to setup your business (exchanger), and you've promised to pay this off for the next 12 months. Though the best form of expenditure would be in 'buying more stock'.

Seeing as the UK law does not recognise btc atm, it can be considered a commodity.

Now here's where you can 'play the game'.

You transfer enough btc into fiat to enable you to cover all your expenditures, of which the major part should be 'buying more stock', which is really buying more btc.

Most of your actual profit you keep AS btc and spend it as much as possible AS btc (as you probably know, there's many ways to spend btc nowadays). The rest you convert to fiat, buy more btc, pay your bills, and declare what little is left as 'profit' for tax purposes.

Please note: Please do not take my word for gospel because the UK legal system is totally fubard, but if ever anyone was serious in setting this up and wanted advice or pointing in the right direction then feel free to pm me. If I had a vast amount of btc I'd already have set this all up, unfortunately I came late into the btc game (late 2012) and didn't venture much into at the time. You'd need a starting capital, either in fiat or btc, or someone who has the fiat/btc and trusts you, or works with you.

You would be setup as a 'sole trader' who is a 'service provider'.

Enjoy.

Well said!

The banks in the UK have everyone by the short and curlies. They also have no moral compass in their charging methods, when they see a customer has no choice or when they see that they are losing customers, they have no incentive to 'be nice'.  They will charge for everything they can get away with - and as PPI claims have shown, they will charge for things they can't get away with too!

While I initially wanted to get into bitcoins because I could see me making some money out of it, the more dealings I have had with the financial industry, the more I just want to buy and sell exclusively in alt currencies.

The banks can see this happening too and so we are just going to see them getting even more difficult when it comes to moving from bitcoins to fiat and back again!

Come the revolution etc!

Utter crap.

Can you please contact Lloyds Tsb and tell them to stop charging me whenever I transfer money to a bank in a different country then? And whilst you're at it, tell them to stop charging businesses (my own included) to stop charging me for using card services (so my customers can use debit/credit cards). And thats 'internal' within the UK. You'll have to get in touch with Natwest and Barclays and Lloyds, and whichever other banks that I don't use.

Because apparently these major banks (and I suspect RBS and Bank of England also) don't realise that according to you its 'free' and 'instant' to use debit/credit cards.

Can you also ask them wtf is up with a debit/credit card charge taking 3-7 days to go through since it's 'instant'.

And .. ye ... IF I'm transferring £1 million into btc, then the 0.6% transfer rate IS gonna be a bit more costly than £10, but if I was transferring £1 mil, tbh, I wouldn't care about a £10 charge ..

On point 2 .. you really think that a bank with 0 capital would not effect their capital and their ability to lend to suckers ..? What planet are you on? Seriously ... trolololol much?

If I had a billion £ in a bank (or 100,000 people took out £1,000) and took it all out to change to btc, you bet your ass they'd notice and it WOULD affect their capital.

To be fair, maybe you just have lack of understanding of economics, either that or you're a blatant troll.

Not true on either point.

1. Within the UK we have free and instant faster payments. For transfers abroad, given the cost of converting to and from BTC on either end, it's cheaper to use banks and services such as transferwise.

2. Banks do not depend on deposits in order to lend, only on capital. People removing their GBP from their accounts in order to buy BTC does not affect the bank's capital and therefore its capacity to lend at all. People borrowing and lending in BTC p2p market is equally threatening to banks as p2p lending in services such as Zopa, i.e. not much if at all.

Hello to all. I would echo all the wishes for a proper UK based exchange with fast and free GBP transfers back and forth like intersango used to be. A lot of people seem to blame regulations for that, but I would say that regulation in and of itself is not necessarily a bad thing. I would actually feel safer if an FSA regulated BTC exchange came up. Of course this is more costly, so it may be something for the future, if and when volumes (and BTC price) rise to a point where it's worth it for big players to join the game. Until then, I suppose we'll make do with whatever else is out there.

Absolutely. Bitcoin is a competitor for the banks on at least two fronts:

1. loss of transactions: much faster and cheaper for people to do themselves via Bitcoin.

2. loss of bank balances: since the banks don't offer Bitcoin accounts, they lose out on lending capital as well.


But Bitcoin is only a competitor and a threat until the banks embrace and endorse it themselves. Then it becomes a business opportunity.

Like it was with Napster, iTunes  vs HMV, Virgin Megastore and all the rest.

MtGox UK bank account was closed with Barclays

Barclays own PingIt

One would suspect they don't want a virtual currency competing with their own.

We just lost a lot of faith in bitcoin central, with all their downtime to fix mistakes for a security breach.

Guess I'll just stick to local bitcoin trades.