Subscribe to our blog
Get ahead with our award-winning insights on the latest developments in the fraud and compliance landscape. Enter your email below to receive our blog posts directly to your inbox.

This year’s Consensus Conference looks to be the biggest Bitcoin and Blockchain conference of the year. The agenda has two tracks, one for business and the other for technology + policy. Plus, the lineup is AMAZING! There are great sessions here.

Listed below are our top sessions for:

  1. Global Expansion of Virtual Currency
  2. Regulatory Requirements of Virtual Currency

Global Expansion of Virtual Currency

Session 1: Building a Global Payments App

Monday, May 2nd, 9:30am
Speaker:
– Jeremy Allaire, Co-Founder & CEO, Circle
– Sean Neville, Co-Founder & CTO, Circle

Circle launched in the US with tremendous fanfare just over two years ago, and this month they launched in the UK where they were the first virtual currency firm granted an e-money license. Granted by the Financial Conduct Authority (FCA), the e-money license enabled Circle to partner with Barclays Bank. Circle is focusing on ‘social payments’ enabling consumers to make payments to other consumers, similar to Venmo. Where Circle has a great advantage compared to others is rather than using the traditional rails, they will use the blockchain, which will makes payments faster and less expensive. In addition, by moving bitcoin ‘under the hood’ Circle makes it easier for more consumers to use bitcoin.

Circle is a very experienced leadership and compliance team, which is excellent because Social Payments is a challenging space for many reasons including:

  • Transactions containing suspicious key words must be flagged
  • Suspicious activity reports must be filed on transactions that are genuinely suspicious within 30 days.
  • There is no minimum dollar amount for sanctions screening against OFAC, HMT and other lists. This means every transaction, no matter the amount, must be screened.
  • Unless the dollar is kept extremely low, transaction monitoring of every user must occur.

Session 2: Digital Currencies in Emerging Markets

Monday, May 2nd, 2:20pm
Speakers:
– Ola Doudin, BitOasis
– Pablo Gonzalez, Bitso
– Ben Gorlick, Blockstream
– Sunny Ray, Unocoin
– Marcus Swanepoel, BitX
– Moderator: James Wester, IDC

Digital currency is country agnostic. It works the same in North Korea as it does in Norway. In fact, many believe the growth of bitcoin will come from emerging markets where the payments infrastructure is not as developed and the local currencies may not be as stable. This panel has a stacked line-up of CEO’s representing exchanges on four continents and specifically covering the countries of Mexico, Dubai, India, and South Africa.

This is a great opportunity to learn about the challenges that these virtual companies have faced in rolling out digital currencies in emerging markets. The challenges our clients have seen are different than elsewhere as

  • No actual regulation – It can be great that bitcoin is not included in AML regulation, however it means risk because when regulation comes it can be lax, or it can outlaw bitcoin usage.
  • Easily validate users – Name/Address databases exist in most developed nations. This makes it easy to validate that a customer exists and is not on a sanctions list. In emerging markets where these lists often don’t exist, it means validating users through document verification which has more friction and is often more expensive.

Regulatory Requirements of Virtual Currency

Session 3: Banking for Virtual Currency Companies

Tuesday, May 3rd, 1:30pm
Speakers:
– Alan Lane, Silvergate Bank
– Ted Rogers, Xapo
– Pratin Vallabhaneni, Arnold & Porter
– Moderator: Robin Weisman, Coin Center

Banking relationships in the U.S. are not easy to find for virtual currency firms. In fact, they are nearly impossible. There are only a handful of banks that provide full banking services to virtual currency exchanges, not just operational accounts. We are hoping the speakers will address the following:

  • Silvergate Bank: What they look for in virtual currency clients and how they maintain regulator approval.
  • Xapo: How they acquired banking relationships and how they maintain them during times of de-risking.
  • Arnold & Porter: The legal requirements that both virtual currency companies and banks must keep in mind.

We’ve seen banks blamed for not working with virtual currency companies, however many people inside of banks would like to work with these companies. A large part of the issue is regulatory, but some of the issue is that virtual currency companies don’t often understand how banks operate, specifically regarding risk.

Banks need the following to even consider work

  • Experienced team: Looking for stability and individuals and advisors who have successfully operated a company before, preferably in the space.
  • Experienced compliance team: This can be either a fulltime compliance officer who has a strong background in compliance, or a relationship with compliance gurus.
  • Policies, Procedures, and Controls: Banks needs to see that these fit your institution and are not just downloaded from an internet template.
  • Financial robustness: Working with a virtual currency company will cost a bank a tremendous amount of resources (financial and time), they need to know you will likely be around in five years.

It’s no surprise that the virtual currency firms with banking relationships in the US have an experienced team, especially in compliance, and have raised funds

Session 4: The Future of Regulation

Tuesday, May 3rd, 4:50pm
Speakers:
– Jennifer Shasky Calvery, FinCEN
– J. Christopher Giancarlo, CFTC
– Benjamin Lawsky, The Lawsky Group
– Mark Wetjen, DTCC
– Moderator: Jerry Brito, Coin Center

Why are banking relationships in the U.S. not easy to find? Many believe it’s because of the regulatory agencies on this panel – This is mostly not true.

FinCEN’s guidance in March 2013 stipulated that bitcoin exchanges are money service businesses (MSBs) and needed to be regulated as such. This includes registering with FinCEN as a MSB, gaining state licenses wherever they operate, and complying with Anti-Money Laundering regulation, both Know Your Customer (KYC) and transaction monitoring.

In June 2015, independent of any Federal regulatory agency, the Ben Lawsky led New York Department of Financial Services (NYDFS) unveiled the ‘BitLicense’ the strictest virtual currency regulation by any state.

What this means is that these are the perfect panelists to speak on the future of regulation. In fact, no regulatory panel has ever had these relevant speakers all in one place!

  • We expect FinCEN to list what they’re focusing on in the space, they are the regulator who fined Ripple last year. This could be many things including exchanges that don’t touch fiat currency such as Shapeshift, exchanges with no KYC such as BTC-E, or virtual currency ATM’s.
  • We expect Ben Lawsky to discuss the BitLicense. Even though only one company has been granted a license, much to the disappointment of the community, we can expect to hear more about why it was needed. In addition, Mr. Lawsky is consulting for blockchain companies and will likely discuss where regulation is heading.
  • We expect the CFTC, to discuss their ruling that bitcoin is a commodity, and therefore under their jurisdiction. The implications of this are that they could investigate virtual currency exchanges and derivatives.

 

Attending the show? Schedule time to meet with us!
[email protected]

ONBOARD: Simplifying Account Protection and Compliance for FinTech.

onboard_splash-01.png