Wells Fargo, America's Largest Bank By Market Cap, Pushing To Offer Bitcoin Services
Submitted by Tyler Durden on 01/14/2014 21:24 -0500
Earlier we pointed out that mortgage origination at Wells Fargo - the bank's bread and butter - is crashing at an unprecedented pace, and as per the conference call, Q1 isn't looking any better. Naturally, it stood to reason that the bank would seek alternative business and product lines to supplant the declining revenue it used to generate when it would originate some $100 billion in mortgages every quarter, now half that number. However, not even in our wildest dreams did we predict just what this "alternative" product would be. Because, as the FT reports, Wells Fargo, the largest US bank by market cap, is currently exploring Bitcoin as just that revenue replacement source. Per the FT: "Wells’ anti-money laundering chief, Jim Richards, has launched a group to examine how it might safely offer Bitcoin-related services or banking arrangements to virtual currency entrepreneurs, according to people familiar with the initiative."
Wells chief executive John Stumpf said it was the bank’s practice to examine financial innovations.“We have made enormous investments as a company and as an industry in a payments system that is secure, and we need to be sure we are up to speed with what other things are going on and their risks and rewards,” he said.“We want to make sure we understand what it is, what it does and what it does not . . . . The world is changing and will continue to change. Whether Bitcoin will be a big part of that, who knows?”
As the FT accurately points out, "the difficulty in persuading financial institutions to offer bank accounts has become one of the biggest difficulties facing Bitcoin entrepreneurs in the US." Which of course means it is also a great opportunity for the first entrant, such as what almost certainly appears to be Wells:
Wells’ public-private group, comprising more than a dozen members, was scheduled to meet in San Francisco on Tuesday to debate the security issues surrounding banking and Bitcoin. One possible aim would be to produce a set of anti-money laundering principles for established financial institutions to follow when dealing with virtual currency start-ups, according to a person familiar with the event.
Naturally, the US government's desire to increasingly regulate Bitcoin has pushed it to scramble in clearing up what the legal status of Bitcoin is: "last month the Congressional Research Service circulated a report on virtual currencies for policy makers, setting out a list of areas where the legal and regulatory approach to Bitcoin remains unclear. These range from national tax issues, because Bitcoin profits are not recorded within the traditional financial system, to concerns among individual states."
However, as HSBC and various other criminal banks have shown, if a client is willing to pay for a service, regulations and/or laws is the last thing banks are concerned with, so while the US Congress and Fed dither on how to treat Bitcoin first Wells and soon all other banks will provide some Bitcoin-related services.
Then the only question becomes whether the people who have used Bitcoin in the past precisely because it remained at more than arms length away from the big money centers, will continue to do so now that BTC is for all intents and purposes just another institutionalized asset, if not quite currency just yet.
Keeping prices low
Bitcoin ATMs Are Coming To New York City
Submitted by Tyler Durden on 01/12/2014 12:56 -0500
With over 1,000 new merchants adopting Bitcoin every week, it is perhaps not surprising that, as NY Post reports, the first Bitcoin ATM is about to debut in New York City. Following success in Canada and Europe, Brooklyn native Willard Ling, 30, is set to introduce the first bitcoin ATM to New York City at the East Village bubble tea shop 'Just Sweet'. State regulators with the Department of Financial Services are expected to hold hearings later this month to discuss how the digital currency should be regulated; and until then, Ling’s bitcoin ATM will sit in his apartment.
Josh Harvey, co-founder of Lamassu, showed off the first bitcoin dispenser at last week’s Consumer Electronics Show and has found quite a bit of interest for the $5,000 machines.
How does the ATM work?
The machine, designed and manufactured in Portugal, looks like a typical deli ATM — butfunctions more like a vending machine. You put in US dollars and receive bitcoins back on your phone.Users first download a bitcoin wallet mobile app — such as BlockChain or Mycelium — and set a password. A black-and-white QR code appears. They press the phone against the ATM’s glass window so it can scan the code, then feed in cash.Presto, the machine sends bitcoins to the phone.
Coming To New York...
Brooklyn native Willard Ling, 30, is set to introduce the first bitcoin ATM to New York City.After scouting locations, he has chosen the East Village bubble tea shop Just Sweet, on 3rd Avenue and 12th Street. He is now in talks with the owners on a rent deal.
But there are still hurdles...
State regulators with the Department of Financial Services are expected to hold hearings later this month to discuss bitcoin and how it should be regulated.Until rules are drawn up, Ling’s bitcoin ATM will sit in his apartment.He thinks New York should get on with it if it wants to still be considered a center of finance.
We would tend to agree since, as Mike Krieger at Liberty Blitzkrieg notes, over 1,000 new merchants are accepting Bitcoin per week (via BitPay alone)...
Earlier today, the Bitcoin news website Coindesk reported that BitPay is adding 1,000 new merchants per week, within an article highlighting the fact that private jet company PrivateFly had just teamed up with the payment processor to accept BTC for its charter flights.
Just to put this into perspective and understand just how staggering this growth it, BitPay only first surpassed 1,000 total merchants in September 2012 and a total of 10,000 in September 2013. At its current growth rate, the company is set to double the milestone of 10,000 merchants every two and a half months. Incredible.
“We believe that merchants are starting to see the value that accepting bitcoin can bring to their business,” said BitPay’s Jan Jahosky. “We’re adding merchants at a pace of 1,000 new merchants per week.”“We expect exponential growth in the popularity of bitcoin around the world with both merchants and consumers, and anticipate seeing the biggest growth in China, India, Russia and South America.”
Full article here.
Overstock's First Day Of Bitcoin: $130,000 Sales, 840 Transactions, CEO "Stunned"
Submitted by Tyler Durden on 01/11/2014 15:56 -0500
Submitted by Michael Krieger of Liberty Blitzkrieg blog,
Upon the conclusion of the Senate hearing on Bitcoin this past November, I tweeted that I thought we had entered Phase 2 of the Bitcoin story. A month later, following news that Andreessen Horowitz had led an venture capital investment of $25 million in Coinbase, I wrote:
As I tweeted at the time, I think Bitcoin began phase two of its growth and adoption cycle upon the conclusion of the Senate hearings last month (I suggest reading: My Thoughts on the Bitcoin Hearing).I think phase two will be primarily characterized by two things. More mainstream adoption and ease of use, as well as increasingly large investments by venture capitalists. In the past 24 hours, we have seen evidence of both.
Phase 2 so far is going even more positively than I had expected. Overstock.com accelerated its plans to accept BTC by many months, and the early rollout has been a massive success. The company’s CEO just tweeted: