For those that don't know about a money transmitter license: https://en.wikipedia.org/wiki/Money_transmitter
I had to do look myself to understand why selling a crypto filled USB stick would fit into the definition.
Generating $32,000 in 30 days selling a crypto-filled USB stick
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Re: Generating $32,000 in 30 days selling a crypto-filled USB stick
#92Earlier quoted context omitted.
I think this list of ETN/ETFs behave pretty similarly: https://money.usnews.com/funds/etfs/rankings/multicurrency
Based off that list are you saying companies like T. Rowe Price and Citigroup are offering ETNs and ETFs that have fund compositions that are random for each customer?
Obviously the value proposition is a little bit different but it seems close enough to rhyme. T. Rowe Price and Citigroup aren't saying "the best part about these funds is that you have no idea whats in them!" but in practice these funds behave similarly to the crypto flash drives.
I don't think that the etfs disclose which assets are held on any given day. From the consumers perspective they are buying some mix of currencies, although they don't know exactly which ones. It seems pretty random to me, just not different from the other note holders.
Re: Generating $32,000 in 30 days selling a crypto-filled USB stick
#93Earlier quoted context omitted.
I agree. Have these guys done any legal due diligence on any of this? Any lawyers care to chime in? I thought you couldn’t do this in many states without a money transmitter license. Also, does this constitute financial advise? That’s also a big no no in the USA. The CoinTracker guys (current yc batch who make an app for tracking crypto) mentioned that as a reason for not offering a portfolio management product right…
"Have these guys done any legal due diligence on any of this?" Something, something, move fast and ask for permission later.
In all seriousness, what is the worst that could happen to these guys?
Re: Generating $32,000 in 30 days selling a crypto-filled USB stick
#94Besides that they might be breaking laws in other ways, there is a normal (used by card perso bureaus) procedure for the concern about them generating the private keys. I doubt they use that, but he. It would be a closed system which automatically, using an HSM usually, generates all required secrets and adds them on the stick and then destroys them. To make it be more robust, it would include a procedure which, again automatically and not accessible (by procedural regulation; this is all not technical really) by humans, generates a keypair, somehow provides the private key to the user (email? preferably the user would generate the keypair but if you have to buy these sticks we cannot expect them to?) before destroying it and encrypt the stick content with the pubkey. Some auditor would review the process, software and hardware and put a stamp on it to close off that liability. In this case, the empty usb sticks go into the blackbox (regulatory and possibly also technically) and come out with unreadable content, so who handles them after is no longer relevant for security.
If these guys sit behind their normal work laptops, connected to the interwebs, generating these sticks and sending them off unencrypted, you probably will have a lot of issues if someone comes to look at your operation.
Re: Generating $32,000 in 30 days selling a crypto-filled USB stick
#95Err.. aren't these guys going to run into regulatory problems? You need a license to sell this in the US. Not to mention selling crypto with credit cards is a great way to go broke unless you own the keys like Coinbase does. Also, why would you trust the keys they are sending you? Having someone else generate a wallet for you then sending it to you via a USB key sounds very very bad. I don't get this.
> Err.. aren't these guys going to run into regulatory problems? You need a license to sell this in the US.
We've had some conversations with our legal team at Cooley & some conversations with outside counsel at Goodwin Procter. They have not been able to reach consensus on whether we fall within regulatory oversight. Until then, we're not going to be selling anymore in the United States. It comes down to whether this is art or a collectible or not. We're working on it & have stopped sales for the time being. :)
> Not to mention selling crypto with credit cards is a great way to go broke unless you own the keys like Coinbase does.
This is a fair point, there is actually trust on both sides of the relationship here - we're trusting that our customers will not chargeback & they're trusting us not to steal their keys.
> Also, why would you trust the keys they are sending you? Having someone else generate a wallet for you then sending it to you via a USB key sounds very very bad.
We originally thought so as well. When we sold a bunch we were surprised & started talking to our customers. It turns out, they don't want to go through the hassle of finding a wallet creator, disconnecting their computer from the internet, generating a wallet, writing down private keys or mnemonics & securing them.
You can think of this kind of how car dealerships don't run their own mail servers anymore or pizza places don't run their own instance of a bind DNS server. They want the convenience of not having to worry about it.
We're currently working hard on a v2 that makes it a bit more secure while maintaining usability.
> I don't get this.
We really didn't either, but the people that have trusted us with their money helped us understand this: Everyone who is working on cryptocurrency projects is suffering from the curse of knowledge [1] - most of them don't care about the end user.
Re: Generating $32,000 in 30 days selling a crypto-filled USB stick
#96I wouldn't recommend using this for non-trivial amounts of money for hopefully obvious reasons Nor would I recommend the founders continue to run it unless they've consulted a lawyer and are aware they're likely running a money transmitter business. See https://en.bitcoin.it/wiki/Casascius_physical_bitcoins#Suspe... Accepting credit cards as payment for cryptocurrency is also a risky proposition, to say the least.
> I wouldn't recommend using this for non-trivial amounts of money for hopefully obvious reasons
Hey Tom! Guy from the article here. First off, thanks for Metabase. I'm a big fan & recommend it often.
Second, you're absolutely right. We have been capping people at $1500 purchases per month unless they were willing to provide identification & an understanding of the risks associated with our service.
> Nor would I recommend the founders continue to run it unless they've consulted a lawyer and are aware they're likely running a money transmitter business. See https://en.bitcoin.it/wiki/Casascius_physical_bitcoins#Suspe....
Casascius very simply shut down, some of our counsel thinks we have legal basis to not be a money transmitter while other legal counsel believes we may be. We're currently working through that to understand how and where we stand to adapt our offering to be within the limits of the law.
> Accepting credit cards as payment for cryptocurrency is also a risky proposition, to say the least.
Agreed. Mutual trust has been required, we're working on something better than that now :D
Re: Generating $32,000 in 30 days selling a crypto-filled USB stick
#97I don't get it, how did they get these sales if theres nothing on their website https://www.cblocks.io/ "Want a CBlock One? Enter your email - we'll notify you when we launch!"
We stopped selling after our last run of USBs & for the reasons outlined above.
Re: Generating $32,000 in 30 days selling a crypto-filled USB stick
#98Earlier quoted context omitted.
"Have these guys done any legal due diligence on any of this?" Something, something, move fast and ask for permission later.
In all seriousness, what is the worst that could happen to these guys?
"In more extreme situations, taxpayers could be subject to criminal prosecution for failing to properly report the income tax consequences of virtual currency transactions. Criminal charges could include tax evasion and filing a false tax return. Anyone convicted of tax evasion is subject to a prison term of up to five years and a fine of up to $250,000. Anyone convicted of filing a false return is subject to a prison term of up to three years and a fine of up to $250,000."
https://www.irs.gov/newsroom/irs-reminds-taxpayers-to-report...
I'm not their or your lawyer and this isn't advice it is just one among what I assume are many possible examples of penalties that have been asserted for those who are messing around with coins without really thinking them through. I don't know who is doing their taxes or legal prep, maybe they've got this all covered, who knows.
UPDATE: They reply in another comment that they've been advised to avoid US sales for the time being. Makes sense.
Re: Generating $32,000 in 30 days selling a crypto-filled USB stick
#99I wouldn't recommend using this for non-trivial amounts of money for hopefully obvious reasons Nor would I recommend the founders continue to run it unless they've consulted a lawyer and are aware they're likely running a money transmitter business. See https://en.bitcoin.it/wiki/Casascius_physical_bitcoins#Suspe... Accepting credit cards as payment for cryptocurrency is also a risky proposition, to say the least.
> I wouldn't recommend using this for non-trivial amounts of money for hopefully obvious reasons Hey Tom! Guy from the article here. First off, thanks for Metabase. I'm a big fan & recommend it often. Second, you're absolutely right. We have been capping people at $1500 purchases per month unless they were willing to provide identification & an understanding of the risks associated with our service. > Nor would I rec…
> We're currently working through that to understand how and where we stand to adapt our offering to be within the limits of the law.
Trying to claim it's an 'art collectible' (as you say in another comment), doesn't sound like being 'within the limits of the law' - it sounds squarely like trying to find loopholes in the law.
Re: Generating $32,000 in 30 days selling a crypto-filled USB stick
#100Earlier quoted context omitted.
By the time you get it in the mail, it might be double. Or half. I wouldn't want to have to try to explain the volatility of altcoin markets to a grumpy Florida lottery regulator looking to charge you with something.
Cryptocurrencies are treated exactly the same as commodities, legally. So it would be the same thing as if you shipped bars of gold and silver to someone. It really isn't complicated.
Have you personally dealt with receiving commodities like gold from CME group or something? My understanding is it is not simple at all. But would love to hear a person's first hand experience.