Bitcoin Bank?

One of the toughest parts of running a bitcoin business that actually handles transactions has been securing bank accounts and banking relationships. So in some respects, today’s rumors about itBit applying for a banking license in New York should come as no surprise. In reality, of course, this would indeed be a monumental development, not only in bitcoin, but in financial services more broadly.

Not too long ago, I had a chance to ask a regulator from the banking industry what it would take for a bitcoin company to secure a banking license, and he all but laughed at me. This was someone who (obviously) knew what he was talking about, sat in a position of authority and was neutral to positive on bitcoin, even if he was skeptical that the technology would prove compatible with the broader financial system due to coin “taint” from illicit activity. He pointed out that new banking licenses and even potential banking license acquisitions (by non-banks) simply don’t get approved very often these days. The last may have been back in 2011, when Green Dot acquired a bank holding company in California. At the time, though, Green Dot had already racked up over a decade of phenomenal results and audited financials…it had already crafted the prepaid debit regs and proven the utility of the model.

It seems beyond belief to expect a similar feat could be achieved by a small ~2 year old bitcoin exchange with no real results.

[And man, would I be happy to be wrong here. Does the itBit bank license application necessarily mean that the applicant is seeking to become a bank holding company or are there various levels of licensure that aren’t being discussed here?]

There’s only one thing that makes be believe that this is even remotely possible, and that is that the NY regulators (Ben Lawsky in particular) have gotten along well with this team and would like to notch a political victory by fostering the development of a leading bitcoin exchange and digital currency bank in Manhattan. A phone call from Ben Lawsky would certainly have helped to secure the board directors that have allegedly signed as co-organizers on the company’s supposed bank application: Sheila Bair (FDIC), Robert Herz (FASB) and former U.S. Sen. Bill Bradley.

We’ve got to stop to think, though: what does this really mean?

Deposit insurance on bitcoin? That seems impossible; the federal government would never go for that. Fractional reserve or any sort of lending? Very, very doubtful. It strikes me as more likely that this is a kitchen sink approach towards compliance with bitcoin regulation. If the BitLicense already seems onerous, and more heavily regulated banks can get an exemption from the BitLicense while providing additional services, it might be a good gamble that keeps the company one step ahead from Coinbase, Circle and Xapo — all of which are essentially acting as banks via their respective vault services anyway.

It’s definitely the most recent move in a super-long-dated game of high stakes chess itBit seems to be playing. That is, if you build it (with permission), you’ll catch up to the early leaders and quickly leapfrog them with the mainstreamers.

Anyone else have a theory to share?

Events: “Bitcoin 2015” is happening this fall. Stay tuned.

Jobs, Jobs, Jobs

Coinbase Product Manager, Exchange

Summary: Coinbase is the leading bitcoin wallet and brokerage business in the world. The company recently launched the first US-compliant bitcoin exchange — previously, the dominant bitcoin exchanges have been unregulated, offshore exchanges with little access to the U.S. banking system. The Product Manager will lead Coinbase’s efforts to make the Coinbase exchange #1 worldwide in users, institutional partners, volume, etc. The best candidates for the position are metrics-driven leaders who are technical or have some technical background, with a preference for folks with experience growing a business line and/or working with trading or exchange technologies.

Full job description here

ConsenSys, New York (
Blockchain production studio building decentralized applications in the blockchain 2.0 space (mostly on Ethereum). These tools will be packaged into separate ventures that are individually funded and skinned for different business niches. We are hiring 5–15 students for a summer internship program where they will have access to our amazing team and have the opportunity to plug into numerous ongoing projects. (Since ConsenSys is itself a somewhat decentralized company, with personnel in various cities, remote working interns may be considered.)
-Please apply by sending an email to with work samples, resume, and general interests in the space. If you include a proposal for a dApp, smart contract, or other useful tool you want to build, we may consider the development of that project.

Abra, San Francisco (VC-Backed)

The 2.0 remittance app that just won the Launch Festival last week is looking for two senior engineering hires. (

-iOS Dev Lead — Min 5 years development experience with at least 3 years on iPhone. Must understand location services, UI programming, and other core iOS servIces.

-If you think you’re a good match or know someone who is, email

Grayscale Investments, New York (a DCG Company)
The manager of the Bitcoin Investment trust, the first publicly traded bitcoin investment vehicle, is making two non-engineering hires. (

-Account Manager — Min 3 years of demonstrated sales-driven success within the financial industry, preferably in an investor development or capital raising role; Series 7 and 63 licenses certifications. More info here.

-Marketing Manager — Min 4 years of demonstrated success in product marketing, preferably in the financial space; looking for candidates with experience marketing either public or private investment products and/or marketing for asset management businesses. More info here.

Bolt, San Francisco (VC-backed)
The stealth startup focused on consumer applications of Bitcoin is making a number of engineering hires including Security Engineer, Ruby Engineer, and UI/UX Designer.
-Check out Bolt ( and email

Elliptic, London (VC-backed)
-The full-service bitcoin custodian is also making a number of key hires including data scientists and front-end developers.
-Learn more and apply at

Today’s Tid Bits

The Cloud is Dead. Long Live the Cloud.
According to Gartner, there will be 26 billion Internet-connected objects by 2020, many of them relying on the centralized cloud. IBM and Samsung both stand to benefit from this shift, but are moving away from this centralized model to one that is built on the blockchain, the transactional engine that powers Bitcoin. IBM and Samsung believe that connecting devices through the blockchain will be faster and more secure. The two tech giants have already partnered to create a platform called Adept that allows for the decentralized connection of the Internet of Things.

Genesis Trading Partners with BitGo to Streamline Bitcoin wallet Security and Management
BitGo, the leading bitcoin security platform, and Genesis Trading, the first broker-dealer in the US, regulated by FINRA and the SEC, have partnered to specialize in trading bitcoin. The two are working to create a digital currency trading platform specializing in large trades for private and institutional investors. Genesis Trading, which previously operated as the Trading Division of SecondMarket, has traded more than 800,000 bitcoin worth more than $300 million since April of 2013.

Bitcoin Core Developers Join MIT Digital Currency Initiative
Gavin Andresen, Cory Fields and Wladimir van der Laan, Bitcoin’s core developers, have joined the MIT Digital Currency Initiative in a full-time capacity. The three developers, who had previously been supported financially by the Bitcoin Foundation, are now collectively continuing their work with support from the MIT Media Lab. Andresen, Fields, and Wladimir will continue to work on the core development of Bitcoin.

Lawsky: BitLicense Will Be Finalized By End of May
Benjamin M. Lawsky, the superintendent of the New York Department of Financial Services, anticipates the final version of the BitLicense regulatory framework to be released sometime before the end of May. Lawsky noted that his office is in contact with other state regulators and is watching how both domestic and foreign regulation of digital currency activities takes shape. The BitLicense, which will regulate bitcoin business activity in the state of New York, has gone through months of comment period and revision and will be released “very soon.”

Brock Pierce Elected Bitcoin Foundation Board Chairman
Brock Pierce has been named chairman of the board of directors at the Bitcoin Foundation by a 3–0 vote on Tuesday, with an abstaining vote from board member Olivier Janssens. Pierce was elected to the Foundation in May of 2014, and nominated by board member Bobby Lee, CEO of BTC China, for the position. Pierce will work with newly appointed executive director, Bruce Fenton, to shape the Foundation’s 2015 strategy.

Spanish Bitcoin Community Celebrates Bitcoin’s VAT Exemption
Ministerio de Hacienda, a spokesperson from Spain’s tax office, has confirmed that bitcoin is exempt from Spain’s Value Added Tax (VAT). Bitcoin startups and legal experts in Spain are praising the administration’s decision, which will provide clarity for the startup’s otherwise uncertain regulatory future. It should be noted, that the Spanish banks BBVA and Bankinter are also currently invested in bitcoin companies.

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