Coin Congress Day 1: Views on New York Compliance, Bitcoin Trading

By July 23, 2014Bitcoin Business
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Coin Congress Day 1: Views on New York Compliance, Bitcoin Trading


Day one of Coin Congress at the Hilton Union Square San Francisco brought a familiar circuit of faces that regularly talk about the cryptocurrency industry.

The event, however, still offered some new perspective and teachable moments. The New York Department of Financial Services (NYDFS) framework document outlining its proposed ‘BitLicense’ plans for regulating digital currencies certainly provided fuel for divergent opinions.

Lawyers, investors and those employed at startups all had differing thoughts regarding the NYDFS’ potential regulations. This topic, along with a few other interesting subjects, were highlights on the first day of the conference, which continues with another jam-packed schedule on 24th July.

A new economy

ZipZap CEO Alan Safahi, an experienced operator in the payments industry, conducted the keynote for Coin Congress, something he playfully noted. “I guess I’m the oldest guy in this space, so they asked me to talk about the state of bitcoin,” he said.

Safahi pointed out in his presentation that the cryptocurrency bellwether, bitcoin, is growing at a dramatic pace versus its counterparts.

He said, in terms of bitcoin’s overall growth:

 “Bitcoin outpaces all altcoins.”

As further evidence of this, he pointed out a number of companies that have emerged around bitcoin’s technology – an ecosystem other coins have not yet developed. Safahi explicitly spoke about solutions providers such as Coinbase and Circle helping bring further legitimacy. “[Now] there’s a whole category of solutions providers,” he added.

His presentation pointed out companies such as BitGo and Kraken as key companies helping to further bitcoin’s use as a novel technical innovation.

Yet there are still things holding bitcoin back. After Safahi’s presentation GoCoin CEO Steve Beauregard was next, lamenting the difficulty of QR codes.

He said:

“Nobody loves QR codes. I think the saying goes, ‘I love QR codes – never’.”

Accelerators not positive on NYDFS framework

A panel featuring some of the top bitcoin startup accelerators did not have a sunny disposition on the subject of what recent regulatory news coming out of the NYDFS will mean for bitcoin businesses.

Boost VC’s Adam Draper, who told the audience that 12 of his newest Tribe 4 of startups are bitcoin companies, may have offered the most succinct opinion.

Draper said:

“The New York rules suck. It was awful. The worst possible outcome. It’s worse than banking regulation.”

“They literally just listed a bunch of rules,” said 500 Startups partner Sean Percival. He also added that user growth is still an immense challenge. “We look at the addressable audience,” Percival said. “And right now the addressable audience is small.”

Accelerator panel. (L-R) Scott Robinson, Sean Percival, Adam Draper, Anthony Di Iorio
Accelerator panel. (L-R) Scott Robinson, Sean Percival, Adam Draper, Anthony Di Iorio

Scott Robinson of Plug and Play Technology Center advised anyone thinking about entering the bitcoin space to start thinking now about how to comply with future regulatory policy. “You should definitely know your KYC/AML really well,” he said.

Anthony Di Iorio, who runs Toronto coworking and accelerator space Decentral, said alternative coins offering advanced properties are an exciting prospect for the future along with the groundbreaking technology bitcoin brought to the masses.

“I’m a big bitcoin fan, but I am a believer in the appcoin systems coming out now,” Di Iorio said.

Lawyers and startups: Have to work with NYDFS

The perfunctory regulation panel – a mainstay at all bitcoin-based conferences – made it known that in their opinion, no matter what, the bitcoin community will have to comply with regulators’ compliance demands.

Dan Wheeler, a regulatory partner at Bryan Cave LLP, said not taking the regulation issue seriously could be very problematic for bitcoin businesses not following the rules.

Wheeler said;

“This is an area that the regulators are very good at. They are very sophisticated in looking at KYC programs. And unfortunately there are consequences for not doing it right.”

Tim Bynum, Chief Compliance officer for BitPay, implored the audience to offer feedback to the New York state regulators.  “Please read all forty pages. KYC is littered throughout the document. We need your comment,” he said.

Bynum added regulation is just going to be part of participating in the bitcoin economy going forward:

“I think concentrate on what is the problem and what is the solution. I think [regulation is] going to be a cost of doing business.”

Jose Caldera, vice president of marketing and products for IdentityMind Global, said the IRS ruling on bitcoin classifying it as property shows the different capabilities BTC has over regular money – and that it is a new paradigm for regulators to think about.

Caldera said:

“I think it deserves its own financial asset class. That’s why it’s property, that’s why it needs that classification.”

Trading bitcoin

Binary Financial managing partner Harry Yeh offered an interesting talk towards the end of the day on the subject of trading bitcoin. He did warn, however, that making money buying and selling BTC for profit is not easy. Yeh noted that it takes a certain amount of ebullience to trade bitcoin.

He said:

“Money management is a very, very important thing when trading bitcoin. Cut your losses early, and let your gains run.”

Yeh talked about different strategies and tools that can be used to trade bitcoin. One tactic he discussed was technical trading with charts alone, and told the audience that his firm Binary Financial uses RTBTC to analyze technical chart information.

Harry Yeh of Binary Financial goes over his firm's popular BTC trading methods.
Harry Yeh of Binary Financial goes over his firm's popular BTC trading methods.

Another trading method for bitcoin that Yeh likes to use is fundamental analysis, trading on news developments. “Fundamental analysis could be [trading on] the NYDFS, or China, news,” he said. “[But] Be careful of bitcointalk and Reddit,” he added.

Yeh recomended using ZeroBlock, Google News or CoinDesk in order to find accurate information about developments in the cryptocurrency industry.

He said:

“Bitcoin’s price reaction to news is much, much heavier than a whale [large investor] coming in and buying bitcoin.”

During his Q&A Yeh added that commissions are a problem for investors who want to start out trading a small amount. A trader starting out with just a single bitcoin could suffer at the expense of cyrptocurrency exchange commissions, he said.

Check back in with CoinDesk tomorrow for a recap of Coin Congress Day 2.

Images via CoinDesk

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