Illinois Money Transmitter Licenses for Crypto Companies
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Crypto ‘Exchange of Exchanges’ ShortHop Expands to 7 US States
https://preview.redd.it/jvp4ecyji3j31.png?width=860&format=png&auto=webp&s=c9eaf7617de65fa6822d20c7bd01593cfa275e6d ShortHop, an “exchange of exchanges” for cryptocurrency trading, has launched in seven additional U.S. states. Revealed exclusively to CoinDesk, the exchange and brokerage has opened for business in Indiana, Massachusetts, Nevada, New Jersey, Rhode Island, Arizona and Montana. The Wilmington, Del.-based ShortHop was already live in California, Washington and Illinois. While the exchange’s parent company, technology provider Velocity Markets, is registered as a money services business (MSB) with the Financial Crimes Enforcement Network (FinCEN), ShortHop had to apply for money transmitter licenses in each state where it does business. The company also expects to be licensed in Utah and Pennsylvania next week. As a “spot fill market,” ShortHop allows customers to transact digital asset listings from multiple order books on one screen in addition to its own orders to provide customers with the lowest price, said Velocity Markets CEO Jonathan Kelfer. “You might find that when you go on Binance, the spot price for bitcoin is the quoted price. When you go on Gemini it’s the quoted price there as well,” Kelfer said, by way of example. “We’ll use that in aggregate to get the best price across the ecosystem.” In this way, the company’s model resembles those of Voyager and Fidelity Digital Asset Services, both of which act as brokers, helping customers find the best deals in a highly fragmented market. The difference is that ShortHop also has its own exchange. “ShortHop is a spot market first, but we’re aggregating liquidity across the ecosystem,” Kelfer said, adding that the service is currently plugged into a total of eight exchanges and OTC desks. ShortHop’s organic orders get treated like any other order on the marketplace, but “the more orders, the better the price,” Kelfer said.
Skipping between assets
Kelfer founded the company in the early part of the initial coin offering (ICO) boom, seeing a need for reliable American exchanges. “It was my perspective that there wasn’t a U.S.-based presence where people could reliably base these assets,” Kelfer said. “You really had to get on some Chinese exchange, because U.S. exchanges weren’t listing most of these tokens.” Currently, ShortHop just lists a few major cryptocurrencies. Users can acquire and trade bitcoin, ether, litecoin, bitcoin cash, XRP and Stellar lumens (XLM). ShortHop also allows customers to “hop” between these assets without having to go through multiple conversions on different exchanges. Its technology accomplishes this by cross ordering books to create synthetic pairs. Velocity Markets is also building a digital securities exchange. It owns a broker-dealer under the legal name Distributed Technology Markets that has an alternative trading system form on file at the U.S. Securities and Exchange Commission. The company will be using the broker-dealer license to enable the digital securities exchange, but the company would not disclose when it plans to launch. Right now, new users on ShortHop’s platform receive $25 worth of bitcoin for signing up. The platform at the moment is feeless, and Kelfer plans to subsidize retail users by offering a plug-in service to institutions who want to connect to the exchange’s capabilities. “We’d rather do this than nickel-and-dime retail users who should have access to the same quality of infrastructure that large players do,” Kelfer said. “That’s not to say we won’t layer on fees in the future.” Jonathan Kelfer image via Velocity Markets
Adam S. Tracy Explains The State of Incorporation (Fallacy) Decision
Transcribed from: https://tracyfirm.com/adam-s-tracy-explains-the-state-of-incorporation-fallacy-decision/ Where should I incorporate? What state? I get this question five times a week. What state is better, what state helps me? What state has a better tax regime? Why should I incorporate in Nevada versus Delaware? Right? And the reality is the answer is completely over hyped. There couldn’t be a bigger misunderstanding in terms of what states have certain rights and privileges that others don’t. Your traditional states are like Delaware, Nevada. And then recently you had places like Wyoming and even Florida that have kind of come on, and almost offered cheaper incorporations as sort of a revenue stream for the state in question. But when you’re talking about running a crypto related business, what’s really relevant isn’t what state you incorporate in, but it’s what state you reside and operate from. So, obviously New York has the BIT license requirement. If you’re talking about state money transmitter laws, like Wyoming, which is a popular state to incorporate in, has some different capital requirements for operators of Bitcoin related businesses typically exchanges, right? But at the same time Wyoming is a very small state, and you’re probably not operating from there, statistically speaking. So, you really don’t have to worry about the laws. So the reality is you can incorporate in like a Wyoming and then operate from Illinois, and you have to worry about the laws of the state that you are actually operating from. Right? And if you want to operate in another state then you’ll have to worry about the laws pertaining to cryptocurrency or money transmission in that state, right? But if you can find your activity to a certain state or the nature of your activities such that you can deem every transaction you effectively encounter to occur in that state, which by contract you definitely can, then you only really need to concern yourself with the laws of that state. So to answer the question, you know, I’m a big proponent of cost, right? Like when I look at Delaware, you’re looking at almost $1,100. When I look at Nevada, they hit you with this business list, which takes their $150 Corporation and makes it almost $800, and you don’t really get a great deal of benefit from that. Right? I mean, there’s some speed and convenience elements to Nevada that make it very cogent, like in terms of having a robust online platform and quick turnarounds of formations which to a large extent can make it worthwhile. But, you know, from a legal perspective, you look at a state like Wyoming, which is really just pattern, its corporations code against the Nevada code, which in turn was an amalgamation of Delaware — the original sort of corporate Hub — and then all the case law that has developed which makes Delaware an attractive place to incorporate. But if you’re looking for convenience and sort of speed, Nevada’s great. If you’re looking for the same legal protections and not keen to pay thousands of dollars a year, especially when you start increasing number of shares in your paid-in capital or the tax your yearly franchise tax can go through the roof, then look at Wyoming. You can incorporate online immediately. It’s $100 cost, and you get the same protections and privileges as Nevada. So, you know, but at the end of the day, any state is pretty much on par with all others. I think the difference is very overstated, and I think you have certain states that have a reputation, but the reputation is a bit overstated for what they really get. So when you’re talking about a crypto-based entity, look first at what the particular cryptocurrencies (if there are any) laws are in that state and even to the extent and how they’ve interpreted things like money transmission license applications for exchanges in bitcoin ATM networks, things like that, look into those which a lot you can get with a simple Freedom of Information Act request that sends to the right Bureau. They’ll give you copies of the application, you get a sense of it, but don’t let the alleged preference of one state over another guide your decision for a crypto-based entity because there’s simply nothing compared to it. We’ve got to rely on the state that you’re from. If you have any questions regarding where to incorporate, be sure to contact attorney Adam S. Tracy. A former competitive rugby player, serial entrepreneur and, trader, attorney, Adam S. Tracy offers over 17 years of progressive legal and compliance experience in the areas of corporate, commodities, cryptocurrency, litigation, payments and securities law. Adam’s experience ranges from commodities trader for oil giant BP, initial public offerings, M&A, to initial coin offerings, having represented both startups to NASDAQ-listed entities. As an early Bitcoin adapter, Adam has promoted growth of cryptocurrency and offers a unique approach to representing crypto-clients. Based in Chicago, IL, Adam graduated from the University of Notre Dame with dual degrees in Finance and Computer Applications and would later obtain his J.D. and M.B.A. from DePaul University. Adam lives outside Chicago with his six animals, which is illegal where he lives. Primary website: http://www.tracyfirm.com Twitter: https://twitter.com/TracyFirm Youtube: https://www.youtube.com/channel/UCVOa8Iy_RIkmRPwuQliPKfw Linkedin: https://www.linkedin.com/in/adamtracy/ Facebook: https://www.facebook.com/thetracyfirm/ Instagram: @adamtracyattorney Telegram: @adam_tracy Skype: @adamtracyesq Email me: [email protected]
Hi, I am looking to purchase a bitcoin two way atm , however, I am looking into the legalities. How much will a money transmitter license cost me and how can I obtain one? I am trying to find the information online and I cannot find anything. Any help and experience would be useful. EDIT: I'm from Illinois
Hello /bitcoin I was wondering if anyone is familiar with the laws related to buying and selling bitcoins? I am in Illinois, do I need to obtain a money transmitters license if I plan on conducting a good amount of business?
What licenses are necessary to operate an electronic currency exchange in the state of Illionis
I'm trying to determine what licenses are necessary (federal and state) for operating an electronic currency exchange in the state of Illinois. The main things I could deduce was that it requires registering with FinCEN and obtaining a Money Transmitter License. I spoke with a lawyer in New York, and he indicated that if I want to operate an exchange which has a limited number of seats, I will need federal licensing, there is a 3 year waiting period and it costs upwards of $20 million. The electronic currency market that our exchange will attempt to provide service for is quite small, about $1.5 billion in circulation; A very optimistic estimate is that the exchange may hit $10 million in transaction volume per day with a profit of no more than $50k per day, so paying $20 million is simply not practical at this stage. Quoting these numbers made me feel like he was trying to shake me off because he had no interested in dealing with this. Any truth to them? Any advice on the topic will be greatly appreciated. In addition, I would also be very thankful if people can suggest a knowledgeable lawyer (preferably in Illinois) who may be able to provide guidance. [Edit:] The currency I'm referring to is indeed Bitcoin. Updated the $1.5 billion figure too, it was a bit misleading.
A bitcoin money transmitter license is the same as the regular MTL required for money services businesses in the United States. Any bitcoin based business that offers the services of transmitting virtual money or currency from one person or place to another is classified as a money transmitter. A transmitter would find that it would take time and money to comply, thus discouraging smaller such businesses from operating in the state. Several states have enacted slightly different variations of this tactic. New Mexico has interpreted its 2016 legislation to require a money transmitters license with bonding for virtual currency activity. The guidance document goes into much further detail to help companies understand when Illinois’ money transmitter regulations apply to virtual currencies. When a company’s business model falls under the TOMA regulations, the DFPR has the flexibility to modify the capital reserve requirements. Bitcoin Money Transmitter License Guide Throughout the world, the idea of using money to pay for goods and services is not a complicated thought for consumers. On the business side of transactions, the movement of money can become more complex, especially for companies that operate as money transmitters. Whether or not an Illinois money transmitter license is required for an entity to engage in the transmission of decentralized digital currencies turns on the question of whether digital currency is considered "money" as defined in TOMA. Accordingly, Section 5 of TOMA defines a “[m]oney transmitter” as:
Adam Tracy Explains State Money Transmitter License Agency
This week on Around the Coin, Brian Roemmele, Faisal Khan, and Mike Townsend cover the recent ETA conference, why Facebook money transmitter licenses are so important, and future uses for the ... Question: Does registration on FinCEN give you a money transmitter license? About Faisal Khan Faisal Khan is a banking / payments consultant specializing in cross-border payment system and a ... This video is unavailable. Watch Queue Queue Payments expert Adam S. Tracy explains the concept of passporting and how it applies to foreign money transmitter licenses in the United States. ... and influencer since the early days of Bitcoin. Money transmitter expert Adam Tracy explains the scope of state of state money transmitter licenses and the concept of becoming an agent of a licensed money transmitter.