I actually built a very comprehensive site that did this exact thing back in 2011, even hiring a very good designer to help me with the graphics (paid with Bitcoins -- about 60 BTC for his work if I recall). The mobile web frontend for the Bitcoins->Card side worked well enough that I would load it up and use it to buy coffee at my local Starbucks via the PDF417-code that Starbucks uses.
However, I never released due to all the regulatory issues. Very unfortunately, FinCEN still considers this type of transaction to be an exchange of value, and thereby regulated. At the time, FinCEN still hadn't released their guidelines on digital currencies, but they were increasing their regulatory stance on gift cards. The situation is still not completely clear, even now, but I'm pretty sure that FinCEN will try to claim that this type of operation a money transmitter, with all the headaches that this brings.
Also, I wasn't sure if Starbucks would try to do something crazy like sue me to take down the site. But it was primarily my fear of FinCEN that caused me to drop the idea and put the code in storage. Regulation is taking a heavy toll on this country's innovation; this is just one very small example.
Interestingly, I had no problems getting a business bank account for the idea back then. I think it'd be much harder now.
Despite spending 6 weeks part-time on a project that I ended up scraping, I don't regret it since it was my first major Python project and eventually led me to learn lots of implementation details of the Bitcoin protocol itself (though that certainly wasn't necessary for my project).
It's a shame FinCEN regs are so onerous, they're really stifling startups and ensuring that innovation will happen outside the US.
It's pretty vague, but it's easy to interpret the latest guidance to say that exchanging one digital currency for another requires a license, customer identification, suspicious transaction reporting, etc. Even if you never touch dollars, euros, yen or any other "real" currency, are you still a "money transmitter", no matter how small the amount?
"If the choice for regulators is to permit money laundering on the one hand, or to permit innovation on the other, we are always going to choose squelching the money laundering first."
A business that buys/sells gift cards for Bitcoin is a bit of a grey area I think, but I'm absolutely sure that FinCEN considers exchanging Bitcoin for alts to be money transmission, regardless of the amount involved, and once they catch up with the technology, they'll start looking to make a precedent.
And yes, these businesses will simply take place outside of the U.S., taking all those jobs with them.
I have not looked into these details being discussed at all, but the "sending jobs elsewhere" angle sounds nutty. I have to assume that money transfers are also regulated in the places you're thinking of, especially if it is a developed country or a desirable place to live. I mean, you can't reasonably expect to just set yourself up as a bank without jumping through a few hoops.
You realize that some of the largest Bitcoin businesses, such as the now defunct Trade Hill, and the still operating moneero, have moved overseas to more open Latin American economies, right? Uraguay and Costa Rica seem like pretty nice places to live.
These businesses employ/have employed dozens of people, and that could easily grow to hundreds.
Also, by shutting out any chance of an complying American exchange, we de facto sent jobs to Bitstamp in Slovenia, which is growing in to a very nice-sized business, I hear.
That's not really happening. All of the major egifting (bitcoin accepting or just selling gift cards e or otherwise) startups with traction are located in the US. CashStar, gyft, gift tango, and transaction wireless all US based.
I was referring to companies classified as "money transmitters". Being classified as a seller of prepaid access, like gift cards, was actually the best outcome I could have hoped for.
And I personally think gyft is skirting the line and may well find itself in some hot water. I love them as a company, though.
> It's a shame FinCEN regs are so onerous, they're really stifling startups and ensuring that innovation will happen outside the US.
Or the Bitcoin and other virtual currency companies that stay in the US and actually make sure to comply with regulations will do better than the ones that start elsewhere or leave, because people will actually have some reason to consider trusting them.
I wouldn't put my money in a small bank that is outside the US because it finds banking regulations too stifling. Why would I not want to hold those who handle my virtual currency to the same standard?
This is actually a case where we just need better regulation of gift cards.
Basically, the store should be required to exchange them for cash. Any associated fees for that should be built into the purchase price.
This obviates third party exchanges and only 'damages' what is really a crappy gift (in the sense that it isn't a whole lot more creative than cash but is worth less).
Yeah, this isn't that kind of regulation. This is purely about transfer of money to prevent money laundering, in FinCEN's eyes. These regulations aren't about the customer.
I'm not confused. I'm protesting the use of gift card exchange as an example of innovation.
I phrased it in terms of sensible regulation because you proposed that the alternative to bad regulation was no regulation. If you cited a specific rule that was onerous and explained why it didn't actually accomplish anything, that would be different.
I am confused. Can you point out exactly where I propose that the alternative to bad regulation is no regulation?
In the proper political environment, I'm actually not opposed to "good regulation". The problem is, the bureaucrats are taking the appetite of part of the public for "good regulations" and using that political capital to make more barrier regulations -- the bad type. Worst of all, they enforce these regulations with SWAT teams and long federal prison terms [1, just one example of many, since I know you'll ask].
So as long as the government is continuing to pass more barrier regulations meant to prop up the big corporations through regulatory capture, and as long as they continue to enforce those regulations at gunpoint instead of with some sort of civil court like a civilized country would, they get no pass from me for more "good regulations".
If you read through those rulings, you'll see that FinCEN takes a very broad view on exchanges of value falling into the category of money transmission.
Also, read through their new stringent guidelines for sellers of gift cards (sellers of prepaid access). Here's a good summary:
In my case, I was planning on both buying and selling gift cards (digitally, for a mobile frontend to display barcode). My best hope was to be considered a seller of prepaid access, which brought some hope because the strict KYC guidelines didn't kick in until $1000, if I recall correctly. However, since I bought and sold, I was pretty sure that FinCEN would instead consider me a money transmitter, whose KYC requirements start at $0.
It's totally possible for these kinds of businesses to fly under the radar for years, and never be affected. But the moment some ambitious bureaucrat learns about a project like this and decides to made a federal case of it (literally), or some kid's arrested for possession of marijuana who moved money through this type of business, then it's misery for everyone on the receiving end.
My mom was one of the few unfortunate buyers from target that had her card number stolen. The thief has purchased $500 worth of Starbucks gift cards in the last two weeks.
I don't think it is a coincidence that the thief purchasing these cards. I'm not speaking for the creators, they could easily be caught in the crossfire. That being said, this is very obviously an exploitable method of transaction specifically for a thief. No matter the intention of the project. https://news.ycombinator.com/item?id=6175294
Considering buying Starbucks gift cards with stolen credit cards is already an activity of scammers, this seems a bit dangerous. Let alone the FinCEN issues.
It looks like Starbucks gift cards sell for a roughly 20% discount on eBay†. The discount seems to be proportionally higher for higher value cards (who really wants a $400 Starbucks card?). So I guess you get a better deal buying cards on Card for Coin at a 30-40% discount to face value but you get a better deal selling them on eBay...
Something something time value of money something. I'm not really sure. I was just pointing out a feature of the sale prices. I was only eyeballing at that...
This is a nice workaround. I've been long thinking about what could be used instead of dollars to trade for Bitcoin. Of course, starbucks cards are not as widespread and their amount is probably limited (in a sense that there's not enough of them to satisfy demand in the case this seriously takes off), but it's nevertheless great to see people finding ways to bypass the stupid regulatory system, because of which there are no real Bitcoin exchanges in the US.
But that's my choice. See, that's the problem with advocates of any regulation. Regulating != informing. If all government did was saying "This business is not reliable" I'd be perfectly fine with it. But then they actually prevent businesses from operating without licences. This creates a lot of opportunities for corruption. On what grounds do governments think they have the right to tell every person what to do with their money?
Slavery was also legal not so long ago. Being gay was illegal not so long time ago. Alcohol was illegal at some point. Weed is still illegal in most places these days.
Something being a law doesn't make that something justified or moral. It just allows certain groups of people to benefit from it while lying to others that it's for their own good.
Very clever. I just forked over a $10 card for $6 in bitcoins. I've been reading about bitcoin since its inception and finally have my own slice of the pie...
Nah, the Starbucks choice is explained in the article. It's a remnant from the original project to help indie coffee shops accept Starbucks cards.
EDIT - I just read the article you referenced. That scam only applies to registered cards (cards attached to a Starbucks account). I don't accept registered cards, or have anything to do with that.
This service goes in the opposite direction, but if you're looking to cash out dogecoins into Starbucks, Visa or Amazon giftcards, check out https://treats.io/.
tried out the site (had a card with 10 bucks) and tried creating a bitcoin wallet. no luck having the bitcoins show up in my wallet yet. I have a feeling I did something wrong...
What wallet are you using? If you're using a full wallet (Bitcoin-qt), then it could take up to 12+ hours to download the full blockchain and your transactions show.
As a beginner, you'd be better off with a wallet like Electrum or Multibit that will show your transactions almost immediately.
You can also view them here on blockchain.info, by putting your public key (the one that starts with a 1) into the search bar. Your transactions should show up, assuming nothing is going wrong with this site:
blockchain.info
Otherwise, just contact the owner, I'm guessing he'll be eager to help.
I was just using an online based wallet through blockchain.info.
Tried doing a search for my public key 18fyCm3vkftJ9nNgZ4SwoJkCuGVZQ2kZcE and had no luck finding the transaction.
When I get home tonight I need to check out these other wallets and get in touch with the owner. If I'm only out 10 bucks though on a gift card that I got for xmas. No sweat off my back.
No problem. Just in case you don't get those BTC, I just sent you some to that address to play around with or buy a little something with. But hopefully, you'll end up receiving both transactions.
Check out electrum or multibit, they're both fairly easy to use. Be sure the password-protect your wallet with a long password (write it down somewhere!). If you do continue to use blockchain.info be sure to enable 2-factor authentication and use a strong password.
I need to make one correction to what I wrote above. In my haste, I accidentally called your Bitcoin address your "public key". Actually, your public key is a related but different concept. Properly said, the string that starts with "1" is just a Bitcoin address.
Anyway, just wanted to correct myself that those are two different but related concepts. This has no impact on your use of Bitcoins -- just use the one that starts with "1" to give out to receive Bitcoins. Most programs won't even show you the public key I'm talking about, so no need to worry about it.
I definitely see your address in the logs- let me know if you have any problems and I can check with Coinbase. For everyone else, it's definitely faster to supply an email and use a Coinbase account, and then transfer from there at your leisure.
I tried it out with a $20 card this morning (I've had it for 3 years and never remember to use it on the rare occasion that I'm at Starbucks). I just received my 0.014916 bitcoin via Coinbase. It took 2 hours between when I submitted it and when I received the bitcoin.
They would but easy to fraud, because you could use stolen cards to buy them online. Then the guy who trades you for Bitcoins screwed when amazon cancells all the cards. If you can also buy starbucks cards online with visa/mc too then this whole venture is doomed as well.
Create vouchers in 711 you can instantly redeem for bit/altcoins. Bitinstant did this but was badly implemented. Unsure if msb required. Some millionaire prince could make it happen. Probably issues with it being able to use for online gambling too considering paysafecard is forced to sell a crippled version in the US
However, I never released due to all the regulatory issues. Very unfortunately, FinCEN still considers this type of transaction to be an exchange of value, and thereby regulated. At the time, FinCEN still hadn't released their guidelines on digital currencies, but they were increasing their regulatory stance on gift cards. The situation is still not completely clear, even now, but I'm pretty sure that FinCEN will try to claim that this type of operation a money transmitter, with all the headaches that this brings.
Also, I wasn't sure if Starbucks would try to do something crazy like sue me to take down the site. But it was primarily my fear of FinCEN that caused me to drop the idea and put the code in storage. Regulation is taking a heavy toll on this country's innovation; this is just one very small example.
Interestingly, I had no problems getting a business bank account for the idea back then. I think it'd be much harder now.
Despite spending 6 weeks part-time on a project that I ended up scraping, I don't regret it since it was my first major Python project and eventually led me to learn lots of implementation details of the Bitcoin protocol itself (though that certainly wasn't necessary for my project).
Edit: clarity