Coinbase is not a bank. Or a financial institution. If it were, it'd have a charter and licenses. It's a merchant just like any other. You give them money in exchange for goods. No different than iTunes.
It does not need to be licensed as a financial institution to be deemed as one. The courts can and will deem them that the company is subject to some of the rules and regulations governing the financial industry and up the charges against them when this enforced.
I am purposely not saying 'if'. Because there is no possibility of this not being brought to a judge on the behest of SEC themselves or a consumer complaint.
In layman terms:
(1)they buy and sell BTC on behalf of clients and charge the client for the transaction including their fees.
(2)they are an online payment processor of sorts.
They will need to follow more regulations than Paypal, as paypal is also a digital wallet of sorts, but while it provides a conversion, they technically do not trade(buy/sell currencies) on behalf of clients.
Bitcoin is not an official currency in the eyes of the law. Therefore, there are almost zero regulations that would apply to Bitcoin transactions, other than contract law.
bushido|12 years ago
I am purposely not saying 'if'. Because there is no possibility of this not being brought to a judge on the behest of SEC themselves or a consumer complaint.
In layman terms:
(1)they buy and sell BTC on behalf of clients and charge the client for the transaction including their fees.
(2)they are an online payment processor of sorts.
They will need to follow more regulations than Paypal, as paypal is also a digital wallet of sorts, but while it provides a conversion, they technically do not trade(buy/sell currencies) on behalf of clients.
blantonl|12 years ago