6 March 2015

CheapAir Allows Travel to Cuba, Payment with Bitcoin

CheapAir, the first mainstream online travel agency to offer customers the option to pay in bitcoin, litecoin and dogecoin, is now first U.S. company to provide its customers the opportunity to fly to Cuba.

Although recent changes have lifted many travel restrictions to Cuba, there are still limitations.

CheapAir’s website reads:

“U.S. citizens and residents are only permitted to travel to Cuba for one of 12 authorized reasons. They are:

  1. family visits

  2. official business of the U.S. government, foreign governments, and certain intergovernmental organizations

  3. journalistic activity

  4. professional research and professional meetings

  5. educational activities

  6. religious activities

  7. public performances, clinics, workshops, athletic and other competitions, and exhibitions

  8. support for the Cuban people

  9. humanitarian projects

  10. activities of private foundations or research or educational institutes

  11. exportation, importation, or transmission of information or information materials

  12. certain authorized export transactions

You can book your flight on CheapAir.com and, before you complete your purchase, we’ll ask you to specify which of the 12 reasons applies.”

Direct flights between the United States and Cuba still aren’t legal, so flying to Cuba requires a connecting flight to a third country.

The CheapAir website says it offers flights to Cuba through Mexico. Though the traveler would have to buy a flight from the United States to Mexico, then buy a separate flight from Mexico to Cuba, CheapAir packages the flights for the traveler.

Additionally, traveling to Cuba does require a visa, but acquiring one is a simple process. It costs the equivalent of $25-$30 USD (0.08791- 0.1053 bitcoin as of 3/3/15). They’re available at any gateway airports that offer flights to Cuba.

Don’t expect to easily use your bitcoin in Cuba, though, as there isn’t even infrastructure yet in place for the use of foreign credit cards.

Cheapair’s website reads:

“Most U.S. citizens who travel abroad are used to easy access to ATMs (even in very remote locations). At the moment, ATMs are not available in Cuba, though banking relationships are in the beginning stages. In theory, Cuban ATMs could work for Americans traveling abroad in the near future. For now, you’re going to need to bring cash with you and convert to the Cuban Peso at local banks. If your stopover in Mexico City is for more than a few hours, you can also pull money out in Mexican Pesos. But be warned, the Mexican Peso to Cuban Peso exchange rate is notoriously bad. You’re better off exchanging USD, EUR or CAD for Cuban Pesos. Euros and Canadian dollars historically get a more favorable exchange rate on the ground in Cuba. Master Card has been given the go-ahead to accept transactions from Cuban businesses and will be operational by March 1, 2015.”

There is possible future opportunity for a remittance market in Cuba. In 2012, Cuba reported $2.6 billion in remittances. Through technology such as Bitcoin, Cubans living in the United States could send money to their families back home for a lower rate than any remittance company. It would also allow individuals to send smaller amounts than ever before.

An impediment to this market’s creation, however, is the lack of widespread Internet across the country. If Cubans do acquire wider Internet access, they have an opportunity to skip ATM technology, and “leapfrog” to modern payment systems.

A few hotels in Cuba currently have Internet service for guests at a premium, but connection speeds are slow and there are time limits on its use.

CheapAir has uniquely positioned itself to be the only U.S. travel agency to allow people to go to Cuba, and allow them use new forms of money to do so.

March 06, 2015 at 05:32PM

2 March 2015

MGT Capital Investments, Tera Group to Create First Publicly Traded US Bitcoin Derivatives Exchange

MGT Capital Investments announced a planned merger with Tera Group, which operates the first regulated U.S. Bitcoin derivatives exchange. The merger will create the first publicly traded U.S. Bitcoin derivatives exchange.

As observed by The Wall Street Journal, this is a reverse merger where Tera will take a controlling stake in MGT. Tera doesn’t seem too interested in MGT’s gaming operations, so the operation is primarily a way for Tera to go public. In other words, Tera is buying a public listing on the stock market for its Bitcoin operations.

Tera has played a leading role in the development of Bitcoin derivatives. In September 2014, Tera launched TeraExchange, the first regulated U.S. Bitcoin derivatives exchange, and TeraBit, a spot Bitcoin price index based on real-time data from a number of Bitcoin exchanges. The TeraBit price index is used as the settlement rate for USD/Bitcoin derivatives transactions.

Tera is active in the Bitcoin space, which is booming. Forget the highly volatile dollar exchange rate of Bitcoin, the important parameters are the number/volume of Bitcoin transactions and the venture capital investments in the emerging Bitcoin industry, both of which are skyrocketing. Consumers spend bitcoin online, and investors bet on the innovative potential of Bitcoin and its underlying blockchain technology. Technology expert Peter Diamandis said Bitcoin is going from deceptive to disruptive, and listed Bitcoin among his top tech picks for 2015.

That should be interesting for investors, but currently only a few publicly traded companies and funds – including Overstock, Bitcoin Shop and the forthcoming Winklevoss Bitcoin Trust ETF – are active in the Bitcoin space. With this announcement, the new Tera-controlled MGT joins the select Bitcoin club.

Derivatives such as Tera’s forwards are the simplest way to expose investors to Bitcoin, especially those investors who prefer not to trade the digital currency itself – and are the easiest way to profit from the ups and downs of the bitcoin-dollar exchange rate.

In related news, former Goldman Sachs Executive Director Timo Schlaefer announced the launch of Crypto Facilities, a U.K. Bitcoin derivatives broker. This confirms the growing interest of institutional investors in the Bitcoin economy.

“The proposed merger with Tera gives immediate and future value to our stockholders, while creating a robust platform for the growth of the industry’s first publicly listed bitcoin derivatives exchange,” said H. Robert Holmes, Chairman of MGT’s board of directors. “The Bitcoin industry attracted over $400 million of investment capital from some of the world’s most prominent investors over the past 12 months; we see our move today as further progress in the broader adoption of the industry.”

“Growing consumer and merchant adoption of bitcoin is driving demand for regulated capital markets solutions,” said Christian D. Martin, chairman, CEO and co-founder of Tera Group.

“By combining with MGT, Tera will create a unique public offering to support the essential infrastructure needed for a vibrant global bitcoin ecosystem,” Martin said.

In an interview with CoinDesk, Martin added:

“Bitcoin consumes the majority of our mindshare here in our firm. It’s our bitcoin listing and subsequent certification that has the most commercial possibilities for us right now, and it’s a business we’re very keen to cultivate and nurture along.”

MGT and Tera plan to finalize and execute a definitive agreement by March 16, 2015.

Images via Tera and MGT.

March 02, 2015 at 07:23PM

Bitcoin Investment Trust Becomes the First Publicly Traded Bitcoin Fund

The Wall Street Journal reports that Barry Silbert’s Bitcoin Investment Trust (BIT) is about to become the first publicly traded Bitcoin fund. The BIT will be an interesting option for traditional investors looking for exposure to Bitcoin who prefer not to trade Bitcoin as currency. The BIT is sponsored by Grayscale Investments, a part of Silbert’s Digital Currency Group.

Currently, the BIT, launched in 2013, is a private, open-ended trust that is invested exclusively in bitcoin and derives its value solely from the price of bitcoin. It enables accredited investors, with annual incomes greater than $200,000 or assets of more than $1 million, to gain exposure to the price movement of bitcoin for a minimum investment of $25,000 without the challenges of buying and securely storing bitcoin. BIT-accredited investors are shielded from hacking attacks and unregulated entities, which would be appealing for small investors as well. But the BIT hasn’t been publicly available to small investors so far.

The Winklevoss twins also are planning a Bitcoin Exchange Traded Fund (ETF), the Winklevoss Bitcoin Trust ETF, which will be available to all investors on NASDAQ with the ticker COIN. The launch date is unknown, but Cameron and Tyler Winklevoss say that everything is proceeding according to plan. According to their Securities and Exchange Commission (SEC) filing, the value of COIN shares will reflect the dollar exchange rate of Bitcoin on Winkdex.

The Winklevoss ETF is still going through the lengthy ETF registration process with the SEC. But BIT is taking a shortcut, permitted by a rule that that allows holders of a private fund to sell their shares publicly after a 12-month lockup period and completing a less arduous approval process with the Financial Industry Regulatory Authority (FINRA). Without SEC registration, the BIT can’t formally be considered as an ETF, but once existing shares are offered publicly it will be equivalent to an ETF in practice.

Silbert said that FINRA granted BIT’s request for a permanent ticker symbol, GBTC, which “is expected to be effective shortly.”

In a statement, the Digital Currency Group said, “Although we have been assigned a ticker symbol, no assurances can be given as to when or if such trading will commence, or that an active public secondary market for BIT shares will develop or be maintained.”

Each share of BIT is worth approximately one-tenth of a bitcoin. As of Friday, the trust’s net asset value stood at $24.43 per share. The Wall Street Journal article notes that many investors purchased their BIT shares in 2013 when the dollar exchange rate of bitcoin was about $100, so they would make a profit selling now. New investors, including small investors, will be able to buy BIT shares soon.

Bitcoin space and the traditional stock market are increasingly converging, and the Bitcoin economy as a whole will continue to have DiY and “underground” aspects. But it is evident that regulated, professional Bitcoin services will become more common, and take Bitcoin closer to mainstream.

March 02, 2015 at 05:28PM

Bitcoin Giving Back: This Week on Decentral Talk Live


A common theme among bitcoiners is the desire to make the world a better place. This week, Decentral Talk Live focuses on a couple of organizations that are trying to do just that.

Connie Gallippi is the Founder and Executive Director of the BitGive Foundation and a founding member of the Women’s Crypto Association. This week on DTL, Connie describes some of the many projects that the BitGive Foundation has been involved in, especially in Africa. They include Medic Mobile, Save the Children and the Water Project. She also discusses the role she played in getting ChangeTip to add the charitable donation option to their service.

Connie then addresses the issue of inclusion and how the Women’s Crypto Association is ensuring that women’s viewpoints are being well represented in the crypto space.

Another woman making a point of incorporating bitcoin into charitable giving is Anne Connolly, director of fundraising and marketing at Dignitas International and fundraising manager and director of marketing at Médecins Sans Frontières/Doctors Without Borders Ireland. Through her work with Dignitas International, she has helped to raise funds for the Tisungane HIV/AIDS Clinic in Malawi. Anne also addresses the increasingly important role of bitcoin in Somalia, a country with a huge remittance market.

Other guests this week include Flavien Charlon, Founder and CEO of Coinprism, who introduces viewers to the world of colored coins; Radislav Albreicht of BitBond, a peer-to-peer lending platform that allows borrowers to access affordable funding without needing a bank, while lenders earn higher interest rates on their savings; and finally, the always entertaining Tatiana Moroz, bitcoin evangelist, singer/songwriter and author.

March 02, 2015 at 05:11PM

Quebec Attacks Bitcoin Startups with New Regulations

If you operate an exchange, bitcoin automated teller machine or any other money services operation that does business with Quebec residents, you will need to comply with its updated Money Services Businesses Act regardless of where in the world you are based.

This new policy document was first made public on February 1, 2015 (updated to March 1, 2015), and experts have been trying to determine what it means for bitcoin businesses both within Quebec and outside its borders.

The document says that anyone offering money services (that is, currency exchange; funds transfer; issue or redemption of traveler’s checks, money orders or bank drafts; check cashing; and operation of an automated teller machine) must be licensed by Quebec’s Autorité des marchés financiers (AMF), or the Authority of Financial Merchants, in order to do business with clients in Quebec.

For companies not based in Quebec, that means hiring a local representative in the province, usually a lawyer or law firm, to handle the paperwork and act on their behalf in any dealings with the AMF.

In a recent clarification email received by the Bitcoin Embassy on February 26, the AMF confirmed that certain digital currency businesses, such as exchanges (online or in person), need to possess a funds transmitter license to operate. But the details surrounding what type of business models are subject to this license category still needs further clarification, says Jillian Friedman, legal counsel for the Bitcoin Embassy in Montreal.

The email also states that the new interpretation of the MSB law will take effect immediately: There is no grace period. The AMF representative said, however, that those businesses that submit requests for a license within a reasonable time and who cooperate with the AMF will normally be allowed to continue their business activities while their license request is being processed.

Amber Scott, founder and Chief AML Ninja at Outlier Solutions Inc. broke down the policy document in a recent Decentral Talk Live episode, as well as in a follow-up interview for Bitcoin Magazine. (Watch the full Decentral Talk Live episode on decentral.tv here.)

“There are no special circumstances for small businesses who might have one or two interactions with clients in Quebec,” she said. Scott said that companies who do business with Quebecois clients have two practical options at the moment: Register with the Quebec Autorité or stop doing business in the province. For online money services businesses, that would mean filtering and blocking all traffic originating from a Quebec IP address.

As for ensuring compliance, Scott expects that the AMF likely will begin by focusing on companies doing a significant amount of business in Quebec. Anyone found not to be registered would probably receive a letter requesting compliance with the policy, followed by further enforcement measures.

The Bitcoin Embassy in Montreal, home to its own bitcoin ATM, came out with the following response shortly after learning about the new policy statement:

“While we welcome the intention of the Province of Quebec’s financial regulator … to clarify the regulation of bitcoin ATMs, we are surprised by the lack of transparency and involvement of the Bitcoin community in this decision. However, this development had been expected by the community, and the Bitcoin Embassy views this decision as an implicit recognition that Bitcoin is indeed a legitimate monetary alternative to fiat currencies.”

The Bitcoin Embassy also expressed surprise that the AMF did not wait to see what regulations its federal counterpart, FINTRAC, is currently drafting. The Embassy statement noted that Quebec is now the only province that imposes these requirements on Bitcoin ATM operators.

March 02, 2015 at 05:07PM