EB29 -- Steven Morell & Gabriel Mirón: NYDFS BitLicense proposal, MEXBT, Moneero, Latin America

Transcript

hello and welcome to EP Center Bitcoin the show which talks about the Technologies projects and startups driving decentralization and the global cry cryptocurrency Revolution my name is Sebastiano my name is Brian F train and today we have two gentlemen from Latin America as guests first one is Gabriel Marin he's the CEO of the Mexican Bitcoin exchange Mex ET and we also have Steven Morel on who's the chief product officer of the EUR ran Bitcoin startup Monero so super excited to have you guys on today um we have a few topics today and but the thing we want to start off with is uh the bit license thing which I'm sure has been sort of a a Hot Topic today uh and in

the last days so uh Sean Jones has done a brief segment on that which we'll play now before we get into the discussion [Music] last week the New York State Department of Financial Services published draft regulations relating to the conduct of business involving virtual currency the first substantive detailed virtual currency regulations to be issued by any jurisdiction The Man Behind the proposals is 44-year-old superintendent of financial services Benjamin lski who was once described by Business Insider as the Wall Street regulator who pissed

off the fed the treasury and the entire city of London he regulates around 45,000 Financial Services businesses with total assets of around $6.2 trillion the 40-page draft bit license regulations Focus heavily on consumer protection anti-money laundering and cyber security in a supporting press release lski said we've sought to strike an appropriate balance that helps protect consumers and root out illegal activity without stifling beneficial Innovation opinions on whether the balance is right is being hotly debated on social media and in the press in an email to the Wall Street Journal Cameron winkl Vos welcomed the regulation saying

he was pleased lski had embraced Bitcoin and digital assets and looked forward to New York State becoming the Hub of this exciting new technology Nick Spanos co-founder of the New York City Bitcoin Center told CNN that he welcomed regulation but said younger entrepreneurs in his circles think the rules are too costly and will crush them in an impassioned blog post founder of coap and Satoshi dice Eric FES described Lori's proposals as anachronistic legislation that will toss Bitcoin into the same unethical regulatory mess that currently governs the Legacy banking system meanwhile leading virtual currency uh researcher and academic Jerry Breo wrote that the

proposed regulations were a step in the right direction and not out of the ordinary lki proposes a new body of Technology specific regulation interviewed on CNBC he said the regulatory framework covers basically anyone operating in a significant Commercial Way in the Bitcoin space suggesting only large players would be affected however as drafted the definition of virtual currency business activity is wide and will catch exchanges including those exchanging from one virtual currency to another payment processors hosted and non-hosted wallets custodians market makers Traders tipping apps Investment Management Services and even altcoin developers

only miners merchants and consumers using Bitcoin to buy and sell goods and services and certain New York banks are spared seemingly even non-financial currencies such as namecoin and ether could be caught as will ESR and notarial services the regulations will apply not only to Virtual currency businesses in New York state but also to anyone anywhere in the world engaged in Virtual currency business activity involving New York or involving someone who resides in New York or is located there or has a place of business or is conducting business there regardless of where he or she is at the time and that doesn't just mean clients it applies equally to payes recipients and

counterparties even if a virtual currency business outside New York decides not to do business uh involving New York or with New Yorkers it will nevertheless need to know the identity of all parties to a transaction in order to be aware of any New York connection which takes us to one of the anti-money laundering requirements licensed businesses will need to know the identity of all parties to a virtual currency transaction something that's practically impossible today effectively removing the Privacy cryptocurrencies afford other anti-money laundering Provisions include enhanced due diligence requirements for accounts involving foreign entities so uh say a French exchanger who transacts business

involving New York and even obtains a bit license is required to perform enhanced due diligence checks on his clients in France Germany Switzerland South Africa indeed for all his clients who aren't American licensed businesses must maintain 100% virtual currency reserves and also maintain a bond or trust account in dollars Capital requirements will be imposed but as yet no figures have been published on the amount of capital and bonds required other consumer protection measures include disclosing to Consumers a list of prescribed potential risks with virtual currencies according to LY there's a big cyber security potential issue in this

industry and to counter it even the smallest virtual currency business will need to maintain an exhaustive cyber security program including employing cyber security Personnel risk assessment detection and Protection Systems response and recovery measures as well as annual penetration testing and quarterly vulnerability assessments quarterly and annual Financial reports will need to be filed and Records kept for 10 years and there will also be official inspections at least every two years licensed businesses need to employ a qualified compliance officer qualified anti-money laundering compliance personnel and a qualified Chief Information Security Officer the regulations apply equally to

Virtual currency businesses of all sizes anyone engaging in Virtual currency business activity who's not licensed will be breaking New York state law as indeed will operators of mixing Services the draft regulations will be open for public comment for 45 days from the 23rd of July and only feedback filed officially in New York will be taken into account the New York DFS will then review and revise the regulations before finalizing them existing virtual currency businesses will have 45 days from when the regulations become effective to file their applications under transitional Arrangements they'll be permitted to continue operating unless their application is

denied applications will need to include detailed policies and procedures plans projections and financial reports together with financial information and independent background reports on key personnel and shareholders their fingerprints and those of all employees must be submitted to both the state and FBI on CNBC lki called it a great day for the virtual currency industry whether or not that is the case will become evident over the next months and years meanwhile I will be reporting on developments going into the detail of these proposals and exploring the differences between the New York and European proposals on my blog and in future episodes of epicenter Bitcoin

this is Shan Jones reporting for epicenter [Music] Bitcoin so thank you Sean for preparing that segment uh so this is this topic that uh you know kind of took the Bitcoin Community uh well I mean just caused a great amount of uh upset in the the uh Bitcoin community and you know a lot of people are calling this know the destruction of what we're trying to build you know as as we're trying to build these new decentralized infrastructures um it is it does seem quite damaging uh at first when you read it uh of course now this is not enacted legislation it is a proposal uh there

will be a 45 day uh challenge period uh during which participants or people that have a say in this will be able to submit official challenges and then within uh I guess in 45 days and it may be reviewed and then enacted as actual legislation but the initial uh proposal is I mean just kind of ridiculous in terms of what it tries to impose on bitcoin companies and Bitcoin users not only in the US and in New York but also just like worldwide um so what uh what are your initial thoughts on this Brian well I think it's um well I think it's obviously uh

terrible if they actually KN that it's completely impractical I think except for some Bitcoin exchanges nobody will actually do this so I think we will see a type of a segmentation if this go through you know that people will well a ton of Bitcoin startups will be violating a New York law I think for the most part you know here for example you have this app there some friends of mine developed where you like you send Dogecoin it's called Doge rain so you sort of slide do coin and gets in the cloud and gets sent to people well technically they would have to get a bit license you know which is just ridiculous so obviously a lot of people will be in violation of that I think the exception being some exchanges

like coin Setter that will probably do that because for them it's not such a big change uh I hope there's going to be some dram uh drastic changes from the proposed regulation I'm not so hopeful but perhaps let's hear from both of you guys Gabrielle do you see any implication for Mex BT if um if this goes through the way it is right now well yes yes of course the moment we have to we're analyze and we consider this the first trap and want to see is going to be the the final conclusions but if this goes on we're going to have to be much more more strict and defining our processes for being compliant with

all that this place it's interesting because I actually thought you run like the kind of Bitcoin business which maybe in the like small minority where this is not such a big issue because I presume you have to do kyc anyway so uh excluding New York users shouldn't be too much of an issue am I missing something there why why do you still think it's going to affect you well we are we're we're not only focused in Mexico we're focused in the and exchange for for Latin America we have to apply Mao at the moment and we're going to have to exclude some some us customers also one of our goals is to be able to FOC those remittances and

remittances a lot of the to Mexico come from the US so there there's an implication there so you were actually thinking of having directly American customers in your exchange yes okay yes yes at the moment we have tesos and we have US dollars so we're only not only fed in Mexico we're based in Mexico but our operation is much more targeted to the region and also including us uh what about you Stephen well in our case um it's similiar we our headquarter is in uguay but at the global audience and um we have subsidaries outside the US

outside ugu by the way one in the US and um we probably will have to exclude everybody from New York but does that mean you'll also have to do kyc on everybody because otherwise how do you know you don't have someone from New York well if you have if if you do anything with money you most likely have to know um uh whom you're sending money to and if you have to know who you're sending money to you you are being regulated and you have to be complied and then you have to kyc your clients um that's if it's not true in any jurisdiction at some point it will be true for any jurisdiction

um the thing is that in normal AML policies you don't have to verify verify every user from the start um normally there are thresholds um and you probably know this from signing up with PayPal you can sign up with PayPal and your account is being limited to certain thresholds um before they go ahead and ask you know proof of address ID copy and so forth um so the same applies um for every other financial institution um so the way we see the draft right now we I I don't see

any thresholds in in this drop so we would have to exclude every user um even before we KC him so what you're saying is that uh in fact this initial draft does not include any threshold so basically whether you're transferring one Satoshi or $10,000 worth of bitcoin uh you essentially are subject to AML kyc rules this is my understanding we haven't discussed this you know I'm not a lawyer um I'm um one of the compliance officers in P mono um and we haven't discussed this hold on I had some interference um

I was saying that um I'm one of the compli officer I a lawyer and we haven't discussed um The New Yorker bit license in with our legal team yet um you know this is also this is just New York I mean I love New York I live there I work there uh it's one of my favorite places I think it's an important place in the world but it's just is just one of the places um and I there's a lot of competing U jurisdiction worldwide um and I think if this goes ahead in New York um and there will be no changes that makes

practically viable um New Yorkers will be simply excluded from the Bitcoin rtion that's interesting uh I mean I hadn't really thought of this is so I mean what what uh companies will essentially need to do if they want to be excluded from this legislation you know if it does go through and it it is uh it goes through as it is described in this in this initial draft uh if if they want to be able to do business and be free of that they'll have to exclude New York customers and some ways that they can do that is perhaps like duip uh track their IP address to know where they're coming from or do kyc on everybody so that you can actually Define that one one person is coming

from New York or not um so in in a sense if that if if Bitcoin startups and Bitcoin companies in the US and also worldwide and we'll get to that in a minute and why that why it also applies to other uh countries if uh uh basically they they'll they'll be excluding New Yorkers so bitcoiners in New York also have to lose from this not just it's it's not only cumbersome for for companies but it's also I mean Bitcoin users uh and if you want this to go to mass Market uh potentially that's a lot of people they'll also be affected by this let me add one thing because you said something very important and this is very important to understand about AML policies and Regulation and

framework worldwide for and this is true for any jurisdiction um you're not supposed to do something that actually works and I think this is symptomatic for this draft that we are looking at it's not meant to be usable viable what you need to do is you need to excuse my French you need to cover your ass so if I as a compliance officer um take the according Provisions so that that can plausibly say I did all that I could to exclude New Yorker users I'm in the clear if there is still a way of which I don't know how New Yorkers

can use it um by say using some sort of proxy or VPN or whatever other technology tour Network um and they can come up with a residential address that is outside of New York and I have no no reason to believe that they are not I don't you know I'm I'm not the FBI I don't have to hunt people down and actually arrest them I just have to do as much that I can plausibly say I did what I had to do it's all about cover my ass now well one thing that is uh I guess what I find the most appalling about this is that this

legislation doesn't only cover and and uh is not only subject to American compan so for instance if you're a a web wallet uh provider in Slovenia for instance and you have customers in New York and you want to be compliant with this with this legislation you in fact also have to uh abide by it and put in place all these uh kyc and and anti-money laundering all all of this um very heavy uh and cumbersome uh infrastructure if you want to be compant and to me I mean it's it's just the uh the absurdity that the that a US

government state would somehow uh think that they can also uh tell the rest of the world how they can do business like this just to me is just show some sort of like yeah I totally agree I think this is crazy arrogant but this is nothing new right so I think the US has done that many areas that that's the sort of way in banking as well yeah I know exact exactly right but I mean I think the the thing is so you know maybe you know Monero is going to go ahead and do this and you're going to require kyc Etc but a lot of people won't right a lot of uh startups in other countries you know will just say we don't care and uh so if you do go along with that you're going

to make your services is less attractive so um because if I want to create a quick web wallet Etc you know I don't want to give my uh residential address and things like that so um I I think we will see that and then I I I'm wonder whether for example just IP blocking you know if you block a New York IP address is enough you know it may not be enough well first of all we are not surprised um what we are seeing there from New York because it's sadly U what the world has come to that um the US has you know super aircraft carriers and they're enforcing their law wherever it

is in the world we've seen this with kim.com in New Zealand um we've seen this uh you know we've seen this everywhere it's the last remaining superpower and they're enforcing their laws um as they wish um when it comes to um and I I'm not getting tired to to to repeat this um we are using the term of Bitcoin Revolution but I actually think it's Ain going to be a revolution it's going to be an evolution because there's a huge difference in the technical Innovation for startups and the Bitcoin Fair um that we've never seen like this before

in any other uh Innovation like in in the days of social networks you could hack something overnight um launch it in morning and U you would be a rockstar by by the next day we've seen this with sites like Twitter or something um this ain't going to work in the Bitcoin SP you want to start a Bitcoin startup the entry levels are a magnitude or many magnitudes high first of all you can program something overnight and launch the next day because after breakfast you already got to be hacked and CS are stolen we've seen this in the past secondly you cannot just um sit down and

vend a service and say hey come on let's launch this real white even if you get the the SEC the technical security levels um in line you probably violating the law in 150 different jurisdictions so you have to you can just start a page and Go Global um you have to do your do diligence and um you have to go through licensing process you have to solve well I I disagree with that so right now as far as I know if you just do some like Bitcoin startups where we don't touch Fiat I think the only law you're going to uh clearly violate if it goes through

is the bit license thing uh and then you know the the powerful thing with Bitcoin is that you can start your startup anywhere and as long as you don't have that intersection the banking system Etc you know you can have users anywhere and uh so people can totally do that and and I think that the sort of starting a bigcoin startup overnight no I think that's totally or like you know overnight or so like in the typical startup style of like hacking something together and doing that I think that's absolutely going to be a huge part of this and of course you're right right if you hold customer funds if you have like a WB wallet yeah then you know you do need to be more careful um but this is what this is what I'm saying you you

whatever your business model is um you have to evaluate and if you hadn't have to do this with social network if you start whatever type of Bitcoin startup you have to take your business model and you have to sit down with a legal team and say can I do this and it's not only New York um keep in mind that um as often portrayed Germany being the Bitcoin Paradise country which is not um it's Bitcoin isn't German geran Financial instrument and is regulated so if you just that Germany doesn't send aircraft carriers around and arrest people abroad um but um you very easily you can you can violate

German federal law and this is true for many more jurisdictions it's the question of of enforcement the us simply enforces it um outside its own country um on a massive scale in other countries don't um but uh you're still violating violating a lot of local regulation laws or you might and you don't might not even know one thing that's also important to point out is that this bit licensing will also be required for uh people or or entities controlling administrating or issuing actual V virtual currency so in effect if you just create a new virtual

currency which which you can pretty much do right now and that I mean and we're not uh talking about uh you know all this other stuff like colod coins and and and uh you know the called crowdfunding uh uh thing you'll also be subject to bit license so in effect I mean if this would have been enacted uh four or five years ago just starting Bitcoin itself would have been illegal unless Satoshi would have had to get a bid license yeah right but nobody's going to do this like I mean it's not like people are going to stop uh creating new currencies it's not that any of these people you know maybe some exceptions but let's say 99% of people will not get a bit license so I mean I I think I I see the future slightly

differently from Stephen I think what we will see is just that there will be a lot of things going on that are technically illegal you know people will just start their companies anyway and people will start him in other uh places people will obviously be violating this bit license thing if go through I totally I totally excuse me that I jump in I totally agree um that the the way out of this um of this uh U lockdown situation that we have between this crazy crazy and totally useless um worldwide regulation that is built on this totally useless and failed war on terror and War on Drugs um which is all a pretext just to to to do massive

survance of um Capital movements um will be eventually and I'm totally with you will be eventually overcome by people massively violating it and it will be a problem of enforcement and you're right maybe your startup is in some bitco friendly jurisdiction and maybe you don't care about the laws of New York and maybe you're not never pop up on the rare of any district attorney in New York and nothing will happen but you're still violating New York law and well we know what uh happens or what potentially can happen to people abroad who are

violating US law sorry no I just what I thought was interesting about what you're saying is enforcement right and this this is where uh things get interesting is how will the uh us uh government and particularly the New York uh the state of New York and we can also anticipate that other states will put in will will enact similar legislation and not just in the US uh how will they able to to to en enforce some of this stuff which is just like completely impossible like if you create a new virtual currency for instance uh and you issue it and it's completely open source and there's not like one person you can go after in one country because uh developers of new virtual currencies can

be pretty much anywhere how will you enforce this and there's a lot of things in this when you read this it's like how are how do they expect to enforce this stuff well they can of course put out arrest warrants uh sue people can arrest people when they uh you know get on a us on us soil maybe in some cases they can try to get International arrest warrants no but I mean I'm just talking about identifying parties I mean of course they will only do it like if it gets to like a certain size or if they care about it I mean there's going to be way too many violations to like go after everybody but of course it creates this huge uncertainty because so many people will be in violation of this it kind of gives them uh a legal basis or it could

give them a legal basis to just arrest like whoever they don't like yeah that that's the risk I I would say I would say they can do this already um they can and this is you know the master balance um that the NSA is doing worldwide is aimed at you know the possibility of arresting anybody anywhere at any time um there is a big difference between um two two main forces here one is civil disobedience and I hope that we will see more civil disobedience in the future because I believe it's um it's one of

the pillars for freedom and for know checking balances between governments and populations the anarchist speaking here um but the other thing is um if you run a startup there's different responsibilities because you're running a business U you probably have investors somebody's money um that you're responsible for and you cannot create a startup based on I'll probably break laws but maybe it ain't going to be enforced that's just not how you can build a business so if you're ser a startup you have to make sure um that your startup

is in line with law you cannot users get angry at the startups why are they kyc why do they want the passport copy why do they want my proof of address I don't know about that though I mean if you we have a lot of for example think of Airbnb Uber or and in London we had did a longer interview with the CEO of former CEO of Skype all those companies were in violation or are still in violation of various local laws uh I I think you know that's often that's just something you'll have to do if you want to do something I mean I I don't think getting a bit license is going to be the answer for a lot of people I

think it's going to be you well it's just going to be a risk you have to take is you're going to be in violation of these laws well it depends what type of laws you're violating if you're violating laws because some uh you know Capt unions are protesting that's one thing if you're accused of money laundering um or terrorist financing um you got to see yourself thinking about where you know somewhere else this is a whole different magnitude uh that they're going after well uh perhaps let's segue into Latin America and maybe we can just start off with uh with regulation as well although we have been spending way too much time cting regulation although

such an important topic um what's the situation in in your country Gabrielle in Mex Mexico Mexico well what's the situation of the temple for our business we have to apply H several rules about identifying our Customer because we're talking we're we're working with cash we are a direct Gateway of Fiat to crypto so we have to identify our customers we have to uh submit reports of the people that that is that is cashing in and that's and our sitation of the business regarding Bitcoin well we had a meeting a couple of month ago with the bank of Mexico and

to be honest it went pretty good H they are fully aware of it they understand how it works technically and and but they see it as as too little at the moment to have to regulate it and they were pretty clear this part that they understand that there's a lot of benefits that the technology can bring and they are analyzing it but they're not not not going to regulate it in this moment because number one it's too little and if it evolves they're going to take the cards in the matter but they they're just seeing how how it evolves so that's a little bit the situation at the moment so Gabrielle if

you guys are doing AML are you doing it because you expect that in the future uh regulations or legislation will be passed that requires you to do it or have you already been told you need to do this right now yeah no we need to do it we need to do it we're doing a a activ a vulnerable activity and every business that is in this sector has to identify all their customers and identify their transactions when they're talking talking Pat okay cool um and what about U well U same situation and not only as I said we are in multiple jurisdictions and

U the way it works is essentially it's the same framework and the same set of rules just a little bit different versions in every jurisdiction I've seen so far um so down here gr why um we are awaiting a new law with e money issues very similar to the legal framework that we've seen developing over the last decade in in Europe I think remember right PayPal started out as an e- money issue in the UK so we waiting for a new law here Group by that would make us an e issue we've seen the same thing in

Paraguay and um as Gabel said we are under the same regulation we need to kyc our clients we need to report suspicious transactions um and to um the whole sh bang um that any other financial institution has to do even even um uh lying to our users and uh accepting them I can give you an example um if I detect um a lot of small transactions that look like somebody circum in certain thresholds I have to contact the client and this is actually in the regulation I have to tell the client

that I want to help him save costs and if he would explain me the nature of his business I would be probably able to do this uh more cost effectively for him which is a bled lie um if the client cooperates it's fine and I get to sniff around his business which is none of my business um and if he does not comply if he says no no thanks that's fine I have to report this that is crazy it surely is now if you want to be compliant if you want to run a legal business um you you need to be compliant and if you want to be compliant um you

becoming uh essentially u a thck of this um crazy worldwide um survance network of that this uh controlling Financial movements which is I mean I feel I feel like I feel like with this news know we're just going back into the same type of system that we are already in and you know this is what we're trying to fight and trying to to counteract I guess uh this is the the ideological vision of Bitcoin is to detach ourselves from this uh corrupt uh system of corrupt governments and Banks and corporations

and it just seems like we're just going right into a wall here uh if if this stuff does pan out as it seems to be going well we will eventually Prevail um the thing is the first in the first step or in first phase we need to bit bring Bitcoin to the people once Bitcoin has mass adoption um enforcement of this uh will become simply impossible um think of regulations like if you cannot transport more than um $10,000 usually across the border without declaring it but you can travel uh with $20 million in your brain wallet

wherever you want so this is a very good example that this system they have built or that has grown don't want to say somebody buil has just grown um will become simply not enforceable on a l scale yeah I I mean I totally agree that's kind of always been my thinking as well you know when people were worried about companies like Circle um or coinbase you know because it's like not pure you don't hold your own key I I never saw that as a problem I saw as a good thing because it gets more people in and then you know once you're in of course you know that's a very difficult situation if you can uh transfer to wallets you control that

open source wallet you want locally you know there's just no way you can control that from a government's perspective but of course that changes uh you know when you have sort of in when people don't hold their private keys and when it's for example prevented that you should take money out of that I don't think that's going to work I think that's just going to be impossible to do but um I I guess that's at least what they're perhaps will try um but let's uh let's briefly just also go into both of your businesses because we haven't uh we haven't really talked about that and you know I just said like one sentence about it but Gabrielle do you want to uh tell us a bit about uh

Mex BT you know what it is and what your plans are yeah for sure okay so Mex BT is a trading platform for our cryptocurrencies we are based in Mexico and a focus is for the region and at the moment we really beta launch uh semi-privately because we're letting other users come in and test them and it has been going pretty good like we have had no major major issue the technology is working smoothly the users are are pretty happy with the system so right now we are hop this week are going to are going to update and we going to launch a new the the newest

version with lot of updates uh and after that probably going to be one two three weeks more in Data before opening moment we have Bitcoin we have litcoin we have Mexican pesos and we have US dollars but we're going to be integrating the different payment processors in the following weeks H so we can take money from different countries in in Latin America such as Colombia such as Brazil such as Argentina and and the gateways to receive money are our main goal is to to give access and and easy access to people from the

region to buy crypto and you focus is kind of on remittances is that right oh yes at the moment what we want to do is like we want to we want to bring liquidity to the region like when we started in September for example in Mexico were doing OTC and uh you were you were buying at 8% 10% premium on the market this has been decreasing and this is really positive really good at the moment like you're still P pay in like one or 2% premium for for for crypto but it's going lower and right now we us it's 05% for trade and hope to to have a a proper Market in the the following

months but com from 8% premium to 2% in uh in 6 month I think it's it's good and and that's let's see how how it evolves now how how um how's the Mexican uh what's the I guess percentage of uh banked people there and also the amount of people that hold credit cards um is it fairly high no no no it's horrible it's horrible we are a cash Society so it's it's a basically a cash based economy do you plan on on providing other ways like uh I know for instance like in China um uh BTC China has like vouchers that you can buy at uh at kiosks which allows you

to then purchase Bitcoin on their website is that something sort of things that you guys are thinking of also like other ways of of uh getting money into the exchange yeah yeah yeah of course that's one of the main way that we have like what you said they on Bank ofion in Mexico is is 70% it's huge and uh so it's a it's a major issue but we have this cash payment Network that has 130,000 places in Mexico where we can say cash so for example somebody can go to a convenience store and can cash in 50 pesos or can cash in 5,000 pesos and they have 130,000 places around Mexico going from 7-Eleven to Oxo to Walmart h a lot of places where they can

put put cash and it would be credited in our system so that's that right now for example in the data has been I don't know like let's say 70% of the way that people is cashing cashing in I was looking um for some information on Mex BT before and I found I think it was a prospectus uh maybe for seed coin or and and I saw um some numbers on the remittance figures so I think I saw that 10% the Mexican GDP comes from remittances which is basically all from the US and that this was about 38 billion

per year and now I'm curious first of all what kind of fees are usually charged um when you do this sort of dollar to peso remittance transfer yeah well it's 23 billion that the amount of money annually that it's coming 23 yeah and it's crazy because like 51% comes from Texas and so it's really easy to Target and after then you have nichan and but but yeah so the feeds that are charging difference from for example Africa where I think it's around 8% here we could say that they have several Solutions like have like Banks and remit

institutions H have developed different ways to send money and some cases they can be charged like 5% or for example if you send $100 they CH they charge you $5 they have different like they have they develop this cards they they have targeted through many different places like the remittance the remittance issue before Bitcoin so I don't know I'm not AC actic about remittances in Bitcoin but I think there are a few things that that that must to be to be done for it to be able in place because it's not only about the fee it's

it's much more complex we have to understand also that the people that receiv receiving money here ER are well we're a cash Society but we believe in in cash we believe in in this paper you know and especially the the mothers of the people that's working upro and that's sending money money back believe in this money and don't believe in even Banks because they have their money stored in their pillow and making them move from that to to receiving their remittance for Bitcoin it's going to take much more that only the piece so so so that's I mean I guess this the thing

that could happen though is that somebody you know kind of plugs into max BT and maybe plugs into um like coinbase or or maybe a more uh more a cheaper and more liquid US exchange once it's there and then sort of abstracts the whole Bitcoin behind the scenes does that service and perhaps can do it much more cheap or more cheaply than the current remittance services do you think that's a possibility or do you think the fees are um low enough that this is difficult to do yeah yeah of course you have to make it transparent and that's the whole idea

that you plug in up there and you plug in here and you make it invisible so so they people never knew that they took that they that they transacted with Bitcoin yes it's a it's a it's a possibility and let's see how it falls like I don't know for example digital money you know like there have been several several Solutions here like we have transfer transfer it similar to impesa but it's from America mobile America mobile is one of the largest telop worldwide it's Carlos Li and they had 70% of of the market and they and they came with transfer for example and they have almost one year and a half working on it

and it hasn't hasn't traction or you have Wanda from telica which open same solution as in PESA and different countries in Latin America and right now they it's was a joint V with MasterCard and with ponica and they closed they closed their operation in Mexico they closed their operation in Argentina the only one there still operating it's Peru and I don't know I'm not sure still operating so people at least in Mexico and I think Latin America hasn't really adopted like they haveed and in PESA but there's an interesting case in in Nicaragua there's a solution Solution that's called meso and they're using it

for for their mobile for their public transport and it has like 30% like think of of the usage so people are starting to use that that solution they have done it pretty pretty correct so it has a lot to do with with adoption and how our societies are going to going to adopt this e money and this this cryptocurrencies to make make work I think um so so what about your plans of expansion you talked about Colombia Chile I think Peru I saw mentioned somewhere I don't know perhaps this is um this is outdated U perhaps not I don't know so are you planning on on setting up like local subsidiaries in

the different countries that would allow people to um buy Bitcoins there at the moment we are focused in Mexico and our what we're doing is enabling cash in we want to be able to take money from all these different places so we are working with different payment processors to integrate to our system and being en able to receive money from from them through payment processors yeah that makes a lot of sense are you going to have some issues like with local regulations that going to be complicated or can you do that pretty easily ER well that's difficult to to say that's difficult to say ER at the moment they rulle that have to

to to apply and to regulate our Mexican rules which are really strict really really strict like uh Mexico has a situation about about about moving moving money and our AML and kyc rules are pretty pretty pretty strict and we have follow reports monthly to the authorities so and that part we're pretty pretty covered and we're foll the rules here we're going to follow the rules of other other other countries that are less St than this matter Stephen could you perhaps tell us about Monero yeah let me first say that um I totally agree this also my

experience um what G was saying um um the way I I haven't been in every single Latin American country yet but from what I've seen so far most of the Latin American countries and most of the countries in the Emerging Markets um are um see this huge number of un or underbanked uh people and our cash base and each country has something that like a Western Union style service one more or we have two ab where you can essentially send cas

loans for some fees usually between 2 and 5% in some countries little bit higher um but there is a general Trend in Latin America at least to move the population away from this cash handling towards some sort of electronic money um Ecuador is a very good example Ecuador is one of the countries that do not have their own National currency because collapse um and they just recently started a project by the way um Contracting the urug company um to develop a sort of e money um that will

be cell phone based stupid phones and smartphones um and um we see the same thing has happened in Paraguay about 80% of money transfer in Paraguay is going over cell phones um I think the initiative in Paraguay was taken by one of the mobile phone providers and we seeing this in a lot of countries in Latin America um Monero itself is based in ugu the headquarters are in ug uh we also have a subsidary in Hong Kong and we have a subsidary in in the US and we are planning for a further subsidiary in European Union but Mona itself is not as

um as much Latin American targeting company we are targeting the global market so just as you know coinbase circle blockchain of info um we are not focusing on solely on on um on the Latin American Market to describe Monero in a nutshell I would say it's um it's a Bitcoin bank I should be careful with the word bank for legal reasons um but the idea is to um you know people do not really care about Bitcoin itself nobody

cares about underline technology um right now we we are in a time where in some places you can open a store and write on a you know Bitcoin Embassy or Bitcoin here whatever and Bitcoins will flop to that place um but it's only bitcoiners and they're coming there for political reasons most of them um if you want to reach the normal population you have to solve their problems just as G said um the moms believe in cash because that's what they know in other parts of the world they believe in their bank account because that's what they know um or they believe in checks because that's what

what they know so we have to provide them things that look and feel and taste the same way um that things felt that they trusted and that they knew all the life so Monero is offering accounts very similar to bank accounts I say to PayPal accounts um and a lot of channels um on over which you can access this account um and from there we have this I sometimes describe this as a box of Lego pieces um we have this U rocks kernel uh that allows us to build

business logic to build products um that actually solve their the problems on the ground like um we have a rising um level of U um of criminality here in in in in oray and um emerg are concerned about carrying the cash of the daily sales to the bank um after they Clos their shop so um addressing this problem uh reducing the amount of cash that you have in your store um is solving an actual problem and this is what what we are aiming at and can you tell us about some of the solutions that the Monero is uh uh I

know there's different there's different solutions so you have mono social mon SMS the BTM and a trading platform [Music] yeah yeah give me give me let me give let me give you a quick rund out so that it's easier understandable um the core of Monero is a Curren agnostic banking system that we call Rocks and um rocks does on the one side it handles account as I said currency agnostic it can handle accounts in Bitcoin Litecoin whichever coin Ripple any fiat currency US dollar euro case or whatever um up to

you know smart property col coins this type of things um as our CTO said once um it could be bags of rice obviously tell us how many rice CS are they have rice um so this is on the one side and on the other side it does all the things that banking system should do do user management account management kyc U procedures outs um and so forth and on top of rocks there is an API and um it allows us to build what we call thin applications and we call them thin applications because we don't want to call them stupid application but they are stupid application because they don't store their own data they don't

have their own business logic what they do is they take user input and Shuffle it to rocks and they get an answer from rocks and Shuffle this answer to they use it um right now we are launching a number of examples like a Facebook application a Twitter application an SMS application um an ATM that we call BTM a web uh uh application um Point of Sales ter and so forth we can essentially connect anything to rocks and we are thinking also in terms like you know upcoming

Internet of Things uh devices sensors uh could be connected to um to rocks and um it allows us to um connect this this account that you have that feels and looks like a bank account um to any type of um social network or Social Service um and allows us to Target also markets like say for example China where the social network uh landscape is so totally different from what we know from from our social networks so um when you look on the outside to see mon social and mon web

and BTM and point of but the truth is um this are all thin applications that talk to the Cel and the Kel is um is a banking system that gives you accounts um and can allow for any type of um Financial product because we can accommodate any type of business logic so it's interesting how sort of ambitious you guys are in doing all these wide range of uh of products you know it kind of even if you compare to something like coinbase this is like a whole um whole other level in a sense so I'm curious um are you guys planning to

raise like some uh really big amount round of funding it seems like you will need uh a really big team or I would say different teams working on all these different aspects to to accomplish this well um we have been funded um over the last year and a half um through U supporters and that are all shareholders now um from the Bitcoin spare and from through some private Equity um and I think we we've done a pretty good job in developing this core system um over the last year now that the core system um has been stable for quite a while and we started devel all those applications on

top of the API um we are hiring actually if anybody's listening out there good cers please send us an email to jobs mono.com if I'm allowed to do this and we are hiring coders um and we are also planning to open this API to um third party um actually very interesting conversation going on with Partners in China um who are planning to develop their own set of finx for mon So eventually this this uh will be an fbii uh open to third parties um to develop their own solution based

on on rocks the mon API so what what's the timeline uh when when will this be available and in which jurisdictions you see um we are sort of U when we look at this bit license that we spoke about earlier um we are not happy about the BD license um but we feel that we did the right thing because we sort of saw this coming um very early on we we we uh very early on we um sort of understood that there will be a nightmar journel of um regulation around the world and it will look so different

and and um rck has been designed to to to accommodate different any number of of of jurisdictions with different regulations um so theoretically that can just switch off um all non-compliant products um for New Yorker users um right now um we are in closed beta in the next couple of days uh the closed beta will go into a public beta um and um it will at this level uh provide um a So-Cal play wallet with Bitcoin test coins um it's a tool for developers I think there's no decent

test coin wallet service out there um and it allows us to um to test a number of other things that uh we want to test before we go into what we call real money uh uh version that we expect to launch towards the end of August and um from there we want to show the capabilities of scaling the system and a number of other things um we just want to have proof of of work cool well uh thanks very much uh you know for joining us today guys and uh I hope both of you guys will be successful sort of

in in building your products and hopefully people in Mexico or Latin America will be able to use max BT soon to get their Bitcoins and uh I also request an invite for Monero so hopefully uh I'll get that at some point in the near future and be able to test the system out so yeah thanks so much for joining us today guys yeah thank you very much for joining us just a question I want to know if I can add something of course sure sure okay so talk a little bit about about Latin America what's what's going on because for example you have people in Argentina you have people in Chile you have people in Costa Rica there's a lot of things go going on for example in Argentina you have the the

foundation they just did the the the first center for Bitcoin in Argentina with have Alberto from from bitbay and Diego they're they're doing really really cool things and have a lot of startups that are that are working and interesting things in crypto currencies and also for example in Chile you have Adam stradling Adam stradling so he was ex trade Hill he sold almost 10% of the Bitcoins that are in circulation and he has he was one of the biggest he one of the biggest coin providers and liquidity providers for for Latin America or in urai for example also astop that now is the Ripple Gateway it's a Latin American rle Gateway or for example Nicaragua nicara they're working on different things right now in nicara they close a

a deal to do a new Canal next to to Panama there's a $40 billion investment by China and they are pretty pretty the the bit the bitcoiners over there are pretty pretty active and trying to push Bitcoin inside the country and there's going to be a lot of money coming in to to there so that's interesting and know there they haveo and for example in Colombia in Colombia you have Mundo Bitcoin that are are Traders from from from phex and are doing Bitcoin trading and they're also doing a a digital conference which is going to be pretty really interesting ER on the end of the year not right and for example you have Costa Rica and Guatemala that they are also a pretty pretty active small

communities of course but you know there is pretty active and the people that is involved there it's it's really interesting interesting they are well positioned and and it's and there's a lot of things going on in all the region so just wanted to add that that's great to hear so hopefully we'll see uh cool projects coming out of you know all kinds of different countries in Latin America um yeah so thanks so much for joining us today guys and you know thanks for listening if you want to support the show you know you can leave us a review on iTunes which is uh greatly appreciated and helps people find the show you can also uh support us by donating that eper Bitcoin SL tips

and you can follow us an EP on Twitter at enter BTC and finally if you want to kind of stay up to date with what's going on with Bitcoin we send out a newsletter every Friday so you can sign up for that at EP epicenter bitcoin.com newletter so uh thanks so much and we'll see you next week [Music]