Trucoin became a pioneer in the Bitcoin space this past July when it opened its service, allowing users to buy bitcoins almost instantly with a Visa or MasterCard. It was billed as the fastest way to buy Bitcoin and became available to residents of Florida, Massachusetts, Missouri, Montana, New Jersey, New Mexico, South Carolina, and Texas.
To date, Trucoin is authorized to operate in Alabama, Arkansas, Connecticut, Florida, Georgia, Idaho, Kentucky, Maine, Michigan, Minnesota, Mississippi, Nebraska, New Jersey, North Dakota, Oregon, Rhode Island, South Dakota, and Wyoming with service also available in Arizona, Kansas, Montana, New Mexico, Massachusetts, Texas, South Carolina, and West Virginia.
Right now, the states not yet covered are Alaska, California, Colorado, DC, Delaware, Hawaii, Iowa, Illinois, Indiana, Louisiana, Maryland, Missouri, Nevada, New Hampshire, New York, North Carolina, Ohio, Oklahoma, Pennsylvania, Tennessee, Utah, Virginia, Vermont, Washington, and Wisconsin.
We got a chance to catch up with Trucoin’s VP of marketing, Brent James, on their experiences with regulatory compliance across the United States and to get a sneak peak of their future plans in covering all of the states and beyond so that users can easily purchase bitcoins with their credit cards.
Cointelegraph: First, for those who do not know, could you tell us a little bit about Trucoin?
Brent James: Trucoin was founded in 2011. After an uphill battle stemming from issues such as lack of cryptocurrency awareness, bad actors in the Bitcoin space, and misinformation over the course of several years; our approach to entering the Bitcoin space was to focus on being compliant prior to actually handling currency.
While initially it hindered us, in that we couldn't launch a product that involved facilitating Bitcoin transactions, it has proven to be the right approach. As a compliant company, Trucoin is now in a position to focus on our core. Over the course of the last year, we have been focusing on compliance, our product development, and partnerships.
We would have loved to be operational much sooner, but after having accomplished the compliance goals that we set out to achieve we can now focus providing great service to our customers and enhancing our product offering.
“While initially [compliance] hindered us, in that we couldn't launch a product that involved facilitating Bitcoin transactions, it has proven to be the right approach.”
- Brent James
CT: Trucoin was one of the first solutions to offer Bitcoin purchasing with a credit card. What type of response have you received so far from customers?
BJ: The response from customers has been overwhelmingly positive. Our goal, in this initial phase of our product roll out, was to provide anyone with a chance to own Bitcoin in a matter of minutes. Beyond just offering the ability to conveniently pay with a Visa or MasterCard, we wanted to make the entire process much easier and faster. I think that we are on the right track to doing that based on the feedback we've received.
During the pilot program, we had a lot of great feedback both publicly and privately. In one particular thread on reddit, I recall a customer stating he was, "[..] literally blown away." As of this recent launch, we have had unsolicited testimonials posted online and a few folks mention our ease of use and higher spending limits as reasons they prefer Trucoin.
CT: What types of challenges have you faced in setting up this business as far as regulatory compliance goes?
BJ: Compliance has been a great learning experience for everyone on our team. It started years ago with the understanding that handling any currency in a non-compliant manner is not something that would bode well for our company long term. It's been a long interesting path with a lot of great legal guidance both internally and externally.
Admittedly, it's been a lot tougher than I could have imagined. Building a product that accomplishes what we have set out to do for consumers, while ensure compliance and risk mitigation, has been one of the greatest business challenges I've ever faced.
That's not to say we have finished what we set out to do. Our goal is to be fully compliant in all 50 states and, from there, execute our plan to launch in stages to the international markets we have identified.
CT: Is Trucoin considered a Money Transmitter Service and did you have any consulting help in getting your business complaint?
BJ: Trucoin is an authorized agent of a money transmitter in over two dozen states. This means that we carry the same responsibilities that the licensee has with respect to knowing our customer, reporting, and other compliance related responsibilities. The path to getting to where we are, which is fully compliant in each area we conduct business, hasn't been easy.
Since being founded in 2011, we have been focused on building a company that operates legally and can be looked to as an upstanding member of the Bitcoin community. This has involved a great deal of consulting along the way. Even experienced professionals with years of compliance experience have admitted the challenges presented by cryptocurrency. That's why we have taken such a careful approach to date.
CT: What is your view of the proposed NY BitLicense? Which approach do you think is likely to have more success - California’s or New York State’s?
BJ: My view is that FinCEN has made it pretty clear that Bitcoin companies that are engaged in handling currency, including Bitcoin, are to be regulated as MSBs. I think that there isn't a need for regulation beyond that.
“[T]here are some states that do not regulate Bitcoin, for example, South Carolina. I would have to say that those are instances where it can be much easier to conduct business.
- Brent James
CT: Your services are available so far in 26 states across the US. When can we expect it to be 50 and are the state-specific MSB requirements the reason for the wait?
BJ: It's a difficult thing to predict with absolute certainty, but you will see our coverage expand in the New Year and perhaps even sooner than that. You are absolutely correct with respect to state-specific requirements. Some are more difficult than others, but we are working daily to extend our coverage and bring more potential customers the ability to buy Bitcoin in a safe and easy way.
CT: Being an agent of a MSB in over two dozen states, what are the requirements as far as Know-your-customer (KYC) and anti money laundering (AML) are concerned when dealing with cryptocurrencies? What states are the most lenient? Most strict?
BJ: The KYC and AML requirements are somewhat similar state to state, with some exceptions. A lot of challenges come from the different requirements to acquire and maintain the license.
There have been instances, with different states, that have required us to seek more legal opinions for clarity or adjust certain aspects of how we conduct business or report.
As far as strict states versus lenient ones, there are some states that do not regulate Bitcoin, for example, South Carolina. I would have to say that those are instances where it can be much easier to conduct business.
CT: What is your approach to fraud mitigation?
BJ: Well at Trucoin, we are proactive in preventing debit and credit card fraud. We have developed a proprietary fraud mitigation system that has allowed us to have an exceptionally low exposure to chargebacks. So fraud, as it relates to us, is something that fraudsters try to perpetrate against us.
In regard to the investment fraud accusations and issues that have come up in the news recently, the customers at Trucoin need not worry. We allow our customers to take delivery of their Bitcoin right away, so there is no exposure to risk for them.
CT: What are Trucoin’s plans for the future? Will there be an even easier way to purchase Bitcoin in the future?
BJ: We have had a pretty solid track record of keeping things quiet until we feel confident it's ready to be announced to the public. Having said that though, I think that we have a few announcements coming soon that will raise a few eyebrows in the cryptocurrency community.
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