Author Topic: Can BitShares offer Vaultoro decentralized banking services?  (Read 4621 times)

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Offline Permie

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I've sent an email to support@vaultoro.com

Quote
Hello,
I'm a shareholder of the BitShares crypto-ecosystem and I would like to discuss the mutually beneficial relationship that is possible between BitShares and Vaultoro. There is a thread on the bitshares talk forum here: https://bitsharestalk.org/index.php/topic,16724.msg214074.html

I have CC'd fabian@bitshares.org (one of the 101 elected delegates of the BitShares ecosystem) in case of technical questions.

A PDF info-graphic for a quick overview of BitShares is available at https://pdf.yt/d/atDhSKTY2mwequs0

Could you please direct us to the relevant people to discuss the technicalities?

The BitShares ecosystem is a decentralized asset exchange that allows user to issue their own assets. These assets can be traded in seconds, and allow the user to retain sole control of the private keys. The issuer of these UIAs (User Issued Assets) collect all fees generated, and can set KYC requirements limiting who can hold it.
Vaultoro could issue such an UIA to enable your company to access BitShares users as potential customers and profit from every trade of your UIA.
Existing Vaultoro customers would benefit by being able to hold their claims to Vaultoro gold on a decentralized platform where only they hold the private keys.

Another aspect of the BitShares ecosystem that Vaultoro could benefit from are the Market Pegged Assets. These are assets that track the value of real world assets such as USD, CYN, Gold and Silver but are not subject to any counterparty risk, and are backed by over 100% collateral.

Vaultoro could allow their customers exposure to bitSilver to test the demand before committing to purchasing more bank vaults and physical silver.

Vaultoro could accept bitGold in exchange for Vaultoro Gold.
The value of Vaultoro gold can then be exposed to the BitShares decentralized market to be traded. This brings another price finding mechanism to value Vaultoro gold against assets such as bitcoin, USD, CNY, Gold and Silver.
Accepting bitGold for physical delivery of gold would open Vaultoro up to an entire new market and provide a convenient gateway from crypto to physical assets. As gold dealers are subject to far less regulation than traditional banks this gives Vaultoro a significant advantage.

We look forward to hearing from you,
Thank you

Very nice +1

I just sent them another email asking for an update on their discussions on the legality of using BitShares.

I've Cc'd xeroc in to the email to help me out :)
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Offline fav

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Offline cass

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Thanks for the warm welcome guys and girls!

@xeroc Thanks for your detailed response. 

I will have to run all this past our legal and regulatory specialists but it does look very cool.

@Permie Thanks for the info.

Welcome Joshua! Great to have you on board!
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Offline Shentist

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Thanks for the warm welcome guys and girls!

@xeroc Thanks for your detailed response. 

I will have to run all this past our legal and regulatory specialists but it does look very cool.

@Permie Thanks for the info.

if you see problems you could consider to integrate metaexchange.info like you did with shapeshift.io

Offline xeroc

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Thanks for the warm welcome guys and girls!

@xeroc Thanks for your detailed response. 

I will have to run all this past our legal and regulatory specialists but it does look very cool.
Don't miss the newest announcement of today about
BitShares 2.0:
http://bitshares.github.io/

Offline Joshua Scigala

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Thanks for the warm welcome guys and girls!

@xeroc Thanks for your detailed response. 

I will have to run all this past our legal and regulatory specialists but it does look very cool.

@Permie Thanks for the info.
Joshua Scigala
Co-Founder Vaultoro.com
The real-time bitcoin gold trading platform

Offline Permie

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The new website has lots of information about UIA's.
It's available at http://bitshares.github.io/technology/user-issued-assets/
I've copied some of the relevant info here:

Quote
User-Issued Assets
Regulation-compatible cryptoasset issuance.
The BitShares platform provides a feature known as "user-issued assets" to help facilitate profitable business models for certain types of services. The term refers to a type of custom token registered on the platform, which users can hold and trade within certain restrictions. The creator of such an asset publically names, describes, and distributes its tokens, and can specify customized requirements, such as an approved whitelist of accounts permitted to hold the tokens, or the associated trading and transfer fees.

BitShares allows individuals and companies to issue their own tokens for anything they can imagine. Common use cases include:

    Deposit Receipts
        1. Know Your Customer
        2. Asset Seizing
        3. Market Restriction
        4. Transfer Restrictions
    Company Shares
    Event Tickets
    Rewards Points
    Individual or Corporate Debt
    Crowd Funding
    Digital Property
    Privatized BitAssets (Stable Cryptocurrencies)
    Information/Prediction Markets
    How to Profit by Issuing an Asset
        Fee Pools

The potential use cases for user-issued assets are innumerable, and the regulations that apply to each kind of token vary widely, and are often different in every jurisdiction. BitShares provides the tools to allow issuers to remain compliant with all applicable regulations when issuing assets.

Following are a few example use cases for user-issued assets.
Deposit Receipts

Banks are simply companies that maintain a database of customer account balances and facilitate the transfer of these assets among their depositors. Companies like Dwolla and Paypal essentially issue deposit receipts, and then offer cheaper transfers among their users than between banks. With BitShares, it is now possible to move these internal databases onto the block chain where the deposits can be used with other smart contracts such as the internal markets, escrow, or bonds.

In talking to many different banks and exchanges, we have learned a lot about what the law requires of those who wish to issue deposit receipts.
1. Know Your Customer

First and foremost the issuer must know every single customer. BitShares supports this by enabling both whitelists and blacklists. Rather than requiring every issuer to whitelist every customer separately, an issuer may specify a set of identity verifiers that they trust to do this job. This allows issuers to benefit from the network effect of validated users without having to do any direct identity verification themselves.

When an asset enables whitelists, no account may send or receive that asset without being on an authorized whitelist. An accounts funds can be frozen by removing them from the whitelist.
2. Asset Seizing

From time to time, an issuer may be required to seize funds as a result of a court order. While this may be unappealing to cryptocurrency purists, it is an unavoidable reality of trust-based assets. An issuer can determine whether or not they wish to revoke this privilege, but it may be a requirement in some jurisdictions.
3. Market Restriction

An issuer who offers both USD and EUR deposits may need to restrict direct trading between their USD and EUR assets to avoid being subject to foreign currency exchange regulations. Some cryptocurrency exchanges allow trading between fiat and cryptocurrencies, but not between two fiat currencies. Without this feature, many exchanges would be unable to issue their assets on the BitShares block chain.
4. Transfer Restrictions

A transfer-restricted asset allows the holders of the asset to trade it in the markets but not transfer it from person to person. Only a few cryptocurrency exchanges allow user-to-user transfer of funds outside the market, because this particular activity is often subject to a different set of money transmission regulations.

The deposit receipt example is probably one of the most important, and yet most heavily regulated, use cases of user-issued assets.
Company Shares

Corporate shares are heavily regulated by the SEC, but none of those regulations prevent them from being issued or traded on an alternative trading system. The regulations in many jurisdictions require all shares to be registered (aka held by known identities). BitShares corporate shares can be used as collateral for a bond or be used in any number of smart contracts.
Event Tickets

Event tickets are a largely unregulated use case for user-issued assets. Tickets to a school play could be issued as digital tokens that are auctioned off to the highest bidder, who would then resell them. This ensures that the ticket issuer raises as much money as possible up front, while transferring the risk of ticket sales on to speculators.

On the day of the event, the issuer can freeze all trading of the asset and then allow users to cryptographically check in.
Rewards Points

Merchants around the world offer rewards points for loyal customers. These points are accumulated to earn discounts on future purchases. Rewards systems are a prime opportunity to add value by making them available to Bitshares smart contracts.
Individual or Corporate Debt

Many businesses raise money by selling bonds. With BitShares, these bonds can be made tradeable and/or fungible, which makes them more compelling to investors.
Crowd Funding

Whether being used as a transferable coupon for a pre-sale, or doing an IPO on a small company, issuing an asset is one of the most effective means of raising money for a cause.
Digital Property

Software and music licenses can be made transferable by issuing them as a digital asset. Every copy of a program can check to make sure that the user has control of a token before running. Software implementing such a licensing scheme can remain functional even if the company that produced the license goes out of business.

Trading cards can be simulated by creating many limited issue assets. Online games can use these assets to represent game items.

Quote
How to Profit by Issuing an Asset

There are many ways to profit from issuing an asset. As the issuer you have complete control over market fees and can tune parameters such as the percent of each trade that is collected as a fee. This percentage can be bounded by a minimum and maximum fee. The combination of these three parameters give issuers great flexibility in pricing.
Fee Pools

Issuers may optionally maintain a Fee Pool. The Fee Pool is a pool of BTS and an exchange rate at which the issued asset may be converted into BTS. When a user wishes to pay a network fee with the asset, the fee pool will step in to convert the asset into BTS at the rate that the issuer has specified. This means that issuers may charge a premium every time users opt to use their asset to pay network fees rather than paying them directly with BTS.

The purpose of the fee pool is to provide a convenience to users that would like to use an asset without concerning themselves with the details of acquiring BTS. Anyone may fund the fee pool, but only the issuer may specify the exchange rate. This exchange rate is automatically set to the settlement price if the asset is collateralized by BTS.
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Offline infovortice2013

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Offline karnal

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Welcome to the forum, Joshua; I'll be following this thread closely for more information.

Great answer xeroc!

Offline BunkerChainLabs-DataSecurityNode

Hi Joshua,

welcome to the BitShares community. Good to have you here

Thanks for reaching out. Jeff replied to the support tickets but I wanted to come here to discuss the legalities because technologically it's fine.

The advice that we have received is that tokenizing gold would throw us down a regulatory nightmare because we would then fall under regulations that cover financial instruments.

Has the bitshares community dealt with regulations around UIA's?
Indeed we have.

Issuing a UIA on BitShares gives the issuer some extra privileges such as
* Dynamic supply
* Dynamic fees
* Halt trading
* Halt transfers
* Retractable balances
* Transfers and trades restricted to whitelists

You can safely require your costumers to comply with AML/KYC .. put them into your whitelist (which is stored on-chain) and only allows those to transfer and trade your UIA. These functionalities should allow (or at least help) to deal with regulations.

Example:
You issue Vaultoro.GOLD on the blockchain. A costumer that went through verification is put on the whitelist and gets 1 Vaultoro.GOLD for every ounce of gold deposited at his account. Your costumers can use these tokens to trade with other verified costumers in any market available in BitShares (bitUSD, bitGOLD, or even bitSILVER, ...).
Vaultoro can make a profit from commission fees when depositing or withdrawing physical gold .. and make a profit from any trades that involve your UIA.

Here is a brief overview:
http://wiki.bitshares.org/index.php/BitShares/UserAssets

Please note that there will be a bigger announcement today (8pm GMT) that might clarify some of your questions!
Though your are of course free to ask any of your questions here or via mail.

Regards
 -- Fabian

Excellent answer!  +5%
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Offline xeroc

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Hi Joshua,

welcome to the BitShares community. Good to have you here

Thanks for reaching out. Jeff replied to the support tickets but I wanted to come here to discuss the legalities because technologically it's fine.

The advice that we have received is that tokenizing gold would throw us down a regulatory nightmare because we would then fall under regulations that cover financial instruments.

Has the bitshares community dealt with regulations around UIA's?
Indeed we have.

Issuing a UIA on BitShares gives the issuer some extra privileges such as
* Dynamic supply
* Dynamic fees
* Halt trading
* Halt transfers
* Retractable balances
* Transfers and trades restricted to whitelists

You can safely require your costumers to comply with AML/KYC .. put them into your whitelist (which is stored on-chain) and only allows those to transfer and trade your UIA. These functionalities should allow (or at least help) to deal with regulations.

Example:
You issue Vaultoro.GOLD on the blockchain. A costumer that went through verification is put on the whitelist and gets 1 Vaultoro.GOLD for every ounce of gold deposited at his account. Your costumers can use these tokens to trade with other verified costumers in any market available in BitShares (bitUSD, bitGOLD, or even bitSILVER, ...).
Vaultoro can make a profit from commission fees when depositing or withdrawing physical gold .. and make a profit from any trades that involve your UIA.

Here is a brief overview:
http://wiki.bitshares.org/index.php/BitShares/UserAssets

Please note that there will be a bigger announcement today (8pm GMT) that might clarify some of your questions!
Though your are of course free to ask any of your questions here or via mail.

Regards
 -- Fabian

Offline Joshua Scigala

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Hi Guys,

Joshua Scigala here from Vaultoro

Thanks for reaching out. Jeff replied to the support tickets but I wanted to come here to discuss the legalities because technologically it's fine.

The advice that we have received is that tokenizing gold would throw us down a regulatory nightmare because we would then fall under regulations that cover financial instruments.

Has the bitshares community dealt with regulations around UIA's? 

Joshua Scigala
Co-Founder Vaultoro.com
The real-time bitcoin gold trading platform

Offline oco101

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I've sent an email to support@vaultoro.com

Quote
Hello,
I'm a shareholder of the BitShares crypto-ecosystem and I would like to discuss the mutually beneficial relationship that is possible between BitShares and Vaultoro. There is a thread on the bitshares talk forum here: https://bitsharestalk.org/index.php/topic,16724.msg214074.html

I have CC'd fabian@bitshares.org (one of the 101 elected delegates of the BitShares ecosystem) in case of technical questions.

A PDF info-graphic for a quick overview of BitShares is available at https://pdf.yt/d/atDhSKTY2mwequs0

Could you please direct us to the relevant people to discuss the technicalities?

The BitShares ecosystem is a decentralized asset exchange that allows user to issue their own assets. These assets can be traded in seconds, and allow the user to retain sole control of the private keys. The issuer of these UIAs (User Issued Assets) collect all fees generated, and can set KYC requirements limiting who can hold it.
Vaultoro could issue such an UIA to enable your company to access BitShares users as potential customers and profit from every trade of your UIA.
Existing Vaultoro customers would benefit by being able to hold their claims to Vaultoro gold on a decentralized platform where only they hold the private keys.

Another aspect of the BitShares ecosystem that Vaultoro could benefit from are the Market Pegged Assets. These are assets that track the value of real world assets such as USD, CYN, Gold and Silver but are not subject to any counterparty risk, and are backed by over 100% collateral.

Vaultoro could allow their customers exposure to bitSilver to test the demand before committing to purchasing more bank vaults and physical silver.

Vaultoro could accept bitGold in exchange for Vaultoro Gold.
The value of Vaultoro gold can then be exposed to the BitShares decentralized market to be traded. This brings another price finding mechanism to value Vaultoro gold against assets such as bitcoin, USD, CNY, Gold and Silver.
Accepting bitGold for physical delivery of gold would open Vaultoro up to an entire new market and provide a convenient gateway from crypto to physical assets. As gold dealers are subject to far less regulation than traditional banks this gives Vaultoro a significant advantage.

We look forward to hearing from you,
Thank you

Very nice +1

Offline mike623317

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Is this at all possible?
I'd say so .. yes

However, there will certainly not be an official partnership between BitShares and Vaultroro .. simply because BitShares is a technology and a decentralized company.
They still can do business with BitShares being an independent entity leveraging the tools of the blockchain.

I'd say: Go for it, get in contact with them. Inform them about the BitShares DEX and most importantly: tell them how they can make a profit.
 +5% +5%

So we have a consistant message that hits all the important points, i think it might be a good idea that we create some sort of sales pitch for when we reach out to potential partners. I'm sure something like that already exists. I just think we need to send out a consistent, professional, well thought out message rather than random emails. Presumably our marketing team have one?

This would be nice if we could get Vaultroro to use us.
Hoping for the best.

Offline Permie

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I've sent an email to support@vaultoro.com

Quote
Hello,
I'm a shareholder of the BitShares crypto-ecosystem and I would like to discuss the mutually beneficial relationship that is possible between BitShares and Vaultoro. There is a thread on the bitshares talk forum here: https://bitsharestalk.org/index.php/topic,16724.msg214074.html

I have CC'd fabian@bitshares.org (one of the 101 elected delegates of the BitShares ecosystem) in case of technical questions.

A PDF info-graphic for a quick overview of BitShares is available at https://pdf.yt/d/atDhSKTY2mwequs0

Could you please direct us to the relevant people to discuss the technicalities?

The BitShares ecosystem is a decentralized asset exchange that allows user to issue their own assets. These assets can be traded in seconds, and allow the user to retain sole control of the private keys. The issuer of these UIAs (User Issued Assets) collect all fees generated, and can set KYC requirements limiting who can hold it.
Vaultoro could issue such an UIA to enable your company to access BitShares users as potential customers and profit from every trade of your UIA.
Existing Vaultoro customers would benefit by being able to hold their claims to Vaultoro gold on a decentralized platform where only they hold the private keys.

Another aspect of the BitShares ecosystem that Vaultoro could benefit from are the Market Pegged Assets. These are assets that track the value of real world assets such as USD, CYN, Gold and Silver but are not subject to any counterparty risk, and are backed by over 100% collateral.

Vaultoro could allow their customers exposure to bitSilver to test the demand before committing to purchasing more bank vaults and physical silver.

Vaultoro could accept bitGold in exchange for Vaultoro Gold.
The value of Vaultoro gold can then be exposed to the BitShares decentralized market to be traded. This brings another price finding mechanism to value Vaultoro gold against assets such as bitcoin, USD, CNY, Gold and Silver.
Accepting bitGold for physical delivery of gold would open Vaultoro up to an entire new market and provide a convenient gateway from crypto to physical assets. As gold dealers are subject to far less regulation than traditional banks this gives Vaultoro a significant advantage.

We look forward to hearing from you,
Thank you
JonnyBitcoin votes for liquidity and simplicity. Make him your proxy?
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