I received a bill from the NHS dentist but it didn’t have routing details for online banking. I contacted the NHS dentist reception and they explained that they do not offer the option to pay online. Mmmm. Next I contacted the department accounts team and they did not have any routing details but they referred me to the centralised payments section. I confirmed sub bank account routing details and agreed to forward an email confirmation with a payment reference. The reason online payments are not encouraged is that they are processed and reconciled manually. So, the inbound payment from “Cryptopay Limited” was not reversed, lol, and I added a bitcoin milestone to the list:
I have more milestones in the pipeline, of course! ;O)
The minimum days and focus on meaningful Continued Professional Development in the UK Civil Service increases on 01/04/2015 so the next step in the UK national government could be to register and control bitcoin addresses (or another perhaps less contentious crypto currency such as Dogecoin) for one or more exemplar services to build up expertise in crypto currency and underlying technology such as blockchain.
The Isle of Man is well established as a proof of concept accelerator and the UK is a leading financial services centre so ideally leverage the strengths of both jurisdictions with a faster parliament and a bigger regulator so that British companies are world class. The crypto community is a joined up growth policy, lol.
When the front office does not include BACS online payment routing details on invoices, the back office is not able to support manual requests to confirm routing details and the internal financial system does not have the fractional cost online payments option installed?
cash = 60p per £100 excludes 70p per paying in slip
cash exchange = £1.65 per £100
cheque or postal order = 31p
incoming BACS credit = 15p
So, “openmindedly” with numbers that do not reflect any volume discount etc, in the 2014/15 financial year, with cash transactions averaged out at £20 and card transactions averaged out at £50, if a government processed incoming retail transactions without online banking payments (excludes bank account and hardware monthly fees and excludes fraud):
£10m in cash transactions @ £60,000
£0.5m in cash exchange for floats etc @ £8,250
£30m in cheques @ £186,000
£45m in debit card payments (15p) @ £135,000
£15m in credit card payments with 2% fee (£1) @ £300,000
£0m in online banking BACS payments @ £0
However, benchmarked with fintech platforms such as BACS online banking payments, digital currency and banknotey (TM):
£10m in credit card payments with 2% fee (£1) @ £200,000
£1m in bitcoin with 1% fee (50p) @ £10,000
£24m in online banking BACS payments at 15p fee @ £72,000
Ok, that equates to £689,250 with older ratios and £541,875 with newer ratios or nearly -22% in cost savings. An interesting headline number in an era of government budget reviews and pressures to rebalance whole economies.
The card companies have not supported any shift to a surcharge process historically because the inevitable customer conclusion is that cash would be a “free” payment method.
If a government amended policy on not absorbing higher cost credit card transaction fees (American Express is not accepted by the Isle of Man Government) but allowing the customer to choose a preferred surcharge on every payment method such as cash, cheque, debit card, credit card, charge card, prepaid card and even points, miles, bitcoin, ripple and banknotey it could contribute the equivalent of a 1% pay rise, offset the living wage and allow credit cards from credit unions as a more flexible payment method on what are typically quality of life public sector services rather than cash from payday lenders or loan sharks.
If a government then progressed legislation to itemise transaction fees outside the public sector at the offline and online point of sale, customers, SMEs and the economy would immediately benefit from more awareness of transaction process costs, more consistent and more competitive commercial rates and open up the opportunities on real time risk based transaction fees.
As someone that reported a fraudulent card transaction to purchase a flight into the UK from online banking in time to catch the criminal at the departure or arrival gate, it is a reasonable assumption that fintech could significantly decrease financial crime with transparent fees, a shift to joined up real time policing of each and every fraudulent transaction and an end to passing a large percentage of the avoidable costs of financial crime to customers.
policy advisor, Isle of Man Parliament
project lead, openmindedly @ Isle of Man Government
The Isle of Man does not have a central bank and that is well received by bitcoin believers, of course!
On 10 June 2014, the Isle of Man financial services regulator explained that the policy was to support legitimate businesses within the emerging crypto sector to operate in the jurisdiction without regulation, to support best practice and that a public register would be introduced in new legislation.
On 18 July 2014, the Isle of Man financial services regulator announced guidance notes.
The Crypto Valley Summit prompted extensive discussions and — perhaps not widely enough — I recommended a voluntary public register without a fee pending the compulsory public register with a fee in the new legislation.
The new legislation (explanatory notes) is expected in H1 2015 but will not regulate crypto businesses. As at 15 December 2014 it has passed the first and second reading in the lower chamber so still requires a third reading in the lower chamber, first, second and third readings in the upper chamber and also (UK) Royal Assent in the joint chamber so it is on the right timescale.
The UK is often cited as the most important onshore jurisdiction to crypto businesses. I discussed with peer contacts and noted that even the world class UK Government Digital Service has limited public API functionality.
Most regulators and governments struggle to minimise consequential costs but increasingly real time risk management of any business on a public register is a core requirement.
I reviewed the existing Isle of Man public register of regulated banking licence holders and decided to configure a no/low cost public API with import.io as a proof of concept that even an unregulated crypto business would want to be on a voluntary public register that could be monitored with innovative automated services such as alerts (public register ping, highlight a shift to a different jurisdiction) to investors, digital wallet holders, digital currency exchanges, insurance companies, media companies, other regulators and cross-border law enforcement such as Europol and Interpol.
So, what could you do in 2 hours?
host a group coffee with some local peer contacts to shortlist crypto businesses already active in the local tech community and the inevitable 1 or 2 handfuls of stealth mode tech startups that may or may not want to be included yet (20 minutes)
draft a voluntary public register and any amendments (30 minutes)
circulate to highlight any gaps (10 minutes)
upload the summary, content and link to a holding page on the regulator website (30 minutes)
draft tweet (10 minutes)
apologise for making it look easy with import.io (20 minutes)
I’ve been lucky to have had some great discussions around public sector possibilities with open data and open banking but a meetup with Malcolm Couch, the Chief Financial Officer of the Isle of Man Government (the name on our banknotes) and Mark Shuttleworth, Isle of Man resident and ubuntu founder, centred on internal disruption, crowdfunding, Mobile World Congress, cloud hosting, Africa and an open banking mobile app undoubtedly accelerated me on a path to some recent digital currency milestones.
By default governments retain ownership of employee IPR even though most national accounts do not include any employee IPR or goodwill from residents and expats — I had wondered if that would disrupt calculations such as GDP, not unlike the recently included drugs and prostitution numbers in the latest UK statistics.
I needed a different type of engagement to reflect intellectual property rights and digital assets accumulated to date with credit card funding and the opportunity cost of not switching to the private sector — something between an employee secondment, a sabbatical, a fellowship and a social enterprise non-executive directorship to fast forward the local ecosystem but with an IPR exemption — I’ve called the net result country growth hacking!
In January 2014, I started a 1 year specialist contract on open government and open banking with the Isle of Man Government and they were already an early adopter of the shift to tax transparency via USA FATCA and UK “FATCA” and committed to FoI/RTI legislation.
I was 1 of 12 from the IATI (International Aid Transparency Initiative) technical advisory group conference in Montreal at the World Bank supported Open Contracting Partnership fringe meetup next day on the draft procurement transparency standard, with open banking inspired input. To some extent the open bank project API is a mainstream bank version of the bitcoin blockchain.
Isle of Man footprint
TGBEX launched physical bitcoins as a tangible option to collect an inevitable bit of history or to easily and safely invest in offline bitcoin.
QwikBit installed a bitcoin ATM in a very popular pub, the Thirsty Pigeon.
CoinCorner have a live exchange and recently launched a wallet and installed a payment tablet that connects to the existing POS at the Thirsty Pigeon.
CoinKite POS is installed at the Java Express coffee shop. John Middleton also hosts a bitcoin awareness night on Monday night.
A leading local hotel, the Claremont Hotel, is pending installation of inbound bitcoin systems.
CrypArt commissioned original artworks with QR coded bitcoin wallets as the centrepiece and they now have an option to include your existing keys.
A significant handful of other businesses are already exploring bitcoin transaction technology.
A trade association, the Manx Digital Currency Association, helps co-ordinate the industry such as collated responses to government policy, draft legislation and regulator consultations and to promote the jurisdiction as a responsible well regulated centre of excellence in digital currency. The committee members are all active in the industry and indeed the secretary is former head of ebusiness at the Isle of Man Government.
bitcoin milestone: declaration of beneficial ownership of a bitcoin address on a public register
As I thought more about the regulatory context of bitcoin, centred on anonymous transactions and beneficial ownership, I decided on a “mystery shopper” strategy to flush out whether or not anyone could declare beneficial ownership of a bitcoin address at the Courts of Justice and then register the document as a deed on the public register at the General Registry.
On Monday 8th September the first draft was rejected by the Courts of Justice Commissioner for Oaths as it did not meet a prescribed format and I had to amend the draft document and try again. On Wednesday 10th September I arrived at the Deeds Registry and, after some discussion at the public counter and 2 internal legal opinions — a typical deed has a grantor and a grantee and they were uncertain if the system would be able to register the deed — but 2 days later I received the deed certificate by post:
I would definitely recommend some minor but legally significant amendments to the existing procedures, but the offline option demonstrated that a beneficial ownership public register could be delivered within weeks and with existing legislation, procedures and systems.
Isle of Man Crypto Valley Summit
Max Keiser happened to mention his connection to Hollywood Stock Exchange so I knew bitcoin would prompt some serendipitous collisions. I went to the UK Parliament weekend hackathon last November hosted by Rewired State to learn new skills, so I was totally stunned when our team of strangers went on to win with political crowdfunding platform Westminster Stock Exchange inspired by Hollywood Stock Exchange. It highlighted an unexpected core issue with the parliament API and government. MPs are accountable for government performance but government data is not widely available in geocoded datasets filtered by constituency.
At the end of day #1, Brock Pierce, serial investor in bitcoin companies and recently elected director of the Bitcoin Foundation, declared the Isle of Man the bitcoin capital of the world. He also wanted a photo of the deed and the declaration of beneficial ownership of a bitcoin address.
At the end of day #2, Chris Corlett, CEO, Department of Economic Development announced that the Isle of Man Government was the first national government to request expressions of interest in supplying digital currency payment processing. The culmination of my recommendation a number of weeks earlier to Peter Greenhill, ebusiness director at the Department of Economic Development, a coffee with Owen Cutajar, a test transaction via Firmstep AchieveForms and a strategy meetup with the CFO and CTO. Not easy, but easier in the Isle of Man.
On 22nd September, 4 co-founders (Graeme Jones, John Middleton, Adrian Forbes and Richard Owusu) incorporated Garigus Limited, the first corporate entity denominated in bitcoin in the Isle of Man and perhaps the world. It is expected that the company will allow the group to progress ecosystem upgrades and other digital currency projects. Of course, a public corporate bitcoin address could be considered equivalent to a crowdfunding platform!
welcome regulation and compliance
Most regulators are still in catch up mode with digital currency technology but the Gambling Supervision Commission, Financial Supervision Commission and the Office of Fair Trading are generally accepted to be ahead of equivalent regulators, although detailed documentation and consensus agreement on the regulatory framework, minimum standards and compliance requirements is not widely expected until 2015.
A regulator may need to consider that if a brand is already strong enough to reassure players, a licensed gambling operator could soft launch a temporary technology trial in an unregulated jurisdiction anyway just to quantify demand and any issues and then relocate to support faster innovation. Should the Isle of Man be somewhere “where you can” map possibilities?
For example, BetVIP claims to be the first licensed gambling operator to only accept bitcoin, with the systems licensed in Curacao and the company based in Malta.
Well, if regulators are struggling to keep up, so are the banks!
The Isle of Man has the same issue as other British jurisdictions — UK banks are reluctant to bank or simply reject a bitcoin company. Of course, a lot of bitcoin startups are just using a personal bank account but even that option could be squeezed out with the first tax filing.
I recently progressed a new mortgage with a more reasonable Santander after both HSBC, my bank of 15 years and never a missed mortgage payment, and LLoyds Bank were very worried about 1 “high roller” £100 gambling transaction on a football match banker with a subsequent profitable cashout transaction but did not comment on a £40 bitcoin transaction, despite millions of customers gambling more every week in offline casinos with ATM cash withdrawals. You have been warned, probably best to stop anything vaguely naughty now if you want to keep your bank account!
I have a pipeline of bitcoin milestones but bills to pay so I have a seed funding round in London on Wednesday and I have also invited offers on digital assets such as altETF.com, PlayAsYouGo.com (GoCoin igaming?), ChristianBanking.com and shairholder.com to accelerate ecosystem projects with unconditional self-funding.
In a week that ended with Yodlee listed on NASDAQ, a timely reminder that I really need to finalise the next micro funding round on banknotey.com, a unique payment process to instantly extend ebusiness to the unbanked, the underbanked and even the lazy banked, before my government contract ends on 31st December 2014!
I had time to reflect on a hectic few weeks at finovate.com in Silicon Valley, the Downtown Project in Las Vegas, the Open Government Partnership regional summit in Dublin and then the UK Payments Council payments innovations conference during an overdue family holiday on beaches with no mobile data signal. I read a blog post by Martin Tisne from the OGP (http://tisne.org/2014/05/27/the-ambition-of-open-government-partnership/ pending some other blog posts) and I wanted to share some thoughts because we briefly discussed the undocumented policy on sub-national government membership:
(1) Yes, the level of government/civil society exchange taking place is symbolically and practically helping us re-imagine government and precisely why the hub should be an inclusive global platform.
As an open government lobbyist for 10 years – including pushing FoI issues to court at significant personal financial and career risk – and then as a parliament employee for 6 years coincidentally assigned to backbench reformists, I was at the build up to the previous OGP summit in London but I could not attend the summit due to a careful balancing act on annual leave days.
I had reviewed, collated and uploaded data on 16 mostly offshore British influenced jurisdictions of the 70 “countries” in the OKFN open data league table in lunchtimes and late nights:
The league table was a milestone in the Isle of Man open government debate. Suddenly open government could be quantified and – more importantly – visually benchmarked against relevant jurisdictions such as Jersey, Guernsey, Gibraltar, Malta, Cyprus, British Virgin Islands, Cayman Islands, etc. Perhaps I even helped steer the jurisdiction SWOT and PEST analysis towards the concept of OGP membership and eventually a Cabinet Office agenda item.
So, the OGP summit in Dublin was both a highlight and an insight. For example, some delegates believe beneficial ownership in the UK Government gilts is just as important as an offshore corporate entity with an apartment near the London Stock Exchange gilts market!
(2) Yes, nearly 200 changes with significant social impact in 43 countries in less than 3 years is a great return on investment.
Offshore jurisdictions, particularly small offshore jurisdictions, are clearly a disproportionate factor in the global economy with financial services such as wealth management and philanthropy, production line incorporations and beneficial ownership, tax transparency and citizen budgets; surely any offshore government should be welcomed with open government arms to share expertise and lessons learned, to fully understand all the gaps and overlaps and to accelerate technology enabled changes that could exponentially increase the already great return on investment.
(3) “I suspect the long-term success of OGP may in part be predicated on how well we strike the balance between OGP as a platform for reformers vs. a diplomatic forum. Domestic open government reformers could help inform and improve these international negotiations.”
Does the word government in the Open Government Partnership imply any technicalities?
The words “country” and “jurisdiction” could be interchangeable in most discussions about government. Technicalities are not uncommon. For example, I collated and uploaded the Isle of Man IATI public aid flow dataset – “UK Aid from the British people” is actually only from the UK budget and “from British people” and large UK charities often aggregate Jersey or Guernsey donations as UK donations!
National governments and sub-national autonomous governments are equally distinct from local governments. So, should OGP membership really still rely on outdated 19th century diplomatic rules of engagement such as nation status at the United Nations or accept a 21st century revolution in internet country codes and the internationally accepted borders and jurisdictions on mashups in Google Maps and OpenStreetMap?
Should an existing government already on the map with an annual budget of £0.5 billion or £1 billion or £10 billion willing and able to adopt transparency best practice expect to be accepted as an OGP member?
Is open government even more important in the early months and years of a disputed government in a war zone, an elected transitional government or a devolved government in a post independence referendum limbo?
In some countries open data policy supporters might be marginalised or branded as fifth columnists without tangible progress from reusable digital assets or intangible political capital.
(4) “We are experimenting with the creation of smaller networks of open government reformers to see how these forums could help boost learning and networking.”
Countries with key parameters in common should be able to share more relevant experience and reusable digital assets – real world compromises with coalition government, high national debt, high unemployment, an economy dominated by software development or financial services, etc.
(5) It is relatively early days with ambitious open government commitments in OGP National Action Plans, but the private sector has certainly been increasingly willing to discuss open data possibilities in the last 12 months. That’s not to say I haven’t still had some stunned reactions from contacts at companies to ambitious projects such as Bets Aid ™ – repositioning a country with all gambling tax as national public aid flow – the Banknotey ™ mobile app to extend the digital economy to the unbanked and underbanked in cash dominated economies or sectors, etc.
I agreed to switch from 100% to 50% permanent employment on the 1st January to shortlist and progress the most interesting or the most practical projects in a “government accelerator” placement with a government CFO when I belatedly realised from a mortgage application that I was already “all in” anyway!
Issues have included outdated funding mechanisms, linear project management with arbitrary timescales, policy gaps on key areas such as equity crowdfunding and a limited appetite to progress disruptive projects with unquantifiable impact such as live unemployment statistics – yes, I will probably have some stunned reactions at the Financial Times, Bloomberg and hedge funds too when that market sensitive open data is not released at 9:30am….