Starting a BitShares Gateway
Following my previous article, I am looking into starting my own BitShares Gateway which accepts Australian Dollars and issues a User Issued Asset which represents it 1:1.
After talking to a lawyer it's not immediately obvious where a BitShares UIA representing the Australian dollar fits into current financial and Cryptocurrency regulations, so as of now I'm engaging further legal advice.
Why create a BitShares Gateway?
It's important we have a BitShares Gateway because as the name suggests, it's a Gateway into the decentralised Exchange 'BitShares'.
Because of BitShares decentralised, autonomous and blockchain nature, I think it's the best place for people to trade and buy whatever cryptocurrency or asset freely.
Platform
I'm currently building a website which can facilitate KYC and deposit/withdrawal of Australian $ requests.
This is aimed to provide transaction history between the Gateway and user during each incoming and outgoing bank transfer of Australian dollars, same way traditional exchanges offer today.
The backend is being written in NodeJS & frontend likely to be React.
The code will be open source for anyone who wants it, this is to encourage other people to create their own Gateway, unlike Crypto exchanges, I believe the more Gateways available the better, as this will create more competition for fees and more choice for people to pick who to trust.
Marketing
It's hard enough to explain what Bitcoin is, let alone a decentralised Exchange and User Issued Assets. Still considering the best approach for marketing and what message to push out to the world.
Vision
My vision is to lower the barrier of entry into the crypto space for Australians and onboard their trading volume onto a decentralised Exchange solution to reinforce their security and freedom.
What about using bitAUD instead of an UIA? It would be more difficult and more risky for you but would make whole ecosystem much better in the end.
I've looked into it and love the benefits/security BitAUD holds over any UIA however the difficulty and risk with juggling the MPA as a gateway would cost a large chunk of energy and time which I think could be better used for marketing/education to the general public.
Like @ihaywood3 said as well it would likely require further regulation/roadblocks from the government as well.
After enough adoption/use of the UIA I'd like to create liquidity between BitAUD and the UIA if possible.
That's fair. It's very strange that the regulatory barriers are less with the approach that requires more trust, but regulations are pretty frequently nonsensical.
Providing liquidity between your UIA and counterparty-free assets is a good solution.
Agreed. That way it's much more trustless, and it also fragments the liquidity less. Seems to have been working well for the Chinese gateways with bitCNY. If you can manage enough bitAUD liquidity for your market and just take a fee for your services that seems ideal.
bitAUD would be ideal, but it's sailing close to the wind in terms of needing a licence from ASIC. /it doesn't help that the BitShares documentation uses the word 'derivative'.
Hi guys,
We are looking to make a bridge to port new coins on the DEX but we can't setup the deposit/withdraw API. I think the tool for this is pybitshares but that's above my skills.
HOW do you setup this up ? @johnwilliamson @ihaywood3
I am also interested in setting up a gateway.
I don't think you are going to get any straight answers about whether a BitShares UIA is a security until ASIC take an interest and make a statement.
There is a reasonable argument that a UIA used solely for moving cash in and out is not a security: it doesn't have any capital-gain or return a dividend, so it's not an investment in any sense.
My sense is ASIC currently consider crypto-currencies to be too much like hard work and are relieved AUSTRAC have been handled the responsibility. That won't change until they are forced to politically (somebody's granma get scammed by an ICO, media scream "ASIC are asleep at the wheel", etc, etc)
But that might take years, and I don't think its reasonable that the the entire industry freeze development until ASIC deign to decide what's allowed and what's not.
The bigger issue now is banks yanking accounts when they discover they are being used for crypto, this is why having multiple separate independent providers is ideal.
The disadvantage is that we will struggle to provide liquidity if we each run separate markets with our own UIAs. Would you consider making a "wholesale" sale of, say, $10k, of your UIA, and then our clients can use a single UIA in a single market?
Oh really? That's awesome!
True, I'm hoping it will be considered along the same lines as traditional exchanges where they issue their own digital representations of fiat and crypto. Given I'm only issuing fiat and it's done on a blockchain it's even safer compared to them.
Yeah, that's made me a little concerned, I'll be sure to have some bank accounts for redundancy.
I agree, I think liquidity will be a challenge, like you say.
I'd absolutely be open to that, I've been considering the restrictions that would need to be set on the UIA to enforce its use as a simple utility. Otherwise, we could be left open to people transferring the UIA between themselves and the government considers it a money transfer service, independent cryptocurrency, etc.
Because of AUSTRAC's push for KYC each holder of the UIA will have to go through KYC, therefore for you to then pass on portions of your 10,000 UIA to customers you'll need to do KYC verification on them.
Therefore, in order me to pass on amounts of the UIA for further distribution a type of partnership would be created which pools KYC records in order to prove who possesses the UIA at all times, same way as traditional exchanges.
Let me know if you're interested!
Definitely, Steemit doesn't seem to have a PM function: so e-mail [email protected]
Not having a fiat gateway is the biggest obstacle to BitShares' growth. I discovered BitShares 6 months ago, took me a while to appreciate its potential and also had to overcome the entry barriers such as the need to have already bought some crypto to transfer across to a newly created BitShares account.
Like you, I started to look for a regulatory compliant fiat gateway solution.
No matter how libertarian one is, the transition from old to new will need to be done within existing rules. Rules can and will change in future, but for now we have to develop solutions that are compliant.
I work in finance, know how challenging it is, will be happy to help you in your endeavour.
Absolutely agree, it's pretty amazing how much BitShares is developed, just a few more missing pieces of the puzzle, polish and I think it will have much more adoption.
Will definitely engage you if I've got something, thanks!
Hi, @johnwilliamson. Congrats! Have you been well succeed in setting up a bithsares gateway? I am from Brazil and would like to create a similar service here. How can we pm to talk eachother? Thanks in advance.