JUNE 12 DIGEST: Jihadist US Teen Faces Prison for Tweets About Bitcoin, and Bitreserve Eliminates Fees For Currency Conversion

A 17-year-old jihadist teenager from Virginia faces up to 15 years in prison for blog and Twitter posts about encryption and Bitcoin, Bitreserve has announced that it is dropping fees for currency conversions, and more top stories for June 12.

Jihadist US Teen Faces Prison for Blog and Tweets About Encryption and Bitcoin

A 17-year-old Virginia teenager faces up to 15 years in prison for blog and Twitter posts about encryption and Bitcoin that were geared at assisting ISIL. The teenager, who contributed to the Coin Brief news site, pleaded guilty to a federal charge of providing material support to the Islamic State in Iraq and the Levant.

Dana Boente, the US Attorney for the Eastern District of Virginia, said:

“[The plea] demonstrates that those who use social media as a tool to provide support and resources to ISIL will be identified and prosecuted with no less vigilance than those who travel to take up arms with ISIL.”

Bitreserve Eliminates Fees For Currency Conversion

Bitreserve has announced that it is to drop fees for currency conversions, allowing users enrolled in a new membership program to invest in, hold and change between the service’s eight fiat currencies and Bitcoin without a fee.

Bitreserve founder Halsey Minor said:

“The legacy finance industry has grown adept at hiding costs from customers – where they extract fees from those in society who can least afford it. Now that Bitreserve offers its members the ability to convert and exchange money for free, all of us together take another giant leap toward replacing the current global financial system with one that is fair, inclusive, accountable and transparent - a system organized for the benefit of all people everywhere.”

Russia Expected to Legalize Bitcoin P2P Transactions

In a possibly dramatic change of attitude towards cryptocurrency, the Russian Central Bank may soon allow P2P transactions in Bitcoin, as well as other operations with cryptocurrencies. According to a source close to the Central Bank, it is very likely that the regulator may in fact be a proponent of cryptocurrency as the attitude of the Central Bank towards Bitcoin has shifted in the past year. The insider also believes that the Central Bank could legalize and regulate some operations involving Bitcoin, particularly peer-to-peer transactions and settlement payments between individuals.

No VAT on Bitcoin in Switzerland

No VAT applies to Bitcoin in Switzerland, according to the Bitcoin Association Switzerland. This means that the purchase of goods or services with Bitcoin is not regarded as barter trade, and will therefore not trigger double taxation. Furthermore, trading bitcoins for Swiss francs is seen as the exchange of legal tender against a non-official means of payment - similar to the exchange of Swiss francs for euros.

Luzius Meisser, president of Bitcoin Association Switzerland, stated:

“This is the most reasonable way to classify bitcoins in the context of VAT and we are fortunate that the tax administration agrees with our view. Bitcoin is a currency, and thus should also be treated like a currency.”

Decentralized Marketplace OpenBazaar Raises $1 Million

The much-anticipated decentralized market OpenBazaar has raised US$1 million in seed funding with the help of Andreesen Horowitz, Union Square Ventures, and angel investor William Mougayar. The seed funding will be used to pay the developers so that they can work full time on the project and speed up development.

OpenBazaar founder Brian Hoffman said:

“Our plans remain as they are which is to continue pushing towards a fully functional and completed release.”

Chicago-Based FinTech Initiative Awards $3M to Nine Financial Services Startups

The Center for Financial Services Innovation – a Chicago-based non-profit focused on spreading consumer financial health – has set up the Financial Solutions Lab to identify, test, and scale innovative solutions and services. The center has now awarded nine startups that are helping households better manage their finances a total of US$3 million.

Sarah Gordon, Vice President at CFSI, said:

“We are thrilled to be showcasing some of the country’s most promising solutions to a common financial challenge -- that of managing one’s income and expenses on a daily basis.”

ShapeShift Leaves New York, Choosing Not to Comply with BitLicense

Popular cryptocurrency exchange ShapeShift has terminated its services in New York due to the state’s BitLicense regulations for digital currencies. ShapeShift is not willing to take the risk of exposing its users’ personal information, leaving them susceptible to potential data breaches or hacking attacks.

Erik Voorhees, Shapeshift Founder and CEO, said:

"We either would have to do something we're not comfortable with, or leave New York. It's a moral and ethical stand we're going take."

Kraken Introduces Dark Pool to Discretely Place Large Bitcoin Orders

Kraken has introduced its dark pool, an order book not visible to the rest of the market. This new feature allows users to discretely place large Bitcoin orders and execute against similar sized orders at potentially better prices. Kraken is now one of the few exchanges offering a dark pool for Bitcoin.

Innovate UK Awards Five Fintech Startups up to £35k Each

As winners of Innovate UK's IC Tomorrow Fintech Innovation contest, Squirrel, Tento, Swave, Bubbal and Mentat have been awarded up to £35,000. In addition to funding from Innovate UK, each will work in partnership with industry and government bodies including American Express, Accenture, Lloyds Banking Group, the Department for Business Innovation and Skills, with RBS Group, Money Advice Service and Experian.

Matt Sansam, program manager for IC tomorrow, said:

“We aim to position the UK at the forefront of innovation by building relationships between digital communities and the biggest industry players, and give talented entrepreneurs the opportunities they deserve.”