While BitPay is only one option available to merchants it is the largest Bitcoin payment processor and these numbers give a glimpse into the Bitcoin economy.

BitPay’s merchants are still largely ecommerce, 90%+, but they have experienced increased growth in non-US merchants. Earlier this year 40% of BitPays merchants were located outside the US, however these latest numbers show a 10% increase to 50% of customers based outside North America.

In line with the growth in merchants, the volume of Bitcoin sales through the business has also had a dramatic increase. “The month of August was another record month for BitPay, processing over 10,000 merchant transactions worth over $6.4 million.  Year-to-date in 2013, over $34 million worth of bitcoins have been spent on goods and services through merchants using BitPay’s platform.”

The Bitcoin economy may be small, but it’s growing rapidly!

First eBay added, and then removed, ‘Virtual Currency’ to its categories of items for sale.

But even more interestingly eBay appears to have produced a video about Bitcoin which they posted to their blog.  The post is titled What’s the Deal with Bitcoins anyway? And curiously is presented without a date, seems to be only accessible directly via the URL and with this disclaimer at the top, “*This video was created for informational and educational purposes.”

The video does present Bitcoin in an unbiased and educational fashion.

The post and the video asks “What do you think? Are bitcoins the real deal?” however, comments are not allowed. … What’s the deal with eBay and Bitcoin?

After series of Bitcoin businesses being dropped  by their banking partners earlier this year, the Internet Archive Federal Credit Union (IAFCU)  came to the rescue. The New Jersey based credit union, run by the Internet Archive, has been very friendly to the Bitcoin industry and has worked with a number of businesses who have had trouble establishing relationships with banks.

One of the businesses the credit union partnered with was the US based TradeHill  exchange. Late last week Jered Kenna, Tradehill’s founder and CEO, confirmed via Reddit that the exchange had suspended trading due to “operational and regulatory issues” faced by its bank.

IAFCU posted its own statement on the matter , but was not clear on the nature of the regulatory issues.

• As the rupee continues to struggle, Indian officials continue their attempts to curb demand for gold.

Via Reuters…

India is considering a radical plan to direct commercial banks to buy gold from ordinary citizens and divert it to precious metal refiners in an attempt to curb imports and take some heat off the plunging currency.

The RBI will ask the banks to buy back jewelry, bars and coins for rupees. Lenders will have to offer better rates than pawn shops and jewelers to lure sellers.

“We will start a pilot project among some banks where we will allow them to buy back gold from individual households,” the source, an official familiar with the central bank’s plan, said. “This will start soon, we have discussed (it) with banks.”

• From New York to Germany, check out a timeline of August events affecting the crypto-currency community here.

• For those following the Bitcoin Foundation’s board elections Bitcoin Magazine has posted transcripts from Let’s Talk Bitcoin’s interviews with the Individual Seat Candidates

Two new seats are being added to the Board of Directors. One representing Individual Members and the other is representing Industry (business) Members. In order to be eligible to vote in this election, you must be a current member of the Bitcoin Foundation.

On Monday 5 Foundation members, Marco Santori, Patrick Murck, Peter Vessenes, Brian Klein and Jim Harper, met with representatives from a number of US agencies including FinCEN, IRS, FDIC, Federal Reserve, OCC, FBI, DEA, Secret Service, and the Department of Homeland Security.

via CoinDesk

Murck, who is general counsel for the Bitcoin Foundation, said all parties at the meeting had a “productive and frank” discussion about digital currency. “It was a positive first step for the industry in creating an open and on-going dialog. I left feeling very encouraged that we were able to dispel some myths and misinformation about how the bitcoin protocol works.”

Another attendee, Jim Harper, director of information policy studies at Cato Institute, shared this sentiment.

He said a number of topics were discussed at the meeting, which was held at US treasury building in Washington DC, including privacy, law enforcement and how government controls have the potential to strangle the industry before it has even had the chance to really get going.

“We talked about how the weight of regulation in the US can, and does, drive bitcoin service providers to move outside of the country,” Harper explained.

He suggested the Bitcoin Foundation was able to set the record straight on a number of digital currency-related issues, and that explaining what exactly the blockchain is and how it works largely dispelled the idea that there is some “magical secrecy” to bitcoin.

Marco Santori also commented on the meeting via BitcoinTalk

I, of course, discussed regulatory challenges.  I discussed some of the ways in which the regulatory landscape in the US did not achieve the government’s policy goals.  In particular, I spent a few minutes just going through the ambiguity in the March FinCEN Guidance, and emphasized the importance of supporting innovation in the Bitcoin industry.  I hit some points very hard – like how the regulatory environment has disincentivized businesses from launching in the US and from servicing US customers.  I also discussed how some businesses were simply picking up and leaving the US entirely.

Tuesday, in another meeting at Capitol Hill, Foundation members Peter Vessenes, Patrick Murck and Marco Santori meet with representatives from the offices of several congressmen and senators.

Via CoinDesk

Santori, who is chair of the foundation’s Regulatory Affairs Committee, said the attendees raised a number of concerns including privacy and anti-money laundering issues, but most just wanted to know how the protocol works.

…

There were also people at the meeting who had a very in-depth understanding of bitcoin. Santori said he was surprised to find there were a few attendees who knew more about bitcoin than he did.

But what exactly does the designation of “Rechnungseinheiten” mean for German Bitcoin users and businesses?

Via Pymnts.com …

The German parliament stopped short of granting bitcoin full currency status on August 19, but recognized bitcoins as “units of account” when it formally issued regulations for the popular virtual currency.

The ruling means bitcoin will be legal for use in private transactions, PC World reported. German commercial entities that want to conduct business with bitcoin will first need to obtain permission from the Federal Financial Supervisory Authority. 

The announcement comes at a time when global governments are looking for direction on how best to regulate bitcoin, and commentators told PYMNTS.com that the development can be seen as a win for both bitcoin users and business owners and investors.

Likewise, the ruling is likely to have reverberations in the international community, where it could serve as a template for lawmakers in countries where the regulatory environment for bitcoin remains unclear.

Additional Implications For Germany

German lawmakers also issued directives on key issues, determining if bitcoin would be subject to capital gains tax and sales tax, how bitcoin mining – the process by which additional bitcoins are generated – should be addressed and whether payment processors could avoid taxation.

Legislators decided commercial activities that use bitcoins should not be tax exempt, TechCrunch reported. Still, there is some confusion regarding this point. The media outlet noted that it was not clear how the sales tax would be implemented, and whether it would affect individuals who only occasionally sell items through third-party businesses such as eBay.

German lawmakers recommended bitcoin mining be governed as private money creation, and that payment processors be exempt from sales tax when dealing with German customers.

Further, notable German lawmakers made the philosophical case for bitcoin.

“We should have competition in the production of money,” said Frank Schaeffler, a member of the German parliament’s Finance Committee, according to CNBC. “I have long been a proponent of Friedrich August von Hayek scheme to denationalize money. Bitcoins are a first step in this direction.”

The statement made it clear that Bitcoin is not e-money and not subject to the EU’s e-money regulations.  Also bitcoins held for 12+ months are still free from capital gains tax.

However, there still seems to be some confusion for Bitcoin businesses over whether or not they need to register with Germany’s financial regulator BaFin. There are reports that BaFin classified Bitcoin (and other digital currencies) as “financial instruments“. This would require licensing and other challenging requirements such as €730,000 of capital.

Recently the German exchange bitcoin.de has collaborated with German based Fidor Bank which has pre-emptively applied for a license from BaFin. The outcome of their application may shed some light on the situation.

Gold jewellery demand rises 37% in Q2 2013, led by Indian and Chinese consumers

Lower gold prices generated a surge in global jewellery demand to 575.5t, the highest volume for five years. In value terms demand was 20% higher than Q2 2012.

Sizeable ETF outflows countered by record bar and coin demand of 508t in Q2 2013

The fall in gold prices led to record demand for gold bars and coins of 507.6t, up 56% in value terms to US$23bn. However, this was mitigated by well-documented outflows from ETFs.

Technology gold demand saw a marginal increase, up 1% in Q2 2013

Demand for gold in the technology sector in Q2 2013 increased by 1% to 104.3t. Price declines and improvements in economic conditions provided a boost to demand from the electronics segment.

Central bank gold purchases slowed in Q2 2013, remain within 70-160 tonne range

Central banks added 71.1t of gold to official reserves in Q2 2013, marking the tenth consecutive quarter of net purchases but 57% down on the previous year.

Total supply shrank 62 tonnes in Q2 2013, driven by 21% decrease in recycling

While Q2 2013 mine production saw a 4% increase year-on-year, the significant reduction in recycling by consumers during the quarter led to the 6% decrease in total supply.

The full report can be read here.

On Monday the US Senate Committee on Homeland Security & Governmental Affairs sent a letter to Homeland Security for information on any policies, procedures or guidance they have that pertains to “virtual currencies”.

The letter states the committee has initiated an inquiry into virtual currencies, list recent legal actions involving Bitcoin and contains the usual ‘hey were all for new tech, but we need to look at the threats and risks’.

The letter, which can be read here, ask Homeland Security for 3 things to be provided by the end of the month…

1. Any policies, procedures, guidance, or advisories related to the treatment or regulation of virtual currencies and any minutes of interagency working groups involved in the development of any such policies, procedures, guidance or advisories;
2. Information related to any ongoing coordination of your agency with any other federal agencies or state and local governments related to the treatment of virtual currencies; and,
3. Any plans or strategies regarding virtual currencies and information regarding any ongoing initiatives you have engaged in regarding virtual currencies and the name of the person most knowledgeable about any such plans, strategies or initiatives.

In their 2014 appropriations bill, the subcommittee directs the FBI to report on Bitcoin, specifically what the FBI is doing to address the “challenge” that they see from the “ersatz currency“.

Page 45 of the bill…

From the wording of the bill, particularly in describing digital currencies as “ersatz” (inferior substitute – merriam-webster.com) we can guess that the members of the United States House Appropriations Subcommittee on Commerce, Justice, Science, and Related Agencies are not big Bitcoin fans.

LetsTalkBitcoin, which broke the story on Monday, sees this fear from Congress as quite predictable.

The cash-like nature of Cryptocurrencies such as Bitcoin seem to be fundamentally at odds with the identity-based financial systems we’ve used since the advent of the internet.  What the bitcoin-using community sees as the advantages of Bitcoin; trustless and irrevocable transactions divorced of official identity.  In another light this can be seen as enabling money laundering, consumer fraud and terrorism.

“It is natural for established industries and their representatives in the Senate to fear new and disruptive technologies.” explained Andreas M. Antopoulos, Expert on decentralized networks  “As with the early Internet, there are those who only look at the empowering effects on criminals, rather than on the vast majority of people who can benefit enormously. It just takes time for the lawmakers and laws to catch up to the technology and adapt”

Via Forbes’ Kashmir Hill …

A subpoena doesn’t mean criminal activity has taken place. A person familiar with the matter says the two-year-old department wants to make sure Bitcoin isn’t a conduit for illicit activities and is gathering information in order to decide whether to issue regulation for virtual currencies. The department has the authority to create regulation if there is no other primary regulator.

…

In addition to rooting out illegal activity, the department says it wants to make sure Bitcoin company customers’ funds are “safe and sound,” expressing concern about consumer complaints “about how quickly virtual currency transactions are processed.”

…

The virtual currency Bitcoin has already been getting lots of attention on the federal level. The IRS has been encouraged to make sure people pay tax on it. The FBI realizes it’s useful as a currency for illicit activity. The SEC has argued that it is indeed money and that people should go to jail for using it in Ponzi schemes. And the Department of Treasury has issued guidance for Bitcoin money transmitters. State regulators paying attention will help to further legitimize the currency, but it will also increase the start-up costs for Bitcoin money transmitters. The NYSDFS notes in its statement that “virtual currency exchangers may be engaging in money transmission as defined in New York law, which is an activity that is licensed and regulated by DFS.” That means ponying up bond money, as pointed out in the Wall Street Journal

Below are the companies subpoenaed.

• BitInstant
• BitPay
• Coinabul
• Coinbase Inc.
• CoinLab
• Coinsetter
• Dwolla
• eCoin Cashier
• Payward, Inc.
• TrustCash Holdings Inc.
• ZipZap
• Butterfly Labs
• Andreesen Horowitz
• Bitcoin Opportunity Fund
• Boost VC Bitcoin Fund
• Founders Fund
• Google Ventures
• Lightspeed Venture Partners
• Tribeca Venture Partners
• Tropos Funds
• Union Square Ventures
• Winklevoss Capital Management

It looks like Bloomberg is testing a Bitcoin ticker. Abbreviating Bitcoin as XBT, Bloomberg terminal users can now look up Bitcoin’s pricing history. Data comes from Bitcoin exchange service Mt. Gox as well as Tradehill. More details here.

The Bitcoin ATM is now available for pre-order. The makers of the Bitcoin machine, Lamassu, are now accepting orders for the machine. Lamassu will sell the machine with the appropriate software installed and leave regulatory compliance to those operating the ‘ATM’.  Customers in the US are required to sign a due diligence questionnaire.  Prices start at $5000 via Bitcoin or wire transfers. Order yours here.

Why Libbitcoin matters. Libbitcoin is an advanced alternative implementations of the Bitcoin protocol. While there are other alternative implementations, this one is unique it allows Bitcoin users with some technical skills but not necessarily experienced programmers to “work directly with the underlying [Bitcoin] building blocks.”

This may be a competitor to the current implementation, bitcoind and have the effect of limiting the influence of Bitcoin updates coming from authorities such as the Bitcoin Foundation. This may help to maintain Bitcoin’s decentralized nature and has some political implictions as explained here.

Bitcoin is officially Money. The SEC is suing Trendon Shavers for running a Ponzi scheme, the Bitcoin Savings & Trust. Part of Mr Trendon’s defence was to claim that Bitcoin investments are not securities and Bitcoin is not money; last week a judge disagreed.