Processing SBD Withdrawals via PayPal - [Requesting Input from the Community]
Cashing out SBD for "real money" is a big hurdle for many users. You either have to know someone who can cash your money out for you, or go through the difficult process of sending your Steem/SBD to an exchange, trading it for Bitcoin, then selling the Bitcoin for cash.
I know this can be discouraging for many users, so I want to provide an easier alternative. I would like to setup a system to process withdrawals of SBD for "real money" to be paid via PayPal.
Before I proceed, I would like to get input from the community:
- Do you think this a good/bad idea?
- Can you think of any way that I could potentially be scammed?
- Is what I am planning to do legal? (I live in the USA.)
- Do I need to take any precautions regarding money laundering?
- Do I need to take any additional legal precautions beyond the write-up I have below?
- Can you see any flaws / holes in my process?
- Any other thoughts come to mind?
This info will be clearly defined for users using the system:
While I assure you this is not a scam, I do want to make it very clear that you are sending your SBD to my personal account to process. I am in no way affiliated with Steemit Inc. or Paypal. You do have to trust that I will not run off with your money. Do not send me more money to process than you feel comfortable sending.
This method will not give you the best price for your SBD. For those of you who are able to sell on the exchanges (or have friends who can do it for you), you will get more money for your SBD by doing it that way. This method is intended to be used by users who are not comfortable using the exchanges, or would like an easier way to withdraw their SBD for cash.
These will be the terms for processing a withdrawal:
- I will pay out $0.75 USD per $1.00 SBD withdrawn.
(The $0.25 difference is to cover price volatility and as payment for my services.) - Payments will be made via PayPal.
- PayPal will also take out their own fees from the transfer. This will be taken out in addition to the $0.25/SBD that I charge.
(See PayPal's terms of service for an explanation of their fees.) - Payments will be sent within 48 hours of receiving SBD.
(I will do my best to process payments sooner than that!) - Payments will be made to the PayPal email address specified in the memo of the SBD transfer.
- No refunds of any kind will be given once I have sent payment to the PayPal email address specified in the memo of the SBD transfer transaction.
- Withdrawals of Steem will not be processed. (Only SBD.)
- I reserve the right to send your SBD back if I am unable to process the transaction for any reason.
- I will do my best to resolve any disputes as best I can, but I make no guarantees of any kind.
(I have no intention of scamming anyone, but I do not want to open myself up to anyone scamming me by making a guarantee that someone could exploit.) - Withdrawals will be limited to $100.00 SBD per user per week.
If you do not agree to the above terms, do not use this service.
The steps for a user to process a withdraw will be:
!! NOTE - THIS IS ONLY A PROPOSAL. DO NOT TRANSFER ANY SBD TO MY ACCOUNT !!
- The user will transfer SBD to a designated account.
- The user will specify a PayPal email address in the memo of their transfer.
- Within 48 hours, I will cash out the SBD for USD, and send the USD (minus fees) to their PayPal account.
!! NOTE - THIS IS ONLY A PROPOSAL. DO NOT TRANSFER ANY SBD TO MY ACCOUNT !!
I do really think that this would be a very valuable service to offer members, especially those who are not familiar with crypto-currency / exchanges. If this is not a viable proposal, then I hope that we can come up with some alternate solution to make SBD->fiat transfers easier for mainstream users. Ideally Steemit Inc. will one day offer a payment gateway directly through their site!
I appreciate everyone's time/thought/feedback on this!
[Above image courtesy of pixabay]
[Edit]
So I have been looking into the legal parts of this since I posted, and it looks like there are a lot of legal hurdles to jump through in order for me to not be at risk of breaking the law (in the US).
"As a money transmitter, the Company will be required to (a) register with FinCEN, (b) conduct a comprehensive risk assessment of its exposure to money laundering,13 (c) implement an Anti-Money Laundering Program based on such risk assessment, and (d) comply with the recordkeeping, reporting and transaction monitoring obligations set down in Parts 1010 and 1022 of 31 CFR Chapter X. Examples of such requirements include the filing of Currency Transaction Reports (31 CFR § 1022.310) and Suspicious Activity Reports (31 CFR § 1022.320), whenever applicable, general recordkeeping maintenance (31 CFR § 1010.410), and recordkeeping related to the sale of negotiable instruments (31 CFR § 1010.415). Furthermore, to the extent that any of the Company’s transactions constitute a “transmittal of funds” (31 CFR § 1010.100(ddd)) under FinCEN’s regulations, then the Company must also comply with the “Funds Transfer Rule” (31 CFR § 1010.410(e)) and the “Funds Travel Rule” (31 CFR § 1010.410(f))."
As an unrelated side note, anybody who is involved in the processing of BTC/SBD related payments in the US should probably read that article. Even if all you do is accept BTC (or other alternate currencies) as a form of payment, there are some strict rules you must follow so that you are not classified as a “money transmitter”. Money transmitters must comply with the above rules that I posted. I will probably write a separate post on this soon, since it applies to a lot of what members of the community are doing to accept SBD as payment.
@timcliff the money transmitter regulations are not only federal, but each state carries its own laws and registration requirements as well. Whe Inlooked into it for Bitcoin a few years back, I read to become certified in all 50 states cost something like $25 million. New York now requires a Bitlicense for any business transacting tin the state of New York and you will be subject to Know Your Client laws (similar to banks and other money transmitters/exchangers), plus have the FinCen requirement of filing Suspicious Activities Reports (SAR) for clients who exchange more than $10k either in a lump sum or in the aggregate. There is more, but that should give an idea of why so few businesses in the US exchange currency and even less exchange crypto.
Thanks! Unfortunately the more I look into this, the more I am realizing it is probably not something I can do on a small scale working out of my house. I appreciate your input!
I think I would probably use it as doing it the other way is difficult
Sounds interesting.. I would suspect it would not be a long term opportunity using the methods you describe, but rather a short term fix for an absent service.
As far as problems with the Tax man or the US Gov. I don't see a problem, I transfer from my bank to my Paypal Business account every month. In fact, I use my Paypal Business Mastercard when I buy Gold and Silver because it pays 1.5% cash back.
So I'm sure on that end it would simply appear you are making purchases, which is what you're doing.
On the Exchange end I have no experience...
Good idea though, good luck with it....
For me it would be great as I have been on PayPal for 15 years. But unfortunately I do not know about the other legal concerns.
I will say that although the fees are huge, there will be many that use it... just as they use the check cashing stores or pawnshops.
But here is a thought, as more adopt the cryptocurrencies, how valid will PayPal be in a few years?
Yeah, it's a good question. I can definitely see the potential for SBD to be as accepted as credit cards and other forms of "normal" payment methods in the not so distant future. For now though, in order for Steemit to gain mass adaptation, I think we will need some 'easy' way to cash out for the masses.
No doubt as many are here trying to earn a living (or so it seems)... and I applaud your thought process. We never know what the future brings and having an insurance like this is just another step.
Hi @timcliff, nice to know you are thinking in that direction. It is quite difficult and cumbersome at the moment, but the best way possible at this time is exchanging your steem dollars for bitcoins. I submited a post a few weeks back detailing the process I use to convert y steem dollars into USD paid into my PayPal account. You can have a read, this is the link : https://steemit.com/money/@delphia16/how-i-converted-my-steem-dollars-sbd-into-dollars-straight-into-my-payppal-account-in-less-than-30-minutes . I might need to rpost this article for others who are thinking of such to have a read. Thanks
Thanks for the link. It is helpful. Unfortunately it still has a lot of steps and involves working through exchanges - which is what I was hoping to setup a way to avoid.
I am part of a few groups/forums that play online poker that trade account $$ for paypal. A few of the problems I have seen included that a transaction can be reversed by the buyer and there are sometimes long wait periods until PP money can be released. But sounds like a pretty good idea if all the quirks can be figured out. Good luck
Fantastic, I think many people would take you up on it just to save the hassle of doing it the long "techie way". Basically you'd then cash it out yourself the techie way and profit for your labor, or hold on to some for the long haul?
I don't think it could be illegal or laundering in any way, it's just you paying cash for a commodity that is valuable to you, no different from gold, silver, or comic books for instance, just imho... The only "problem" I'd foresee for you is that someone else will come along and say "I'll give you 80%" .. "I'll give you 85..." All this until yes, Steemit Inc figures it all out. I'd be happy to test it out with you just to give you a "review" and I am planning on accepting Steem for my book, and an event down the road.
Best, Guy
This might be a great idea, congrats.
You can have multiple currencies in your PayPal account, of course. If I remember correctly, you have to open them one by one.
Your post got me to start thinking of a similar service. SBD to Euros via SEPA transfer. Will sleep on it :)
It's amazing. Great News :) It will be more useful as time goes by. I expect service quality is well.
The cryptocurrency-fiat barrier is definitely an issue, but Paypal is an issue unto itself.... Cryptocurrency and paypal are like oil and water: They don't mix. You'll probably end up with a locked account and frozen funds, "just because".
It might work for a while, but I don't expect it to scale to any large number of people. I mean if it was doable, it would have happened already with BTC => paypal.
Thanks for the input. I am planning to get on the phone with PayPal tomorrow and see what their position is. I used to sell Diablo II merchandise via PayPal way back in the day (and got my account frozen and funds locked for that) so I know what you mean :)
Yeah, they do that all the time. Now, if you can get a written response, even as an email, it'll be good so that they don't change the rules later on (assuming they say they're ok right now).
I don't know if its legal (or usable in a court) to record the conversation, so that's why I'm suggesting written responses.