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:

1. I will pay out $0.75 USD per $1.00 SBD withdrawn.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.)
2. Payments will be made via PayPal.
3. 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.)
4. Payments will be sent within 48 hours of receiving SBD.
   (I will do my best to process payments sooner than that!)
5. Payments will be made to the PayPal email address specified in the memo of the SBD transfer.
6. 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.
7. Withdrawals of Steem will not be processed. (Only SBD.)
8. I reserve the right to send your SBD back if I am unable to process the transaction for any reason.
9. 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.)
10. 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 !!

1. The user will transfer SBD to a designated account.
2. The user will specify a PayPal email address in the memo of their transfer.
3. 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]

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[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))."

Source: https://www.fincen.gov/resources/statutes-regulations/administrative-rulings/request-administrative-ruling-application

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.

It is going to take me some time to look into this, as well as check with PayPal to see what their policies are. I would still like to do this, but based on what I have found so far - it looks like it will be a fairly difficult process to do 'right'. I am not sure if I will be able to implement this due to the legal hurdles.