The Confluence of Prepaid Cards and New Technologies Including Mobile Wallets, Cryptocurrencies, and EMV Cards: Utilizing the Prepaid Construct in an Alternative/Emerging Payments Context and Overcoming Complicated Regulatory and Compliance Challenges americanconference.com/2016/655/prepaid-card-compliance Jack Albers, Product Counsel, PayPal Veronica McGregor, Partner, Hogan Lovells LLP Robert Schwentker, Founding President, Blockchain University Ryan J. Straus, Partner, Riddell Williams Damier Xandrine, SVP & Senior Company Counsel, Wells Fargo Law Department

June 3, 2016

Question

• What is the impact of wallets such as Apple Pay, Samsung Pay & Android Pay on the payments market, specifically prepaid?

Emburse: Expense Management Platform

• Assign virtual or physical expense cards to employees or contractors to enable pre-approved spending. Spending restrictions via: – Time restrictions

– Budget or allowance

– Merchant requirements

• Emburse Card is issued by Community Federal Savings Bank

• Y Combinator startup - 2016

Questions

• Are there trends of technology and internet-based companies incorporating prepaid features into their products and services?

• What may e the evolution & impacts of the regulatory and compliance framework governing these new prepaid products?

Bitcoin Debit Card Providers

Bitcoin Debit Cards

Bitcoin Debit Card Providers Card Networks Company HQ Issuer Spectrocoin ATM UK

Advcash Mastercard Belize Wave Crest Holdings Limited

WageCan Mastercard Hong Kong

Transforex Investment Consulting Co., Ltd.

Wirex Mastercard London Wave Crest Holdings Limited

Bitpay Visa Atlanta Metropolitan Commercial Bank

Cryptopay Visa UK Wave Crest Holdings Limited

Shift Payments Visa San Francisco Metropolitan Commercial Bank

Xapo Visa Hong Kong

Wave Crest Holdings Limited (initially)

Key Points

• Xapo: Bitcoin Visa Card, links to Xapo & PayPal wallets

• Shift Payments: Links to Coinbase account

• BitPay: Visa debit card, also ATM withdraws

• WageCan: White Label Bitcoin Debit Card

• BitGold: Redeem gold balance to Prepaid Card

• SpectroCoin: Buy Bitcoin with Visa or Mastercard

• CryptoPay: Not required to complete ID verification for small purchases

XAPO

• Debits purchases directly in bitcoin from your Xapo main wallet.

• Runs on VISA network

• Moved its Terms of Use back to the original jurisdiction of Hong Kong, pending confirmation from Swiss regulatory authorities

• Xapo is a custodian of any bitcoins transferred to a Xapo Wallet or Xapo Vault.

• Can link Xapo Debit Card as a new payment card in your PayPal account.

• Xapo use MyChoice prepaid cards

Shift Payments • Shift Card: first U.S. bitcoin debit card. Connect

Coinbase account

• Vision/road map: connect everything from bank, airline mile, and alternative currency accounts to one’s Shift Card.

BitPay • Load dollars onto your BitPay Visa card using any

bitcoin wallet. Funds are ready to spend in minutes.

• BitPay card for online & offline use, also withdraw cash at any ATM.

• Monitor card activity with BitPay app

WageCan • Bitcoin wallet for web and mobile

apps

• Individual account daily limit is $50,000

• White Label Bitcoin Debit Card

– Brand logos onto cards

– WageCan rewards

– Basic plan starts at 5 Bitcoins.

WageCan Fees Fees USD EUR Remark

ATM Cash Withdrawal 1% (a minimum of 3 USD)* 1% (a minimum of 3 EUR)* 1% for the first 5 transactions per month, 2%/transaction thereafter(a minimum of 3 USD/EUR)

POS Free Free -

Overseas Transaction Fee 1% 1% Applicable to ATM/bank withdraw or POS/on-line transactions outside Hong Kong

Currency Exchange Fee 0.5% 0.5% Applicable to ATM/bank withdraw or POS/on-line transactions not made in the base currency of the debit card

Balance Transfer Fee 3% (A minimum of 50 USD) 3% (A minimum of 50 EUR) For users broken/lost/renew before expiration.

Inactive Account Management Fee＊

2 USD per month 1.5 EUR per month If there is no transaction within 12 consecutive months, a deduction will be conducted from the 13th month.

BitGold • BitGold: buy gold easily, within 1% of official gold price

• Spend gold globally, at any Point of Sale with a BitGold Prepaid Card

SpectroCoin: Buy Bitcoin with Visa or Mastercard

Cryptopay

• Cryptopay customers are not required to complete ID verification provided if they are happy to stay within the lower debit card limits. It is possible to stay anonymous where desired.

Cryptopay: Verified & Unverified Limits Card limits EUR Card GBP Card USD Card

Number of online transactions

Unlimited Unlimited Unlimited

Single ATM transaction limit Unverified / Verified

€200 / €1000 £160 / £800 $200 / $1000

Daily ATM withdrawal limit Unverified / Verified

€400 / €2000 £320 / £1600 $400 / $2000

Lifetime ATM withdrawal limit Unverified / Verified

€1000 / Unlimited £800 / Unlimited $1000 / Unlimited

Max single top-up value Unverified / Verified

€2500 / €10000 £2000 / £8000 $2500 / $10000

Max daily load Unverified / Verified

€2500 / €20000 £2000 / £16000 $2500 / $20000

Max lifetime load Unverified / Verified

€2500 / Unlimited £2000 / Unlimited $2500 / Unlimited

Wirex • Wirex hybrid personal banking platform combining

blockchain technology and traditional finance.

• Bitcoin wallet for web and mobile apps

• “Wirex combines the speed and flexibility of blockchain finance with the acceptance of traditional currency in one account. ”

• Each transaction charged 0.0002 transaction fee which goes to the Bitcoin network.

• Card Issued by Wave Crest Holdings Limited, a licensed electronic money institution by the Financial Services Commission, Gibraltar.wagecan.com

Questions

• Are prepaid cards a vehicle on which to load bitcoins? How does this work currently?

• What are banks’ obligations in this regard?

• How will the regulatory and compliance framework evolve to account for the marriage of cryptocurrencies and prepaid products?

Robert, Veronica, Jack, Damier, Ryan