This isn't a good comparison. I have no reason to trust Coinbase and my options for recourse are minimal if they end up being shitty. My bank is an institution with capital assets in my city. I know where they are. They have an address and it's local. I can talk to a manager, face to face, if there is a problem. (And have.)
(And my bank has a better security record than Bitcoin companies have thus far shown, besides.)
Ally is a bank and regulated as one, even though they're 'online'. Coinbase is not regulated as a bank. They're not even regulated under the much looser guidelines of a money transmitter.
Yeah, but bitcoin businesses may have to follow the same regulations no matter what if they considered as dealing currencies (depends on your local jurisdiction). That's what it boils down to. It's probably not Coinbase who independently implemented this requirement.
But it's Coinbase who wants me to trust them with my driver's license and passport despite being Some Faceless Internet Company. That business model kind of sucks. It may not be their fault that it sucks, but it still kind of sucks.
> But it's Coinbase who wants me to trust them with my driver's license and passport despite being Some Faceless Internet Company.
Most Internet Companies are faceless. Yet people still use AirBnB, Uber, and other services that connect them to people they don't know - and that kind of thing can be a source of risks as well.
By the way, whenever you go in a hotel overseas, they'll ask you about a copy of your passport too. Do you trust every single hotel that they will keep your passport copy secure ? I'd probably trust Coinbase more on that than any second grade hotel out there.
Uber doesn't demand I give them an archival copy of all my identification to use them. (AirBnB might, I wouldn't know because I wouldn't ever use them.) The difference between these companies--or ones I actually use--should be quite obvious, but I get that the Disingenuous Bitcoin Guy schtick is powerfully tempting.
(And I have never had my passport copied by any hotel.)
I guess I made enough on paypal that they were all of the sudden interested in proof of my SSN, and a copy of my DL. That is when I realized that my paypal account was setup in an unlicensed company name, that didn't match my SSN or my DL. They won't allow me to correct the error. Had to close the account.
If you go to PayPal and want to open regular account for low transactions, do they ask you for ID and proof of residence? You cannot compare brick and mortar bank to bitcoin service.
For low transactions maybe, but as soon as you want to do anything more with your Paypal account they will ask for the same kind of papers. I find nothing strange about that.
You said it yourself - for low transactions. When people donate/do transactions around the web they wont spend probably more than $100 in one go. If any bitcoin service would be worried about scam they would implement same security measures - lets say limit of $100 per transaction or total of $1K per year before they ask for papers. Easy and saves them a lot of money on processing applications as well.
If you go to a bank and try to create a bank account, do you laugh when they ask you for your ID and proof of residence? :)