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Title: FinCEN says you must be MSB if you sell bitcoins for $ Post by: Malophor on October 18, 2012, 06:36:17 PM I was looking at starting up a site that would sell bitcoins through credit card transactions as a US based business. Not wanting to run into immediate regulatory problems I gave FinCEN (Financial Crimes Enforcement Network) a call. It took them a couple of weeks to get back to me but the answer was yes that business would be required to register as a Money Service Business.
Title: Re: FinCEN says you must be MSB if you sell bitcoins for $ Post by: jbreher on October 18, 2012, 07:00:21 PM Did they bother to quote any:
Title: Re: FinCEN says you must be MSB if you sell bitcoins for $ Post by: MysteryMiner on October 18, 2012, 07:02:26 PM Fuck them! Bitcoins in fact are digital signatures. You sign integer and recipients public key with your private key. So Bitcoins are more like service like SSL root authority instead of money like paypal.
P.S. next time call DEA and ask them what license you need to sell drugs on Silk Road. The future of Bitcoin is illegal that might destroy current establishment and governments. Again, fuck the government, fuck any regulations and fuck them all! You have the tool in your computer - Bitcoin! Title: Re: FinCEN says you must be MSB if you sell bitcoins for $ Post by: repentance on October 18, 2012, 07:03:19 PM I was looking at starting up a site that would sell bitcoins through credit card transactions as a US based business. Not wanting to run into immediate regulatory problems I gave FinCEN (Financial Crimes Enforcement Network) a call. It took them a couple of weeks to get back to me but the answer was yes that business would be required to register as a Money Service Business. It's what I'd expect but I'm interested in the specific regulations they quoted. Knowing that gives an indication of whether they're currently regarding Bitcoin as a currency, a commodity or some other kind of financial product/service. As FinCEN operates at a federal level and MSBs are regulated at state level, I'm also curious whether there are any exemptions you could seek if you operated within set limits. You were smart to seek advice in advance. I've worked for a cc provider and they'll shut down your account and make a suspicious activity report in a heartbeat if their algorithms think there's anything fishy about the account transaction patterns. Title: Re: FinCEN says you must be MSB if you sell bitcoins for $ Post by: jgarzik on October 18, 2012, 07:14:36 PM I was looking at starting up a site that would sell bitcoins through credit card transactions as a US based business. Not wanting to run into immediate regulatory problems I gave FinCEN (Financial Crimes Enforcement Network) a call. It took them a couple of weeks to get back to me but the answer was yes that business would be required to register as a Money Service Business. Yes, that is expected. BitInstant is a registered MSB, AFAIK. A couple other exchanges based in the US are registered, or in the process of registering. According to my research (WARNING: not a lawyer, seek your own professional advice) online bitcoin exchanges in the US would need to register in ~47 of 50 states, as well as registering as an MSB with the federal government. (or limit the users accessing the website to a select few states) There is a multi-state surety bond and registration process, making multi-state compliance a bit easier, but it is definitely a lot of paperwork and background checks required. Title: Re: FinCEN says you must be MSB if you sell bitcoins for $ Post by: Yankee (BitInstant) on October 18, 2012, 07:19:36 PM I was looking at starting up a site that would sell bitcoins through credit card transactions as a US based business. Not wanting to run into immediate regulatory problems I gave FinCEN (Financial Crimes Enforcement Network) a call. It took them a couple of weeks to get back to me but the answer was yes that business would be required to register as a Money Service Business. Yes, that is expected. BitInstant is a register MSB, AFAIK. A couple other exchanges based in the US are registered, or in the process of registering. According to my research (WARNING: not a lawyer, seek your own professional advice) online bitcoin exchanges in the US would need to register in ~47 of 50 states, as well as registering as an MSB with the federal government. (or limit the users accessing the website to a select few states) There is a multi-state surety bond and registration process, making multi-state compliance a bit easier, but it is definitely a lot of paperwork and background checks required. Heh, and thats the easy part! You also need to do the following, just off the top of my head: - Quarterly audits that you pay for - Every 6 weeks you need a verified and updated AML Program - Attend BSA training twice a year - Bend over backwards and get anally raped every day.... Title: Re: FinCEN says you must be MSB if you sell bitcoins for $ Post by: MysteryMiner on October 18, 2012, 07:23:59 PM Better operate from New Shwabia, Nazi Germany. TrueCrypt once did that!
Someone told that retards are trying to recreate current financial institutions using Bitcoin. He was right! Title: Re: FinCEN says you must be MSB if you sell bitcoins for $ Post by: repentance on October 18, 2012, 07:30:03 PM Heh, and thats the easy part! You also need to do the following, just off the top of my head: - Quarterly audits that you pay for - Every 6 weeks you need a verified and updated AML Program - Attend BSA training twice a year - Bend over backwards and get anally raped every day.... Are there different classes of MBS, all with their own additional requirements? My understanding is that the business that the OP is proposing is somewhat different to that operated by BitInstant. Are they likely to be subject to more regulations as they'll actually be selling BTC direct to the public rather than operating as a platform for others to trade BTC (like MtGox) or a conduit for getting funds into exchanges quickly (like BitInstant)? Title: Re: FinCEN says you must be MSB if you sell bitcoins for $ Post by: BitcoinINV on October 18, 2012, 07:41:48 PM I was looking at starting up a site that would sell bitcoins through credit card transactions as a US based business. Not wanting to run into immediate regulatory problems I gave FinCEN (Financial Crimes Enforcement Network) a call. It took them a couple of weeks to get back to me but the answer was yes that business would be required to register as a Money Service Business. I can only see that if you buy and sell them on the same site. If you are just selling them there should be no need for that. Bitinstant is great example why. Reason being you move funds to and from your bank account. If funds are just moving one way it should not be any problem to them as long as you pay your taxes. I recently started selling coins for credit card and that's the answer I got when I called. I have talked to the Attorney General office and the S.E.C. When exactly did you call them? Did they state exactly why? were you going sell and buy coins? I mean credit cards are easy to monitor its bank transfers they are really worried about. Title: Re: FinCEN says you must be MSB if you sell bitcoins for $ Post by: greyhawk on October 18, 2012, 07:49:31 PM Better operate from New Shwabia, Nazi Germany. TrueCrypt once did that! BaFin is already on the trail of Nazi German exchanges. That is no longer an option, mein Führer. Title: Re: FinCEN says you must be MSB if you sell bitcoins for $ Post by: jgarzik on October 18, 2012, 07:51:12 PM Heh, and thats the easy part! You also need to do the following, just off the top of my head: - Quarterly audits that you pay for - Every 6 weeks you need a verified and updated AML Program - Attend BSA training twice a year - Bend over backwards and get anally raped every day.... Oh, you also need at least two people, right? IIRC, every MSB requires a compliance/risk officer, who is separate from the person(s) handling money day-to-day. Title: Re: FinCEN says you must be MSB if you sell bitcoins for $ Post by: jgarzik on October 18, 2012, 07:54:31 PM Are there different classes of MBS, all with their own additional requirements? My understanding is that the business that the OP is proposing is somewhat different to that operated by BitInstant. Are they likely to be subject to more regulations as they'll actually be selling BTC direct to the public rather than operating as a platform for others to trade BTC (like MtGox) or a conduit for getting funds into exchanges quickly (like BitInstant)? A Money Services Business (MSB) is a specific definition. There are other types of businesses (depository, securities, mortgage, insurance, ...) that may register with FinCEN. You might be able to get away with only registered in a single US state, if you are largely a brick-and-mortar business rather than an online business. e.g. a pawn shop exchanging bitcoins might only need to register as an MSB, plus one (1) state. (again, IANAL, seek your own professional advice) Title: Re: FinCEN says you must be MSB if you sell bitcoins for $ Post by: BitcoinINV on October 18, 2012, 07:59:07 PM Well see look at it this way Bitinstant is a money transfer service. You give them money they give someone else money.
Money Services Business - The term "money services business" includes any person doing business, whether or not on a regular basis or as an organized business concern, in one or more of the following capacities: (1) Currency dealer or exchanger. (2) Check casher. (3) Issuer of traveler's checks, money orders or stored value. (4) Seller or redeemer of traveler's checks, money orders or stored value. (5) Money transmitter. <<<<<<<<<<<<--------------------- That is what makes bitinstant (6) U.S. Postal Service. Title: Re: FinCEN says you must be MSB if you sell bitcoins for $ Post by: benjamindees on October 18, 2012, 08:01:45 PM I see the BitInstant Foundation For The Prevention of Competition circlejerk has arrived to dispense their usual, shitty legal advice.
Title: Re: FinCEN says you must be MSB if you sell bitcoins for $ Post by: Yankee (BitInstant) on October 18, 2012, 08:11:50 PM Heh, and thats the easy part! You also need to do the following, just off the top of my head: - Quarterly audits that you pay for - Every 6 weeks you need a verified and updated AML Program - Attend BSA training twice a year - Bend over backwards and get anally raped every day.... Oh, you also need at least two people, right? IIRC, every MSB requires a compliance/risk officer, who is separate from the person(s) handling money day-to-day. I believe this to be true, but not 100%. FinCEN would probably reject 1-man shows though. Money Services Business - The term "money services business" includes any person doing business, whether or not on a regular basis or as an organized business concern, in one or more of the following capacities: (5) Money transmitter. <<<<<<<<<<<<--------------------- That is what makes bitinstant Ya, the first part of your comment is true forsure! Money Service Business is not the same as a Money Transmitter and you can be an MSB and not an MTB (4) Seller or redeemer of traveler's checks, money orders or stored value. <---- This is what BitInstant is. I see the BitInstant Foundation For The Prevention of Competition circlejerk has arrived to dispense their usual, shitty legal advice. What? What kind of snide comment is this? I commented on this thread to help those who have questions and provide my input. We've spent over 100k on lawyers, why shouldn't I be able to provide help and advice? If you don't want it, leave. Every competitor of BitInstant are friends with us, and we all help each other out for a bigger pie instead of fighting over the small slices we have now. Please don't make comments you don't know to be true, just makes you look dumb. Title: Re: FinCEN says you must be MSB if you sell bitcoins for $ Post by: repentance on October 18, 2012, 08:16:33 PM If funds are just moving one way it should not be any problem to them as long as you pay your taxes. I'm not sure that the one-way thing is any sort of shield. Jewellers, for instance, are subject to AML regulations based on their volume of business even if they do not buy from the general public. It's also worth noting that the IRS itself carries out AML investigations and makes referrals to FinCEN - merely paying your taxes is not enough to protect you if you're required to comply with AML regulations and fail to do so. There may be some exemptions open to you if you operate within certain limits. It's worth seeking advice from an experienced financial services lawyer to find out in what circumstances exemptions might apply. Operating within those limits might be more financially viable for you at this time than seeking licensing. Obtaining an exemption is a formal process - you have to apply for it so it still costs money. Title: Re: FinCEN says you must be MSB if you sell bitcoins for $ Post by: hazek on October 18, 2012, 08:21:20 PM Fuck them! Bitcoins in fact are digital signatures. You sign integer and recipients public key with your private key. So Bitcoins are more like service like SSL root authority instead of money like paypal. P.S. next time call DEA and ask them what license you need to sell drugs on Silk Road. The future of Bitcoin is illegal that might destroy current establishment and governments. Again, fuck the government, fuck any regulations and fuck them all! You have the tool in your computer - Bitcoin! This is exactly how I feel. Of course doing so you always run the risk of getting on one of their lists and since you are dealing with a violet thuggish group of psychopaths ending up on one of their lists usually doesn't end well for you.. So in your own self interest it's always a good idea to do what ever you can to mitigate that risk meaning you either bow to their extortion or you go completely underground and hide from them. Bitcoin thankfully allows for both. Title: Re: FinCEN says you must be MSB if you sell bitcoins for $ Post by: BCB on October 18, 2012, 08:24:01 PM Actually, according to a French ruling " the nature of bitcoin [could be] irrelevant to the case at hand".
https://bitcointalk.org/index.php?topic=118947.msg1279522#msg1279522 Title: Re: FinCEN says you must be MSB if you sell bitcoins for $ Post by: kiba on October 18, 2012, 08:25:06 PM I was looking at starting up a site that would sell bitcoins through credit card transactions as a US based business. Not wanting to run into immediate regulatory problems I gave FinCEN (Financial Crimes Enforcement Network) a call. It took them a couple of weeks to get back to me but the answer was yes that business would be required to register as a Money Service Business. Yes, that is expected. BitInstant is a register MSB, AFAIK. A couple other exchanges based in the US are registered, or in the process of registering. According to my research (WARNING: not a lawyer, seek your own professional advice) online bitcoin exchanges in the US would need to register in ~47 of 50 states, as well as registering as an MSB with the federal government. (or limit the users accessing the website to a select few states) There is a multi-state surety bond and registration process, making multi-state compliance a bit easier, but it is definitely a lot of paperwork and background checks required. Heh, and thats the easy part! You also need to do the following, just off the top of my head: - Quarterly audits that you pay for - Every 6 weeks you need a verified and updated AML Program - Attend BSA training twice a year - Bend over backwards and get anally raped every day.... That should be art of the political platform for bitcoin: DESTROY all Anti-monetary liberty programs. Title: Re: FinCEN says you must be MSB if you sell bitcoins for $ Post by: BitcoinINV on October 18, 2012, 08:27:01 PM Heh, and thats the easy part! You also need to do the following, just off the top of my head: - Quarterly audits that you pay for - Every 6 weeks you need a verified and updated AML Program - Attend BSA training twice a year - Bend over backwards and get anally raped every day.... Oh, you also need at least two people, right? IIRC, every MSB requires a compliance/risk officer, who is separate from the person(s) handling money day-to-day. I believe this to be true, but not 100%. FinCEN would probably reject 1-man shows though. Money Services Business - The term "money services business" includes any person doing business, whether or not on a regular basis or as an organized business concern, in one or more of the following capacities: (5) Money transmitter. <<<<<<<<<<<<--------------------- That is what makes bitinstant Ya, the first part of your comment is true forsure! Money Service Business is not the same as a Money Transmitter and you can be an MSB and not an MTB (4) Seller or redeemer of traveler's checks, money orders or stored value. <---- This is what BitInstant is. I see the BitInstant Foundation For The Prevention of Competition circlejerk has arrived to dispense their usual, shitty legal advice. What? What kind of snide comment is this? I commented on this thread to help those who have questions and provide my input. We've spent over 100k on lawyers, why shouldn't I be able to provide help and advice? If you don't want it, leave. Every competitor of BitInstant are friends with us, and we all help each other out for a bigger pie instead of fighting over the small slices we have now. Please don't make comments you don't know to be true, just makes you look dumb. I knew it was something like that but I figured since you guys did bank to bank thats what it fell under I am sorry for the mistake. Title: Re: FinCEN says you must be MSB if you sell bitcoins for $ Post by: BCB on October 18, 2012, 08:27:31 PM Also, to "operate within certain limits" of FinCEN, BSA, AML, or KYC rules to avoid notice or regulation is called "structuring" in FinCEN parlance, so they watch for that as well.
Title: Re: FinCEN says you must be MSB if you sell bitcoins for $ Post by: Yankee (BitInstant) on October 18, 2012, 08:31:30 PM I knew it was something like that but I figured since you guys did bank to bank thats what it fell under I am sorry for the mistake. No need to be sorry! Was just making sure the facts are correct. Sorry if I gave you the impression that you should apologize :) Title: Re: FinCEN says you must be MSB if you sell bitcoins for $ Post by: repentance on October 18, 2012, 08:32:57 PM Part of the political platform for bitcoin is to DESTROY all Anti-monetary liberty programs. Part of the political platform for some Bitcoin users is to destroy all AML programmes. Others simply want a convenient, low-cost payment system. Some want to get rich speculating on BTC value. It's ridiculous to assume that everyone who uses BTC does so for ideological reasons when it's pretty obvious that large sections of this community are only interested in BTC for making short-term profits and don't give a shit about political platforms if they can use BTC to increase their income/wealth right now. Title: Re: FinCEN says you must be MSB if you sell bitcoins for $ Post by: BCB on October 18, 2012, 08:36:39 PM He's probably part of Occupy Wall Street. And how'd that work our for you besides getting laid and getting high in your tent at Zuccotti Park?
Title: Re: FinCEN says you must be MSB if you sell bitcoins for $ Post by: repentance on October 18, 2012, 08:44:24 PM Also, to "operate within certain limits" of FinCEN, BSA, AML, or KYC rules to avoid notice or regulation is called "structuring" in FinCEN parlance, so they watch for that as well. That's not what I'm talking about. I'm talking about limits set by the regulators themselves which allow certain types of businesses to be exempt from some aspects of regulation and determine whether or not they need licensing/what type of licence they require. For example, jewellers can be exempted from AML compliance if they are (i) retailers who exclusively purchase from other dealers subject to the anti-money laundering program regime, (ii) businesses who purchase from the general public, and (iii) non-dealers subject to the anti-money laundering rules as long as purchases of precious metals, jewels and stones are less than $50,000; if purchases exceed $50,000 in a year, then the anti-money laundering regime does apply. There is nothing even slightly illegal about having an exemption granted by regulators. When it's granted you agree to abide by the terms of that exemption, which will often only continue to apply as long as you operate within certain limits - adhering to those limits is not "structuring"; trying to find creative ways to bypass them is. Title: Re: FinCEN says you must be MSB if you sell bitcoins for $ Post by: BitcoinINV on October 18, 2012, 08:50:20 PM I dont sell bitcoins I sell Private keys :D.
Title: Re: FinCEN says you must be MSB if you sell bitcoins for $ Post by: kiba on October 18, 2012, 08:55:07 PM Part of the political platform for some Bitcoin users is to destroy all AML programmes. Others simply want a convenient, low-cost payment system. Some want to get rich speculating on BTC value. It's ridiculous to assume that everyone who uses BTC does so for ideological reasons when it's pretty obvious that large sections of this community are only interested in BTC for making short-term profits and don't give a shit about political platforms if they can use BTC to increase their income/wealth right now. AML programs are harmful to bitcoin, because they impose a large cost for dubious benefit on users of exchanges. Also, banks hate it too. Make it more costly for them to earn money. They don't give a damn about their customers practicing tax evasion and other nonsense. Title: Re: FinCEN says you must be MSB if you sell bitcoins for $ Post by: conspirosphere.tk on October 18, 2012, 08:57:45 PM P.S. next time call DEA and ask them what license you need to sell drugs on Silk Road. The future of Bitcoin is illegal that might destroy current establishment and governments. Again, fuck the government, fuck any regulations and fuck them all! Wisdom. +1 Title: Re: FinCEN says you must be MSB if you sell bitcoins for $ Post by: repentance on October 18, 2012, 09:04:38 PM I dont sell bitcoins I sell Private keys :D. That might not matter if those private keys allow someone to access stored value. One of the problems with the FATF framework, from which the AML/CTF regulations of so many nations derive, is that it really is just a broad framework. Each individual nation then adopts over-arching regulations and passes its own specific legislation related to that framework. Each nation then applies those laws and regulations within its own boundaries, but the interpretation of those laws and regulations by the regulators often remains legally untested. Even organisations which have the resources to mount a legal challenge - such as major banks - agree to civil forfeitures because the penalties per offence are so huge that losing a legal challenge would bankrupt them. Massive as some of the forfeitures paid by banks have been, they're a drop in the ocean to what they would have been required to pay if a penalty was imposed for every single violation. Now it's possible that a court might find that existing laws cannot be applied to certain types of BTC activity (a loophole which would be quickly closed, BTW), but such a finding would require a test case which would be expensive to defend and in which the stakes would be extremely high for the person/entity challenging the regulator's ruling. Even the biggest of existing Bitcoin businesses couldn't afford to pay millions of dollars in penalties if they lost. Quote Also, banks hate it too. Make it more costly for them to earn money. They don't give a damn about their customers practicing tax evasion and other nonsense. Of course they hate it. The cost of compliance is huge. They comply because the cost of not complying is potentially catastrophic. Regardless of what you believe, it's Bitcoin service operators who are actually putting themselves in potential legal jeopardy. It's not your right to determine what level of risk is appropriate for them. That's up to the service operators themselves to decide. If they don't want to expose themselves to the risk of prosecution for multiple federal offences, that's their right. They have no obligation to take risks for your benefit. If you think that "someone" should be taking those risks, put your own ass on the line instead of complaining that others aren't willing to do so. Title: Re: FinCEN says you must be MSB if you sell bitcoins for $ Post by: benjamindees on October 18, 2012, 09:15:44 PM I see the BitInstant Foundation For The Prevention of Competition circlejerk has arrived to dispense their usual, shitty legal advice. What? What kind of snide comment is this? It's a comment to point out the fact that you and Jeff do the same little irrelevant "scary regulations" dance on literally every other thread in this forum that pertains to buying or selling Bitcoins outside of the large exchanges. It would probably be considered illegal market manipulation under the laws you like to cite, if it weren't so ham-fisted. At the very least, it should be considered unethical for a developer/insider and an early-adopter to go out of their way to discourage someone from selling his Bitcoins, under color of law no less. So whether you two are doing so intentionally or unintentionally, that's what it looks like to a casual observer. And it really just needs to stop. (4) Seller or redeemer of traveler's checks, money orders or stored value. <---- This is what BitInstant is. This, for instance, seems like diversionary nonsense. What BitcoinINV posted is the correct interpretation. The "stored value" that you exchange are MtGox codes. And you are regulated because you handle other people's money, not because you sell Bitcoins. It really isn't that complicated. Frankly, it is absolutely incredulous to me that you don't understand all of this already, and well enough to explain it in a straightforward manner without sounding like you are intentionally discouraging third-party sales. If you don't, perhaps you should consult some more with your overpriced lawyers. Title: Re: FinCEN says you must be MSB if you sell bitcoins for $ Post by: DeathAndTaxes on October 18, 2012, 09:16:46 PM I dont sell bitcoins I sell Private keys :D. That might not matter if those private keys allow someone to access stored value. Bitcoins aren't stored value. A MtGox code is stored value It is a liability of MtGox Inc (or whatever their name is). Since MtGox has an obligation to make good on that promised stored value it is subject to regulation (strangely MtGox is not a MSB despite issuing stored value codes). Likewise so is an Apple gift card, a prepaid VISA, or even a phone card. They are a promise of future value. Bitcoin private key isn't stored value. Who is the issuer? If I buy $10,000 worth of BTC and Bitcoin collapses who can I claim reimbursement from? Calling a Bitcoin private key stored value would be like calling a 1oz gold coin a store of gold in the amount of one ounce, or a house a store of housing value. Title: Re: FinCEN says you must be MSB if you sell bitcoins for $ Post by: DeathAndTaxes on October 18, 2012, 09:22:29 PM I was looking at starting up a site that would sell bitcoins through credit card transactions as a US based business. Not wanting to run into immediate regulatory problems I gave FinCEN (Financial Crimes Enforcement Network) a call. It took them a couple of weeks to get back to me but the answer was yes that business would be required to register as a Money Service Business. One can't simply register as "A" Money Service Business. MSB is a catch-all for 10 different types of specific business activity that requires registration. So of course this FinCEN agent told you specifically which type of business activity to indicate on the registration. Right? http://i.minus.com/i2qG3AjRn5iqV.png Title: Re: FinCEN says you must be MSB if you sell bitcoins for $ Post by: repentance on October 18, 2012, 09:58:25 PM Strange the OP didn't mention which section of MSB code the regulator advised him he should register under. No cites, no references, not even what section. Just that he MUST. Dubious. One can't simply register as some "generic" MSB. So obviously the OP knows which section a business would need to register under. I agree that this is very strange. My experience of dealing with regulators is that they like to give you very lengthy written answers to such questions and tell you exactly what sections of the regulations apply to your question and why. They also frequently tell you to seek independent legal advice because what they're telling you is how they would apply the regulations to your particular situation, not necessarily how a court would rule on that application - as I mentioned above, a lot of AML related stuff hasn't ever been challenged because nobody wants to take the risk of losing a challenge. At the end of the day, people need to take the advice of their own lawyers because that's who'll be representing them if they find themselves under legal scrutiny. That's who'll have to come up with on point legal arguments and actual precedents in the court-room. Arguments which sound good on a messageboard can be useless in a courtroom and many of them are more wishful thinking than anything else. I notice that "informal value transfer system" is mentioned on the form posted by D&T. It would be worth spending a few hours on the FinCEN website and seeing what kinds of activity they've applied this designation to in the past. Likewise, if there are exemptions available for businesses dealing in stored value (this is how gift card issuers and issuers of pre-paid phone and internet credit get around needing to be licensed deposit-takers and Tier 1 capital requirements here in Australia) then it's in your interests to argue that BTC are stored value. The issue isn't so much what is the absolute legal "truth" (there's no such thing), but what legal argument would be most beneficial to a given Bitcoin business at a specific time. Different Bitcoin enterprises will benefit from different types of classification, but they'll likely all seek the classification which regulates their particular type of activity the least. Title: Re: FinCEN says you must be MSB if you sell bitcoins for $ Post by: evoorhees on October 18, 2012, 10:29:42 PM I see the BitInstant Foundation For The Prevention of Competition circlejerk has arrived to dispense their usual, shitty legal advice. So you are suggesting Charlie is posting about things he's spent significant money to learn - which is free advice for anyone listening - in order to prevent competition? Interesting strategy. My goodness... imagine if, in addition to his legal understanding, Charlie started also letting competitors use his computers, his business contacts, and even his office! Then he's REALLY be stifling competition. ::) Title: Re: FinCEN says you must be MSB if you sell bitcoins for $ Post by: repentance on October 18, 2012, 10:48:46 PM Whether or not people consider Charlie's advice "shitty", the OP makes no mention of having obtained legal advice of his own. Nobody should even consider applying for licensing as a financial services provider of any type without first obtaining their own legal advice. If you can't afford a lawyer and accountant to advise you on the process, then you likely can't afford proper anti-fraud and AML compliance measures, either. Some things really aren't DIY, and financial service licensing is one of them.
Some of the larger Bitcoin businesses have a very big moat. The barriers to entry for certain types of services are much higher than they were twelve months ago and people need to realise that. Title: Re: FinCEN says you must be MSB if you sell bitcoins for $ Post by: bg002h on October 19, 2012, 12:11:51 AM I was looking at starting up a site that would sell bitcoins through credit card transactions as a US based business. Not wanting to run into immediate regulatory problems I gave FinCEN (Financial Crimes Enforcement Network) a call. It took them a couple of weeks to get back to me but the answer was yes that business would be required to register as a Money Service Business. Yes, that is expected. BitInstant is a register MSB, AFAIK. A couple other exchanges based in the US are registered, or in the process of registering. According to my research (WARNING: not a lawyer, seek your own professional advice) online bitcoin exchanges in the US would need to register in ~47 of 50 states, as well as registering as an MSB with the federal government. (or limit the users accessing the website to a select few states) There is a multi-state surety bond and registration process, making multi-state compliance a bit easier, but it is definitely a lot of paperwork and background checks required. Heh, and thats the easy part! You also need to do the following, just off the top of my head: - Quarterly audits that you pay for - Every 6 weeks you need a verified and updated AML Program - Attend BSA training twice a year - Bend over backwards and get anally raped every day.... I'm sorry to hear about all the contortion and....uhhh....transrectal violation...thanks for going through all that! Title: Re: FinCEN says you must be MSB if you sell bitcoins for $ Post by: BitcoinINV on October 19, 2012, 12:34:13 AM I was looking at starting up a site that would sell bitcoins through credit card transactions as a US based business. Not wanting to run into immediate regulatory problems I gave FinCEN (Financial Crimes Enforcement Network) a call. It took them a couple of weeks to get back to me but the answer was yes that business would be required to register as a Money Service Business. One can't simply register as "A" Money Service Business. MSB is a catch-all for 10 different types of specific business activity that requires registration. So of course this FinCEN agent told you specifically which type of business activity to indicate on the registration. Right? http://i.minus.com/i2qG3AjRn5iqV.png Can't see how bitcoins or credit cards fit in to that at all lol Title: Re: FinCEN says you must be MSB if you sell bitcoins for $ Post by: repentance on October 19, 2012, 12:55:50 AM Can't see how bitcoins or credit cards fit in to that at all lol Have you read the actual definitions of all the terms used on the form and obtained legal advice about whether they would apply to the OP's situation? Because "the people on Bitcointalk didn't see how I could be regarded as a MSB" isn't a legal defence for failing to register (the fine for failing to register within the required 180 days of starting business as a MSB is $5000 per day and that's assuming that you're not violating any other regulations at the same time). OP needs specific information from FinCEN about which sections of their regulations apply to his proposed business and then he needs to seek expert legal opinion on the information provided by FinCEN and any specific additional requirements in the state where he's planning on operating. OP may, indeed, be exempt from needing to register as a MSB, but he needs that confirmed by the actual regulators, in writing. The definitions aren't straightforward and they really need to be interpreted by someone who is familiar with past FinCEN rulings and enforcement actions. If you're going to argue that they don't apply to your particular business, you need to have a legal argument to that effect which would stand up in court. http://www.shajlaw.com/moneyservicesbusiness_faq.html Title: Re: FinCEN says you must be MSB if you sell bitcoins for $ Post by: Atlas on October 19, 2012, 01:02:15 AM I was looking at starting up a site that would sell bitcoins through credit card transactions as a US based business. Not wanting to run into immediate regulatory problems I gave FinCEN (Financial Crimes Enforcement Network) a call. It took them a couple of weeks to get back to me but the answer was yes that business would be required to register as a Money Service Business. One can't simply register as "A" Money Service Business. MSB is a catch-all for 10 different types of specific business activity that requires registration. So of course this FinCEN agent told you specifically which type of business activity to indicate on the registration. Right? http://i.minus.com/i2qG3AjRn5iqV.png Can't see how bitcoins or credit cards fit in to that at all lol >Currency dealer or exchanger Title: Re: FinCEN says you must be MSB if you sell bitcoins for $ Post by: DeathAndTaxes on October 19, 2012, 01:14:12 AM >Currency dealer or exchanger So the US federal government has determined that Bitcoin is a currency? That would be pretty big and AMAZING news. The price is what $20,000 USD per BTC by now right. You have court cases, cites, regulatory memorandums, administrative rulings ... ... ... Definitions matter. The law is a collection of definitions. Quote m) Currency. The coin and paper money of the United States or of any other country that is designated as legal tender and that circulates and is customarily used and accepted as a medium of exchange in the country of issuance. Currency includes U.S. silver certificates, U.S. notes and Federal Reserve notes. Currency also includes official foreign bank notes that are customarily used and accepted as a medium of exchange in a foreign country. http://www.ecfr.gov/cgi-bin/text-idx?c=ecfr&sid=d5570d7646c5fc13fe1fa42a61d1dcf1&rgn=div5&view=text&node=31:3.1.6.1.2&idno=31#31:3.1.6.1.2.1.3.1 So Bitcoin is: the coin and paper money of the United States? the coin and paper money of any other country? silver certificates? Federal Reserve notes? foreign bank notes? Note this isn't to say the federal government couldn't tomorrow expand the definition of currency and thus the scope of the MSB to include Bitcoin or just about anything however the law in effect today is as written not some hypothetical future law. Quote Money services business. A person wherever located doing business , whether or not on a regular basis or as an organized or licensed business concern, wholly or in substantial part within the United States, in one or more of the capacities listed in paragraphs (ff)(1) through (ff)(7) of this section. This includes but is not limited to maintenance of any agent, agency, branch, or office within the United States. (1) Dealer in foreign exchange. A person that accepts the currency, or other monetary instruments, funds, or other instruments denominated in the currency, of one or more countries in exchange for the currency, or other monetary instruments, funds, or other instruments denominated in the currency, of one or more other countries in an amount greater than $1,000 for any other person on any day in one or more transactions, whether or not for same-day delivery. (2) Check casher —(i) In general. A person that accepts checks (as defined in the Uniform Commercial Code), or monetary instruments (as defined at § 1010.100(dd)(1)(ii), (iii), (iv), and (v)) in return for currency or a combination of currency and other monetary instruments or other instruments, in an amount greater than $1,000 for any person on any day in one or more transactions. (ii) Facts and circumstances; Limitations. Whether a person is a check casher as described in this section is a matter of facts and circumstances. The term “check casher” shall not include: (A) A person that sells prepaid access in exchange for a check (as defined in the Uniform Commercial Code), monetary instrument or other instrument; (B) A person that solely accepts monetary instruments as payment for goods or services other than check cashing services; (C) A person that engages in check cashing for the verified maker of the check who is a customer otherwise buying goods and services; (D) A person that redeems its own checks; or (E) A person that only holds a customer's check as collateral for repayment by the customer of a loan. (3) Issuer or seller of traveler's checks or money orders. A person that (i) Issues traveler's checks or money orders that are sold in an amount greater than $1,000 to any person on any day in one or more transactions; or (ii) Sells traveler's checks or money orders in an amount greater than $1,000 to any person on any day in one or more transactions. (4) Provider of prepaid access —(i) In general. A provider of prepaid access is the participant within a prepaid program that agrees to serve as the principal conduit for access to information from its fellow program participants. The participants in each prepaid access program must determine a single participant within the prepaid program to serve as the provider of prepaid access. (ii) Considerations for provider determination. In the absence of registration as the provider of prepaid access for a prepaid program by one of the participants in a prepaid access program, the provider of prepaid access is the person with principal oversight and control over the prepaid program. Which person exercises “principal oversight and control” is a matter of facts and circumstances. Activities that indicate “principal oversight and control” include: (A) Organizing the prepaid program; (B) Setting the terms and conditions of the prepaid program and determining that the terms have not been exceeded; (C) Determining the other businesses that will participate in the prepaid program, which may include the issuing bank, the payment processor, or the distributor; (D) Controlling or directing the appropriate party to initiate, freeze, or terminate prepaid access; and (E) Engaging in activity that demonstrates oversight and control of the prepaid program. (iii) Prepaid program. A prepaid program is an arrangement under which one or more persons acting together provide(s) prepaid access. However, an arrangement is not a prepaid program if: (A) It provides closed loop prepaid access to funds not to exceed $2,000 maximum value that can be associated with a prepaid access device or vehicle on any day; (B) It provides prepaid access solely to funds provided by a Federal, State, local, Territory and Insular Possession, or Tribal government agency; (C) It provides prepaid access solely to funds from pre-tax flexible spending arrangements for health care and dependent care expenses, or from Health Reimbursement Arrangements (as defined in 26 U.S.C. 105(b) and 125) for health care expenses; or (D) ( 1 ) It provides prepaid access solely to: (i) Employment benefits, incentives, wages or salaries; or (ii) Funds not to exceed $1,000 maximum value and from which no more than $1,000 maximum value can be initially or subsequently loaded, used, or withdrawn on any day through a device or vehicle; and ( 2 ) It does not permit: (i) Funds or value to be transmitted internationally; (ii) Transfers between or among users of prepaid access within a prepaid program; or (iii) Loading additional funds or the value of funds from non-depository sources. (5) Money transmitter —(i) In general. (A) A person that provides money transmission services. The term “money transmission services” means the acceptance of currency, funds, or other value that substitutes for currency from one person and the transmission of currency, funds, or other value that substitutes for currency to another location or person by any means. “Any means” includes, but is not limited to, through a financial agency or institution; a Federal Reserve Bank or other facility of one or more Federal Reserve Banks, the Board of Governors of the Federal Reserve System, or both; an electronic funds transfer network; or an informal value transfer system; or (B) Any other person engaged in the transfer of funds. (ii) Facts and circumstances; Limitations. Whether a person is a money transmitter as described in this section is a matter of facts and circumstances. The term “money transmitter” shall not include a person that only: (A) Provides the delivery, communication, or network access services used by a money transmitter to support money transmission services; (B) Acts as a payment processor to facilitate the purchase of, or payment of a bill for, a good or service through a clearance and settlement system by agreement with the creditor or seller; (C) Operates a clearance and settlement system or otherwise acts as an intermediary solely between BSA regulated institutions. This includes but is not limited to the Fedwire system, electronic funds transfer networks, certain registered clearing agencies regulated by the Securities and Exchange Commission (“SEC”), and derivatives clearing organizations, or other clearinghouse arrangements established by a financial agency or institution; (D) Physically transports currency, other monetary instruments, other commercial paper, or other value that substitutes for currency as a person primarily engaged in such business, such as an armored car, from one person to the same person at another location or to an account belonging to the same person at a financial institution, provided that the person engaged in physical transportation has no more than a custodial interest in the currency, other monetary instruments, other commercial paper, or other value at any point during the transportation; (E) Provides prepaid access; or (F) Accepts and transmits funds only integral to the sale of goods or the provision of services, other than money transmission services, by the person who is accepting and transmitting the funds. (6) U.S. Postal Service. The United States Postal Service, except with respect to the sale of postage or philatelic products. (7) Seller of prepaid access. Any person that receives funds or the value of funds in exchange for an initial loading or subsequent loading of prepaid access if that person: (i) Sells prepaid access offered under a prepaid program that can be used before verification of customer identification under § 1022.210(d)(1)(iv); or (ii) Sells prepaid access (including closed loop prepaid access) to funds that exceed $10,000 to any person during any one day, and has not implemented policies and procedures reasonably adapted to prevent such a sale. DISCLAIMER: Anyone looking to start a business, any business should seek legal counsel. However it is my contention that the OP is "full of shit". No regulatory would provide a single sentence answer and certainly wouldn't provide that answer over the phone. The regulatory would be acting as an agent of the United States and any statement would have vast legal implications. It could allow future lawsuits against the federal government or provide protection for a business in the event the federal government sought legal action. It could even rise to criminal entrapment. The simple version is the OP was trolling. Seek your own legal counsel or at the very least do your own personal due diligence. Title: Re: FinCEN says you must be MSB if you sell bitcoins for $ Post by: CharlesPonzi on October 19, 2012, 01:20:59 AM Hopefully we can one day buy and sell bitcoin p2p easily and the regulators can go fuck themselves.
Title: Re: FinCEN says you must be MSB if you sell bitcoins for $ Post by: repentance on October 19, 2012, 01:30:19 AM >Currency dealer or exchanger So the US federal government has determined that Bitcoin is a currency? That would be pretty big and AMAZING news. The price is what $20,000 USD per BTC by now right. You have court cases, cites, regulatory memorandums, administrative rulings ... ... ... There are other regulations which apply to "value transfer" and "stored value". That's why you can't just look at one bit of the regulations in isolation and claim that nothing can be applied to Bitcoin. How you're actually using something often determines what laws apply. Even with USD, which regulations apply depend on how they're being used. It's easy to say "they can't apply regulation X because Bitcoin isn't Y", but it's not your ass which is on the line if you're wrong about that or you who'll have to appear in court and find the funds to challenge any ruling where they do try to apply regulation X. Quote from: CharlesPonzi Hopefully we can one day buy and sell bitcoin p2p easily and the regulators can go fuck themselves. People seem curiously reluctant to do that, though - possibly because at this point more users are interested in Bitcoin as a means of making a quick profit than are interested in using it as a P2P payment protocol. Title: Re: FinCEN says you must be MSB if you sell bitcoins for $ Post by: TheButterZone on October 19, 2012, 01:30:54 AM No regulatory would provide a single sentence answer and certainly wouldn't provide that answer over the phone. The regulatory would be acting as an agent of the United States and any statement would have vast legal implications. It could allow future lawsuits against the federal government or provide protection for a business in the event the federal government sought legal action. It could even rise to criminal entrapment. The government is allowed to lie to you under color of authority and claim "qualified immunity" to do so with impunity. Especially when it involves conduct you know to be legal, and which they claim to be illegal, by using "underground regulations". Title: Re: FinCEN says you must be MSB if you sell bitcoins for $ Post by: BitcoinINV on October 19, 2012, 01:39:57 AM If bitcoin is stored value so is wow gold lol.
Title: Re: FinCEN says you must be MSB if you sell bitcoins for $ Post by: repentance on October 19, 2012, 01:51:50 AM I said to seek legal counsel. However it is also easy for the OP to say they "can apply regulation X" and then provide no supporting evidence in any form and back it up with an utterly implausible story. Trolling is easy. I don't find it implausible per se, I'd just take anything I was told over the phone with a grain of salt because what you really want is a written statement quoting the specific regulations they maintain require you to be registered/licensed. Once you have that, you know whether there are exemptions you can seek or whether you can mount a valid argument that those regulations shouldn't be applied to your particular circumstances. More importantly, even though such communication isn't generally viewed as binding advice, it's difficult to get into trouble if you've followed it and it turns out to be wrong. In my experience, regulators want a lot of information before they'll offer you an opinion because so much is determined by individual circumstances. The opinion they give you is based entirely on the information you give them and it can be totally wrong if there's something you didn't mention because you thought it was unimportant or if the person you spoke to didn't ask the right questions. This kind of shit might seem unimportant but it's stuff you need to consider if you don't want to find you conventional financial accounts suddenly shut down for suspicious activity. Every time a business opens an account with a financial institution (including merchant accounts with CC providers) that institution does an AML risk assessment and if they don't like your level of risk or if your account activity indicates a higher level of risk than they first anticipated, they'll either dump you as a customer or start imposing increasingly onerous KYC requirements on you (and likely start filing a whole lot of SARs). Title: Re: FinCEN says you must be MSB if you sell bitcoins for $ Post by: DeathAndTaxes on October 19, 2012, 02:13:38 AM There are other regulations which apply to "value transfer" and "stored value". That's why you can't just look at one bit of the regulations in isolation and claim that nothing can be applied to Bitcoin. How you're actually using something often determines what laws apply. Even with USD, which regulations apply depend on how they're being used. I haven't looked at one bit of regulation in isolation. I was merely responding to the post dealing with currency exchange/broker. Nobody is saying Bitcoin isn't subject to any regulations. As an example selling drugs for Bitcoins is just as illegal as selling them for dollars. Still the thead is about MSB and the post I responded to was on currency exchanges/brokers. BTW I don't think the over provisions apply but I wans't ingoring them, they simply were outside the context of the debate. Quote It's easy to say "they can't apply regulation X because Bitcoin isn't Y", but it's not your ass which is on the line if you're wrong about that or you who'll have to appear in court and find the funds to challenge any ruling where they do try to apply regulation X. I said to seek legal counsel. However it is also easy for the OP to say they "... they can apply regulation X because Bitcoin is ... (well no he didn't even do that)" and then provide no supporting evidence in any form and back it up with an utterly implausible story. Trolling is easy. Title: Re: FinCEN says you must be MSB if you sell bitcoins for $ Post by: hazek on October 19, 2012, 03:02:53 AM I think all that happened here is the OP convincing the people at FinCEN that bitcoins are a currency when in fact there's no legal precedent affirming that. I wonder how many times he had to repeat digital currency before he got their halfassed response ::)
Title: Re: FinCEN says you must be MSB if you sell bitcoins for $ Post by: repentance on October 19, 2012, 03:31:07 AM I think all that happened here is the OP convincing the people at FinCEN that bitcoins are a currency when in fact there's no legal precedent affirming that. I wonder how many times he had to repeat digital currency before he got their halfassed response ::) You could be right about that. Quote from: Malophor I had a long conversation with a representative from FinCEN today about the requirements to register as a MSB. I'll let you know what I hear back. For a government organization they are awesome. My phone call was returned the same day. They asked a lot of really good questions about bitcoin and were really trying to understand the currency and how this kind of service would fit into it. https://bitcointalk.org/index.php?topic=110687.msg1240504#msg1240504 Title: Re: FinCEN says you must be MSB if you sell bitcoins for $ Post by: interlagos on October 19, 2012, 10:41:55 AM ... I gave FinCEN (Financial Crimes Enforcement Network) a call.... <sarcasm> Is it just me or the name suggests that the Network's purpose is to Enforce Financial Crimes? Well considering that their paper dollar pyramid is the biggest financial crime ever attempted in the history of humanity it all adds up now in my head. </sarcasm> Title: Re: FinCEN says you must be MSB if you sell bitcoins for $ Post by: Bitcoin Oz on October 19, 2012, 11:39:16 AM Why would miners need a MSB license ?
Title: Re: FinCEN says you must be MSB if you sell bitcoins for $ Post by: davout on October 19, 2012, 12:33:19 PM Money Services Business - The term "money services business" includes any person doing business, whether or not on a regular basis or as an organized business concern, in one or more of the following capacities: (5) Money transmitter. <<<<<<<<<<<<--------------------- That is what makes bitinstant Ya, the first part of your comment is true forsure! Money Service Business is not the same as a Money Transmitter and you can be an MSB and not an MTB (4) Seller or redeemer of traveler's checks, money orders or stored value. <---- This is what BitInstant is. I knew it was something like that but I figured since you guys did bank to bank thats what it fell under I am sorry for the mistake. No need to be sorry! Was just making sure the facts are correct. Charlie, you seem, once again (https://bitcointalk.org/index.php?topic=118947.msg1279351#msg1279351), to have a problem with facts. You guys are registered as money transmitters, and not as "Seller or redeemer of traveler's checks, money orders or stored value.", and only in NY. So it's either you don't even know what you're talking about, or you're lying. Title: Re: FinCEN says you must be MSB if you sell bitcoins for $ Post by: Yankee (BitInstant) on October 19, 2012, 01:59:59 PM Charlie, you seem, once again (https://bitcointalk.org/index.php?topic=118947.msg1279351#msg1279351), to have a problem with facts. You guys are registered as money transmitters, and not as "Seller or redeemer of traveler's checks, money orders or stored value.", and only in NY. So it's either you don't even know what you're talking about, or you're lying. Davout, That link has nothing to do with the situation at hand. When we opened the business, under FinCEN we registered as an MTB. 3 months ago we changed our position after extensive legal research and changed it. It can take 3-6 months for FinCEN to change it in their system. No one is lying, nor wrong. We've done the most extensive analyses and work with regulators every day on 3 different levels. You are free to call our lawyers if you want. -Charlie Title: Re: FinCEN says you must be MSB if you sell bitcoins for $ Post by: BitcoinINV on October 19, 2012, 02:15:46 PM Like I just told someone else, When the man with gun and the badge comes and say do this, as long as you say "yes sir" you should be ok. Its still a really gray area. It will take a landmark case about virtual currency's to set this in stone.
Title: Re: FinCEN says you must be MSB if you sell bitcoins for $ Post by: Boussac on October 19, 2012, 02:35:43 PM It will take a landmark case about virtual currency's to set this in stone. Since 1973 (the end of the international gold standard), ALL currencies are virtual. Only bankers want to use the words "virtual" currency applied to anything that amounts to a threat to their monopoly over fiat money creation. Anyway, bitcoin is not a currency until someone finds an issuer. Title: Re: FinCEN says you must be MSB if you sell bitcoins for $ Post by: CharlesPonzi on October 19, 2012, 02:39:16 PM Like I just told someone else, When the man with gun and the badge comes and say do this, as long as you say "yes sir" you should be ok. Its still a really gray area. It will take a landmark case about virtual currency's to set this in stone. Just tell them its a lot easier to bribe cops with bitcoin. Title: Re: FinCEN says you must be MSB if you sell bitcoins for $ Post by: BitcoinINV on October 19, 2012, 02:41:05 PM Like I just told someone else, When the man with gun and the badge comes and say do this, as long as you say "yes sir" you should be ok. Its still a really gray area. It will take a landmark case about virtual currency's to set this in stone. Just tell them its a lot easier to bribe cops with bitcoin. Don't have to he is reading i'm sure lol Title: Re: FinCEN says you must be MSB if you sell bitcoins for $ Post by: moni3z on October 20, 2012, 10:47:34 PM Haven't seen any legal gold traders in Canada with MSB's and they operate openly selling gold to Americans cross border. Prob should have spent the last 2 years pushing for bitcoin to be a commodity instead of 'a currency' which released the regulatory vultures.
If your commodity is apple and tomatoes and you trade them mail order for money do you need a MSB license? Title: Re: FinCEN says you must be MSB if you sell bitcoins for $ Post by: repentance on October 21, 2012, 02:54:01 AM If your commodity is apple and tomatoes and you trade them mail order for money do you need a MSB license? No, but if you are selling the contracts for supply of those items or offering people the opportunity to invest in those contracts then you likely need some kind of financial services licence (a money service business is only one type of financial service provider, there are many others) and are probably required to issue a product disclosure statement/prospectus. Canadian rules relating to precious metal dealers can be found here. Quote The following summary of the legislative requirements under the PCMLTFA applies to you if you are a dealer in precious metals and stones. A dealer in precious metals and stones means an individual or an entity that buys or sells precious metals, precious stones or jewellery, in the course of its business activities. You are subject to the requirements listed below if you ever engage in the purchase or sale of precious metals, precious stones or jewellery in an amount of $10,000 or more in a single transaction. In other words, you are not subject to these requirements if you engage only in purchases or sales of less than $10,000 per transaction. http://www.fintrac-canafe.gc.ca/re-ed/dpms-eng.asp Title: Re: FinCEN says you must be MSB if you sell bitcoins for $ Post by: moni3z on October 21, 2012, 02:59:04 AM If your commodity is apple and tomatoes and you trade them mail order for money do you need a MSB license? No, but if you are selling the contracts for supply of those items or offering people the opportunity to invest in those contracts then you likely need some kind of financial services licence (a money service business is only one type of financial service provider, there are many others) and are probably required to issue a product disclosure statement/prospectus. Canadian rules relating to precious metal dealers can be found here. Quote The following summary of the legislative requirements under the PCMLTFA applies to you if you are a dealer in precious metals and stones. A dealer in precious metals and stones means an individual or an entity that buys or sells precious metals, precious stones or jewellery, in the course of its business activities. You are subject to the requirements listed below if you ever engage in the purchase or sale of precious metals, precious stones or jewellery in an amount of $10,000 or more in a single transaction. In other words, you are not subject to these requirements if you engage only in purchases or sales of less than $10,000 per transaction. http://www.fintrac-canafe.gc.ca/re-ed/dpms-eng.asp Interesting, wonder if this also applies to a bitcoin -> gold cashout service with no ID Title: Re: FinCEN says you must be MSB if you sell bitcoins for $ Post by: MPOE-PR on October 22, 2012, 03:04:28 AM Fuck them! Bitcoins in fact are digital signatures. You sign integer and recipients public key with your private key. So Bitcoins are more like service like SSL root authority instead of money like paypal. P.S. next time call DEA and ask them what license you need to sell drugs on Silk Road. The future of Bitcoin is illegal that might destroy current establishment and governments. Again, fuck the government, fuck any regulations and fuck them all! You have the tool in your computer - Bitcoin! Don't take off now, Mr. Title: Re: FinCEN says you must be MSB if you sell bitcoins for $ Post by: Malophor on October 22, 2012, 12:04:07 PM I have the reply on voicemail. I'll transcribe it here for what the official answer was tomorrow. I also understand that their calls are subject to FOIA requests so I expect this now an official documented reply.
Title: Re: FinCEN says you must be MSB if you sell bitcoins for $ Post by: hazek on October 22, 2012, 12:59:59 PM I have the reply on voicemail. I'll transcribe it here for what the official answer was tomorrow. I also understand that their calls are subject to FOIA requests so I expect this now an official documented reply. What I'd like to know is how often and how hard did you have to insist on bitcoins being a currency and what legal determination was used as basis for this belief. Title: Re: FinCEN says you must be MSB if you sell bitcoins for $ Post by: Malophor on October 23, 2012, 08:45:01 AM I didn't have to insist on anything. They were really professional. The person I was speaking with thought the question was really interesting and importnat to answer correctly. He asked me a lot of questions about who would use bitcoins, why, and what kind of a business model I was considering. I did need to explain how bitcoin was not a ponzi scheme and how that despite the lack intrinsic value people still assign them value.
Title: Re: FinCEN says you must be MSB if you sell bitcoins for $ Post by: hazek on October 23, 2012, 10:44:02 AM I didn't have to insist on anything. They were really professional. The person I was speaking with thought the question was really interesting and importnat to answer correctly. He asked me a lot of questions about who would use bitcoins, why, and what kind of a business model I was considering. I did need to explain how bitcoin was not a ponzi scheme and how that despite the lack intrinsic value people still assign them value. Well I'm pretty sure you made a fallacious case for bitcoins legally speaking being something they are not and they happily bought it. Thanks for doing all of us this disservice of now having to fight an assumption by a mafia that has no basis in fact. You practically guaranteed that it'll also stay that way since the mere threat of violence under this false assumption will shut down most entrepreneurs who might have thought they needn't worry about regulations. And if you think I'm being too harsh, you should think again. Legally speaking bitcoins are not defined what they are. Yes we pretend they are a currency and we call it a currency but legally speaking we don't know what they are. They might be speech for all we know, legally speaking. And I'm sorry but this kind of foolishness of asking a mafia for their opinion and then permission just irritates me to no end. If you really want to be some mafia's bitch, fine, be so on your own but don't drag the rest of us down with you. Title: Re: FinCEN says you must be MSB if you sell bitcoins for $ Post by: DeathAndTaxes on October 23, 2012, 12:59:11 PM I didn't have to insist on anything. They were really professional. The person I was speaking with thought the question was really interesting and importnat to answer correctly. He asked me a lot of questions about who would use bitcoins, why, and what kind of a business model I was considering. I did need to explain how bitcoin was not a ponzi scheme and how that despite the lack intrinsic value people still assign them value. So what class of MSB activity did the regulatory say buying bitcoins fall under? Title: Re: FinCEN says you must be MSB if you sell bitcoins for $ Post by: davout on October 23, 2012, 01:07:27 PM I have the reply on voicemail. I'll transcribe it here for what the official answer was tomorrow. I also understand that their calls are subject to FOIA requests so I expect this now an official documented reply. We're tomorrow, and I'm very interested in the transcript :)Title: Re: FinCEN says you must be MSB if you sell bitcoins for $ Post by: BitcoinINV on October 23, 2012, 01:40:25 PM Me too, actually I would like to here the recording honestly.
Title: Re: FinCEN says you must be MSB if you sell bitcoins for $ Post by: Malophor on October 23, 2012, 05:22:00 PM Here is the transcript:
"Hello this call is for <me>. This is Anthony from FinCEN. I'm getting back to you after a few weeks. I apologize for the delay. I just wanted to make sure I got a proper answer for you. The bottom line answer for the scenario you describe to us you would be a Money Service Business. That is because you would be a money transmitter purchasing a valuable and using it as money and doing it by means of transmission. So, if that is enough I hope that helps you. In any case, feel free to call us back. Have a good day." Title: Re: FinCEN says you must be MSB if you sell bitcoins for $ Post by: Malophor on October 23, 2012, 05:25:48 PM I didn't have to insist on anything. They were really professional. The person I was speaking with thought the question was really interesting and importnat to answer correctly. He asked me a lot of questions about who would use bitcoins, why, and what kind of a business model I was considering. I did need to explain how bitcoin was not a ponzi scheme and how that despite the lack intrinsic value people still assign them value. Well I'm pretty sure you made a fallacious case for bitcoins legally speaking being something they are not and they happily bought it. Thanks for doing all of us this disservice of now having to fight an assumption by a mafia that has no basis in fact. You practically guaranteed that it'll also stay that way since the mere threat of violence under this false assumption will shut down most entrepreneurs who might have thought they needn't worry about regulations. And if you think I'm being too harsh, you should think again. Legally speaking bitcoins are not defined what they are. Yes we pretend they are a currency and we call it a currency but legally speaking we don't know what they are. They might be speech for all we know, legally speaking. And I'm sorry but this kind of foolishness of asking a mafia for their opinion and then permission just irritates me to no end. If you really want to be some mafia's bitch, fine, be so on your own but don't drag the rest of us down with you. I had a legitimate concern about a business proposition. I investigated it with the people responsible for enforcement of the law and got the answer. I'm simply sharing that question and answer back here with the community. I am just the messenger here. If you have a problem with that answer you can call FinCEN yourself. Title: Re: FinCEN says you must be MSB if you sell bitcoins for $ Post by: DeathAndTaxes on October 23, 2012, 05:39:27 PM Here is the transcript: Quote "Hello this call is for <me>. This is Anthony from FinCEN. I'm getting back to you after a few weeks. I apologize for the delay. I just wanted to make sure I got a proper answer for you. The bottom line answer for the scenario you describe to us you would be a Money Service Business. That is because you would be a money transmitter purchasing a valuable and using it as money and doing it by means of transmission. So, if that is enough I hope that helps you. In any case, feel free to call us back. Have a good day." Interesting. What was the scenario? The reason I ask is that Money Transmitter is a very tough license to get. Almost every state requires a MT license and it involves posting a bond, undergoing background checks of beneficial owners, detailed third party auditing of financials, proof of sufficient capital reserves (i.e. sworn statement by bank officers, etc). So merely registering with FinCEN wouldn't make one compliant as a money transmitter. If anything it would be used as evidence by the states as to your willful non-compliance. To my knowledge no Bitcoin related business has a Money Transmitter license (type 409 MSB). Simply "purchasing a valuable" and paying customers doesn't make one a money transmitter. For example the largest retail gold buyer in the US (APMEX) doesn't have a money transmitter license (or any MSB license). They buy "purchasing a valuable" (gold) and pay sellers via a transmission (ACH or bank wire). So I wonder what exactly you described? FinCEN definition of a "money transmitter". http://www.ecfr.gov/cgi-bin/text-idx?c=ecfr&sid=d5570d7646c5fc13fe1fa42a61d1dcf1&rgn=div5&view=text&node=31:3.1.6.1.2&idno=31#31:3.1.6.1.2.1.3.1 Quote (5) Money transmitter —(i) In general. (A) A person that provides money transmission services. The term “money transmission services” means the acceptance of currency, funds, or other value that substitutes for currency from one person and the transmission of currency, funds, or other value that substitutes for currency to another location or person by any means. “Any means” includes, but is not limited to, through a financial agency or institution; a Federal Reserve Bank or other facility of one or more Federal Reserve Banks, the Board of Governors of the Federal Reserve System, or both; an electronic funds transfer network; or an informal value transfer system; or (B) Any other person engaged in the transfer of funds. (ii) Facts and circumstances; Limitations. Whether a person is a money transmitter as described in this section is a matter of facts and circumstances. The term “money transmitter” shall not include a person that only: (A) Provides the delivery, communication, or network access services used by a money transmitter to support money transmission services; (B) Acts as a payment processor to facilitate the purchase of, or payment of a bill for, a good or service through a clearance and settlement system by agreement with the creditor or seller; (C) Operates a clearance and settlement system or otherwise acts as an intermediary solely between BSA regulated institutions. This includes but is not limited to the Fedwire system, electronic funds transfer networks, certain registered clearing agencies regulated by the Securities and Exchange Commission (“SEC”), and derivatives clearing organizations, or other clearinghouse arrangements established by a financial agency or institution; (D) Physically transports currency, other monetary instruments, other commercial paper, or other value that substitutes for currency as a person primarily engaged in such business, such as an armored car, from one person to the same person at another location or to an account belonging to the same person at a financial institution, provided that the person engaged in physical transportation has no more than a custodial interest in the currency, other monetary instruments, other commercial paper, or other value at any point during the transportation; (E) Provides prepaid access; or (F) Accepts and transmits funds only integral to the sale of goods or the provision of services, other than money transmission services, by the person who is accepting and transmitting the funds. The agents response would seem to indicate he is stating that bitcoin is a "currency substitute" which would be a rather broadening of the definition. Bitcoin has no pre-designated value, there is no guaranteed redemption, no insurance or backing (in the sense of capital reserves). If it is a "currency substitute" than essentially anything is. Network bandwidth, or electricity could be viewed as a currency substitute. Now it may be FinCEN declaration that bitcoin IS a currency substitute (they certainly "can" make that declaration) however given that the central axis around MSB/MT requirement it should have been explicitly stated "..... since bitcoin is a currency substitute ... the scenario you described ...". To not do so is well weird. Title: Re: FinCEN says you must be MSB if you sell bitcoins for $ Post by: BitcoinINV on October 23, 2012, 05:50:17 PM Great job looking into that Death, That call is way to vague I would call back and ask them why they felt this way and under what laws. If they are as helpful as they seem they will be more then happy to get that information to you.
Title: Re: FinCEN says you must be MSB if you sell bitcoins for $ Post by: Malophor on October 23, 2012, 06:10:10 PM The scenario I described to them on a previous call was starting a business that offered a website accepting credit card payments in exchange for bitcoins. It took about an hour to explain what bitcoins were, why people would be interested in the business, and what bitcoins are used for. I agree that the reply message was vague as to the reasoning, but, I don't really care to challenge their lawyers on the matter. I really just wanted a yes or no answer. And I got it. So, if you are going to sell bitcoins for dollars -- register as a MSB. It's actually not that difficult. Being a money transmitter (different than MSB) is on a state by state basis and it seems to have a large cost of entry.
Title: Re: FinCEN says you must be MSB if you sell bitcoins for $ Post by: DeathAndTaxes on October 23, 2012, 06:14:17 PM The scenario I described to them on a previous call was starting a business that offered a website accepting credit card payments in exchange for bitcoins. It took about an hour to explain what bitcoins were, why people would be interested in the business, and what bitcoins are used for. I agree that the reply message was vague as to the reasoning, but, I don't really care to challenge their lawyers on the matter. I really just wanted a yes or no answer. And I got it. So, if you are going to sell bitcoins for dollars -- register as a MSB. It's actually not that difficult. Being a money transmitter (different than MSB) is on a state by state basis and it seems to have a large cost of entry. Worst advice ever. Based on what the agent told you registering as an MSB would be insufficient. He stated that you need to register as an MSB BECAUSE YOU WOULD BE A MONEY TRANSMITTER. Quote The bottom line answer for the scenario you describe to us you would be a Money Service Business. That is because you would be a money transmitter purchasing a valuable and using it as money and doing it by means of transmission. So, if that is enough I hope that helps you. In any case, feel free to call us back. Have a good day. When you register as an MSB you need to indicate the regulated activities you will be engaging in. It is the agents opinion (based on the unknown circumstances and details you provided) that the reason for MSB registration is that you would be a "money transmitter". Simply registering as an MSB (stating the reason for registration is Money Transmitter) and then not complying with state laws & requirements would be the worst possible scenario. Your registration would indicate you understand AND AGREE that you are a money transmitter you simply are choosing to willfully violate the law. You do realize there is no such thing as a generic "MSB registration" right? I linked to a screenshot of the form upthread. The MSB registration requires you to state EXPLICITLY what MSB ACTIVITY (such as money transmitter) you will be engaging in. Title: Re: FinCEN says you must be MSB if you sell bitcoins for $ Post by: Flowz on October 23, 2012, 06:17:05 PM I would also like to throw this into the discussion:
What if you own an island on international waters and you would "run" you business there. Would you be subjuct to some sort of international law? Pirate radio's for example like to sit out in international waters, so why not businesses? Title: Re: FinCEN says you must be MSB if you sell bitcoins for $ Post by: Malophor on October 23, 2012, 06:25:06 PM The scenario I described to them on a previous call was starting a business that offered a website accepting credit card payments in exchange for bitcoins. It took about an hour to explain what bitcoins were, why people would be interested in the business, and what bitcoins are used for. I agree that the reply message was vague as to the reasoning, but, I don't really care to challenge their lawyers on the matter. I really just wanted a yes or no answer. And I got it. So, if you are going to sell bitcoins for dollars -- register as a MSB. It's actually not that difficult. Being a money transmitter (different than MSB) is on a state by state basis and it seems to have a large cost of entry. Worst advice ever. Based on what the agent told you registering as an MSB would be insufficient. He stated that you need to register as an MSB BECAUSE YOU WOULD BE A MONEY TRANSMITTER. Registration as an MSB (selecting the activity of Money Transmitter) would then open one up to the state requirements for Money Transmitter. Not meeting those requirements would result in penalties (possibly even jail time). One couldn't even argue they believe they aren't a money transmitter as they registered as one with the federal government. You do realize there is no such thing as a generic "MSB registration" right? I linked to a screenshot of the form upthread. The MSB registration requires you to state EXPLICITLY what MSB ACTIVITY (such as money transmitter) you will be engaging in. You get what you pay for. Free advice on the forums should be taken as just that. Money transmitter as defined by FinCEN is not the same as money transmitter as define by the state of x. They have different standards. FinCEN only updated their rules in the last 2 years with the "informal value transfer system" bit at the end of 5(A). This was not in my state regulations. But, I don't have an official answer from the state. Title: Re: FinCEN says you must be MSB if you sell bitcoins for $ Post by: DeathAndTaxes on October 23, 2012, 06:31:45 PM You get what you pay for. Free advice on the forums should be taken as just that. Money transmitter as defined by FinCEN is not the same as money transmitter as define by the state of x. They have different standards. FinCEN only updated their rules in the last 2 years with the "informal value transfer system" bit at the end of 5(A). This was not in my state regulations. But, I don't have an official answer from the state. The other 49 states? Multiple states require a money transmitter license if you even offer services to residents of that state. Mere registration isn't compliance. Advising others to register without compliance is just asinine. It is an admission that you accept the regulatory definition and yet plan on willfully not complying with any requirements. Title: Re: FinCEN says you must be MSB if you sell bitcoins for $ Post by: BitcoinINV on October 23, 2012, 06:34:16 PM It is an admission that you accept the regulatory definition and yet plan on not willfully breaking the law. Catch 22 I think they call that Title: Re: FinCEN says you must be MSB if you sell bitcoins for $ Post by: JoelKatz on October 23, 2012, 06:36:39 PM By the way, everyone I know of who has asked this question to lawyers (and that is more than two but fewer than ten) has gotten the same response. The FinCEN definition of money transmitter is: "A person that provides money transmission services", which is defined as "the acceptance of currency, funds, or other value that substitutes for currency from one person and the transmission of currency, funds, or other value that substitutes for currency to another location or person by any means."
Title: Re: FinCEN says you must be MSB if you sell bitcoins for $ Post by: hazek on October 23, 2012, 06:51:21 PM It took about an hour to explain what bitcoins were Like I said, I just wonder how many times you had to insist bitcoins were a currency.. and I have no problem believing it took you an hour to achieve that. Title: Re: FinCEN says you must be MSB if you sell bitcoins for $ Post by: BitcoinINV on October 23, 2012, 06:53:12 PM First they he said when they asked "What are bitcoins?" They are a Digital Currency.................
Title: Re: FinCEN says you must be MSB if you sell bitcoins for $ Post by: tarrant_01 on October 23, 2012, 06:57:22 PM I just wanted to add that if you register as a money transmitter with the state, you are required provide your MSB registration with FinCEN, atleast in my state anyway.
Title: Re: FinCEN says you must be MSB if you sell bitcoins for $ Post by: benjamindees on October 24, 2012, 05:32:42 AM The bottom line answer for the scenario you describe to us you would be a Money Service Business. That is because you would be a money transmitter purchasing a valuable and using it as money and doing it by means of transmission. So, now it's time for the OP to tell us what scenario he *actually* described to them. Because this doesn't at all sound like "selling Bitcoins on my website." Once again, the legal position of Bitcoin is very simple. "Money" is that which has future value. "Currency" is that which has current value. Bitcoin is a currency, with no guarantee of future value. Money is actually a very rare thing, because it's pretty difficult to guarantee that something (anything) will have value in the future. The usual method is via counter-parties who guarantee, through force, that their issued money will have future value. These issuers tend to be governments, who have regional monopolies on the use of force. But there are other issuers as well. Banks, for instance, that hold the debt of a substantial number of members of a community can use this leverage to issue money, backed by the implied force of calling in that debt. The mafia, also, has its own complex monetary systems, again based on counter-parties and the transmission of force. Bitcoin has none of that. Bitcoin is a currency, because it only has current, market value, and because no one guarantees Bitcoin's future value as money. Money is regulated because it is force. Money transmission is further regulated because it is a service which comes with the risk of the money losing value during "transmission". Between the time that you purchase a MtGox code from BitInstant, and redeem that code, MtGox could go out of business. You would have bought "money" or "stored value" with the implication that it has future value and can be redeemed by the money issuer. You would have been defrauded if that turns out not to have been the case. And BitInstant would have been defrauded as well, which is the reason money transmitters actually seek out the protection of governments via regulation. This has nothing to do with Bitcoin. Bitcoins can't be regulated, because they come with no implied guarantees of future value, no backing and thus no counter-party risk to regulate. In fact, the protection that regulation would provide to the OP in the scenario described in this thread is protection against counter-party risk in the traditional banking system, not Bitcoin. The risk of the fraud of credit card chargebacks has been discussed to death on this forum. It's the reason no one sells Bitcoins for credit cards. Not regulation. Title: Re: FinCEN says you must be MSB if you sell bitcoins for $ Post by: caveden on October 24, 2012, 06:47:53 AM For example the largest retail gold buyer in the US (APMEX) doesn't have a money transmitter license (or any MSB license). They buy "purchasing a valuable" (gold) and pay sellers via a transmission (ACH or bank wire). Do they sell gold too? If buying and selling gold doesn't require this license, I fail to understand why buying and selling bitcoins would. <off-topic> What if you own an island on international waters and you would "run" you business there. Would you be subjuct to some sort of international law? IANAL, but I used to follow the discussions on seasteading (http://seasteading.org). There's no natural island that's not claimed by a state, so there's no "international island"*. A vessel in international waters is supposed to carry a flag of a sovereign state, in which case it should follow the laws of this state. A vessel not carrying a recognized flag may be treated as a pirate vessel. The bottom line is that, while you may manage to acquire a lot of freedom by "settling" in international waters, potentially more freedom than anywhere else in land, you also may just be attacked if you provoke large governments enough. I can't tell you if "anonymous banking" is provocative enough, but it's among the things the seasteading institute advises not to attempt (see page 15 of this document (http://seasteading.wpengine.netdna-cdn.com/files/legal_paper_seasteading_building_the_platform_august_2011.pdf)). * Antarctica might be an exception. But states do have a sort of agreement concerning Antarctica. I don't think you could just build your new state there. And even if you could... I don't think you'd find many people willing to join you. :D </off-topic> Title: Re: FinCEN says you must be MSB if you sell bitcoins for $ Post by: JoelKatz on October 24, 2012, 04:37:45 PM So, now it's time for the OP to tell us what scenario he *actually* described to them. Because this doesn't at all sound like "selling Bitcoins on my website." FinCEN regulations only requires that you transmit "currency, funds, or other value that substitutes for currency". Transferring Bitcoins to the buyer transmits currency (or value that substitutes for currency).Once again, the legal position of Bitcoin is very simple. "Money" is that which has future value. "Currency" is that which has current value. Bitcoin is a currency, with no guarantee of future value. Quote This has nothing to do with Bitcoin. Bitcoins can't be regulated, because they come with no implied guarantees of future value, no backing and thus no counter-party risk to regulate. But *selling* Bitcoins has counter-party risk for the buyer. The seller might take his money and not provide him the Bitcoins. This is precisely the reason (or at least, the supposed reason) money transmitters are regulated.Title: Re: FinCEN says you must be MSB if you sell bitcoins for $ Post by: optimator on October 24, 2012, 05:07:57 PM Once again, the legal position of Bitcoin is very simple. "Money" is that which has future value. "Currency" is that which has current value. Bitcoin is a currency, with no guarantee of future value. [/quote] Why isn't gold regulated in this manner? (Especially, since you even have legal tender gold coins...) Title: Re: FinCEN says you must be MSB if you sell bitcoins for $ Post by: JoelKatz on October 24, 2012, 05:51:30 PM Why isn't gold regulated in this manner? (Especially, since you even have legal tender gold coins...) They are. Thanks to the Patriot Act, gold dealers are financial institutions and are subject to FinCEN AML regulations.Title: Re: FinCEN says you must be MSB if you sell bitcoins for $ Post by: optimator on October 24, 2012, 06:19:51 PM Why isn't gold regulated in this manner? (Especially, since you even have legal tender gold coins...) They are. Thanks to the Patriot Act, gold dealers are financial institutions and are subject to FinCEN AML regulations.Thanks, I should have googled first. A quick google search reveals there's a threshold of $50,000 for gold / jewelry dealers to be covered by the regulations. I'm not sure if this has since be amended. http://www.fincen.gov/statutes_regs/guidance/html/faq060305.html (http://www.fincen.gov/statutes_regs/guidance/html/faq060305.html) Title: Re: FinCEN says you must be MSB if you sell bitcoins for $ Post by: JoelKatz on October 24, 2012, 08:04:01 PM Why isn't gold regulated in this manner? (Especially, since you even have legal tender gold coins...) They are. Thanks to the Patriot Act, gold dealers are financial institutions and are subject to FinCEN AML regulations.Thanks, I should have googled first. A quick google search reveals there's a threshold of $50,000 for gold / jewelry dealers to be covered by the regulations. I'm not sure if this has since be amended. http://www.fincen.gov/statutes_regs/guidance/html/faq060305.html (http://www.fincen.gov/statutes_regs/guidance/html/faq060305.html) Title: Re: FinCEN says you must be MSB if you sell bitcoins for $ Post by: benjamindees on October 25, 2012, 05:41:45 AM Joel, you aren't using the word "transmit" according to its legal definition. It doesn't mean the same thing as "trade". It means something like "trade via a third party." It is not the traders who are regulated. It is the third party "transmitter" who is regulated, for the benefit of the traders.
Sorry if I did not make this clear in my examples, but that's the reason I chose MtGox codes. In the case of MtGox codes, BitInstant acts as a third party "transmitter" between MtGox and the purchaser. In the case of Bitcoin, well, there is no third party since Bitcoin is just a communications protocol. The two parties, the buyer and seller, are simply engaging in trade, which the US at least has no jurisdiction to regulate. Title: Re: FinCEN says you must be MSB if you sell bitcoins for $ Post by: JoelKatz on October 25, 2012, 06:27:20 AM Joel, you aren't using the word "transmit" according to its legal definition. It doesn't mean the same thing as "trade". It means something like "trade via a third party." It is not the traders who are regulated. It is the third party "transmitter" who is regulated, for the benefit of the traders. Sorry if I did not make this clear in my examples, but that's the reason I chose MtGox codes. In the case of MtGox codes, BitInstant acts as a third party "transmitter" between MtGox and the purchaser. In the case of Bitcoin, well, there is no third party since Bitcoin is just a communications protocol. The two parties, the buyer and seller, are simply engaging in trade, which the US at least has no jurisdiction to regulate. Here is the full regulation (emphasis added): Quote Money transmitter: (i) In general. (A) A person that provides money transmission services. The term “money transmission services” means the acceptance of currency, funds, or other value that substitutes for currency from one person and the transmission of currency, funds, or other value that substitutes for currency to another location or person by any means. “Any means” includes, but is not limited to, through a financial agency or institution; a Federal Reserve Bank or other facility of one or more Federal Reserve Banks, the Board of Governors of the Federal Reserve System, or both; an electronic funds transfer network; or an informal value transfer system; or (B) Any other person engaged in the transfer of funds. (ii) Facts and circumstances; Limitations. Whether a person is a money transmitter as described in this section is a matter of facts and circumstances. The term “money transmitter” shall not include a person that only: (A) Provides the delivery, communication, or network access services used by a money transmitter to support money transmission services; (B) Acts as a payment processor to facilitate the purchase of, or payment of a bill for, a good or service through a clearance and settlement system by agreement with the creditor or seller; (C) Operates a clearance and settlement system or otherwise acts as an intermediary solely between BSA regulated institutions. This includes but is not limited to the Fedwire system, electronic funds transfer networks, certain registered clearing agencies regulated by the Securities and Exchange Commission (“SEC”), and derivatives clearing organizations, or other clearinghouse arrangements established by a financial agency or institution; (D) Physically transports currency, other monetary instruments, other commercial paper, or other value that substitutes for currency as a person primarily engaged in such business, such as an armored car, from one person to the same person at another location or to an account belonging to the same person at a financial institution, provided that the person engaged in physical transportation has no more than a custodial interest in the currency, other monetary instruments, other commercial paper, or other value at any point during the transportation; (E) Provides prepaid access; or (F) Accepts and transmits funds only integral to the sale of goods or the provision of services, other than money transmission services, by the person who is accepting and transmitting the funds. Read as you suggest, exceptions D and F would make no sense. A person who actually had more than a custodial interest in the currency wouldn't be a money transmitter, since they'd be moving their own money. Yet the exception specifically excepts only those who have a mere custodial interest -- that is, it excepts those who are moving other people's money but includes people who are moving their own money. And sale of goods or provision of services wouldn't be covered at all. The regulations do cover people who take funds from one person and then deliver them to another person, even (in fact, especially) if the funds become theirs in the process. That's why it has to except the sale of goods and the provision of services. Title: Re: FinCEN says you must be MSB if you sell bitcoins for $ Post by: Malophor on October 25, 2012, 08:43:45 AM I wonder if it changes if you send a physical print out of a private key or mt. gox code.
Title: Re: FinCEN says you must be MSB if you sell bitcoins for $ Post by: makomk on October 25, 2012, 09:05:10 AM They are. Thanks to the Patriot Act, gold dealers are financial institutions and are subject to FinCEN AML regulations. Which is not the same as them being a money transmitter.Title: Re: FinCEN says you must be MSB if you sell bitcoins for $ Post by: kaerf on March 19, 2013, 12:21:18 AM apparently it's been formally documented now. http://www.fincen.gov/statutes_regs/guidance/html/FIN-2013-G001.html
if you mine and sell, you're an MSB, but if you mine and spend you're not... ::) Title: Re: FinCEN says you must be MSB if you sell bitcoins for $ Post by: repentance on March 19, 2013, 01:15:00 AM I wonder if it changes if you send a physical print out of a private key or mt. gox code. Probably not. "Real currency equivalent" is specifically mentioned and that would almost certainly apply to MtGox codes. Selling someone the private keys would almost certainly be regarded as "transmission" as that recipient then has effective ownership of the "units of convertible currency". Title: Re: FinCEN says you must be MSB if you sell bitcoins for $ Post by: jgarzik on March 19, 2013, 01:20:32 AM apparently it's been formally documented now. http://www.fincen.gov/statutes_regs/guidance/html/FIN-2013-G001.html if you mine and sell, you're an MSB, but if you mine and spend you're not... ::) Respectfully, I disagree entirely with that interpretation. If you mine and sell via an exchange that is MSB/MT-registered, seems like you are ok. Title: Re: FinCEN says you must be MSB if you sell bitcoins for $ Post by: kaerf on March 19, 2013, 01:38:49 AM apparently it's been formally documented now. http://www.fincen.gov/statutes_regs/guidance/html/FIN-2013-G001.html if you mine and sell, you're an MSB, but if you mine and spend you're not... ::) Respectfully, I disagree entirely with that interpretation. If you mine and sell via an exchange that is MSB/MT-registered, seems like you are ok. Hopefully, your interpretation is the correct one. I'm concerned with Quote a person that creates units of convertible virtual currency and sells those units to another person for real currency or its equivalent is engaged in transmission to another location and is a money transmitter. ... 2 FinCEN's regulations define "person" as "an individual, a corporation, a partnership, a trust or estate, a joint stock company, an association, a syndicate, joint venture, or other unincorporated organization or group, an Indian Tribe (as that term is defined in the Indian Gaming Regulatory Act), and all entities cognizable as legal personalities." 31 CFR § 1010.100(mm). Honestly, I don't see how it's practical/realistic to enforce it as my stated interpretation. Your interpretation is more realistic. Title: Re: FinCEN says you must be MSB if you sell bitcoins for $ Post by: DeathAndTaxes on March 19, 2013, 01:59:38 AM Quote This guidance addresses "convertible" virtual currency. This type of virtual currency either has an equivalent value in real currency, or acts as a substitute for real currency. Given that Bitcoin has no equivalent value in any "real currency" The applicability hinges on the words "substitute for real currency". It is beyond doubt that virtual "currencies" like Amazon Points or Facebook Credits fall under the guidelines but it is unfortunate that FinCEN didn't provide more guidance on the term "substitute for real currency". Time to draft another request for administrative ruling. Title: Re: FinCEN says you must be MSB if you sell bitcoins for $ Post by: galambo on March 19, 2013, 02:04:33 AM So, now it's time for the OP to tell us what scenario he *actually* described to them. Because this doesn't at all sound like "selling Bitcoins on my website." FinCEN regulations only requires that you transmit "currency, funds, or other value that substitutes for currency". Transferring Bitcoins to the buyer transmits currency (or value that substitutes for currency).Once again, the legal position of Bitcoin is very simple. "Money" is that which has future value. "Currency" is that which has current value. Bitcoin is a currency, with no guarantee of future value. Quote This has nothing to do with Bitcoin. Bitcoins can't be regulated, because they come with no implied guarantees of future value, no backing and thus no counter-party risk to regulate. But *selling* Bitcoins has counter-party risk for the buyer. The seller might take his money and not provide him the Bitcoins. This is precisely the reason (or at least, the supposed reason) money transmitters are regulated.What does this mean for Ripple? :( Title: Re: FinCEN says you must be MSB if you sell bitcoins for $ Post by: BitcoinINV on March 19, 2013, 04:31:01 AM I wonder if it changes if you send a physical print out of a private key or mt. gox code. Probably not. "Real currency equivalent" is specifically mentioned and that would almost certainly apply to MtGox codes. Selling someone the private keys would almost certainly be regarded as "transmission" as that recipient then has effective ownership of the "units of convertible currency". I kinda seen this coming hence moving my business offshore, As the first person to sell Bitcoin-Key's for credit card and latter copied by BTCquick, I talked to a informed member of the gov who warned me of this move. Of course If I would have said anything Like I did about the S.E.C. I would have been throwing fud or whatever you have it. But I can tell you right now that BTCquick ZIGZAP Cash for Bitcoins LCC will all have to comply or cease operations, which sucks, cause its going to cost into the 5 to 6 digits to get all that crap sorted out and be in 100% compliance just ask Bitinstant. Doing this with in the 6 month period will be doable but we are in a sequestration right now and I am sure this will reflect on the processing time. http://www.fincen.gov/financial_institutions/msb/msbrequirements.html Now this brings up the states your U.S. registered company does business in, now they want a cut to. So every state you have customers you buy or sell to, you will need to be registered in that state as well, just like good ole paypal. North Carolina Requires 500k capital http://www.dfi.ca.gov/Licensees/money_transmitters/default.html 3,500 app fee lol http://www.banking.state.tx.us/forms/forms.htm#msb I know one of the companies listed above is a a Delaware company http://banking.delaware.gov/services/applicense/tmvintro.shtml http://delcode.delaware.gov/title5/c023/index.shtml Its a little cloudy I just skimmed it quick But it seems if you live in the USA and want to trade coin you are going to need more then 100k to do it. Title: Re: FinCEN says you must be MSB if you sell bitcoins for $ Post by: TheButterZone on March 19, 2013, 05:00:56 AM Cart before horse. Good luck getting a $100k small business loan. Endgame is practically all BTC exchangers go black market or shutter.
Title: Re: FinCEN says you must be MSB if you sell bitcoins for $ Post by: odolvlobo on March 19, 2013, 06:05:00 AM Quote This guidance addresses "convertible" virtual currency. This type of virtual currency either has an equivalent value in real currency, or acts as a substitute for real currency. Given that Bitcoin has no equivalent value in any "real currency" The applicability hinges on the words "substitute for real currency". It is beyond doubt that virtual "currencies" like Amazon Points or Facebook Credits fall under the guidelines but it is unfortunate that FinCEN didn't provide more guidance on the term "substitute for real currency". Time to draft another request for administrative ruling. It seems reasonable to assume that regardless of how obscure the language is, they intend for it to apply to bitcoin because there is a section dealing specifically with decentralized virtual currencies, Title: Re: FinCEN says you must be MSB if you sell bitcoins for $ Post by: genuise on March 24, 2013, 06:34:12 PM Hello, asked in discussion forum, but decided that maybe here it is more appropriate.
If now all exchanges have to be considered as MT and have to be registered as MSB then as I can understand redeemable codes are already included into regulation? So this should mean that mtGox can still provide USD codes. right? or what I did not get? Title: Re: FinCEN says you must be MSB if you sell bitcoins for $ Post by: jordan.dev on March 24, 2013, 06:56:26 PM Quote - Bend over backwards and get anally raped every day.... awesome Title: Re: FinCEN says you must be MSB if you sell bitcoins for $ Post by: moni3z on March 24, 2013, 07:26:39 PM Hello, asked in discussion forum, but decided that maybe here it is more appropriate. If now all exchanges have to be considered as MT and have to be registered as MSB then as I can understand redeemable codes are already included into regulation? So this should mean that mtGox can still provide USD codes. right? or what I did not get? Gox has contracted out all US/Canada to coinlab so you would have to ask them if they still do redeemable codes Title: Re: FinCEN says you must be MSB if you sell bitcoins for $ Post by: genuise on March 24, 2013, 08:04:28 PM I know their answer. They discontinued them.
But they did it before FinCEN published their document. And as I can remember Shtylman mantioned that bitfloor will not implement codes because it was necessary tor register as MT. So now when it is definitely known the in order for exchange to operate it has to register as MSB and also considerd as MT so maybe the situation as automatically fixed with codes? or? Title: Re: FinCEN says you must be MSB if you sell bitcoins for $ Post by: sublime5447 on March 24, 2013, 09:23:46 PM Read most of this post but not all so I dont know if this has already been mentioned. This isnt really a problem it is easily avoided. What they do in japan is this..
The use steal rounds to gamble with, but gambling is illegal.. so what they do is gamble for the steal balls then sell them for lipstick then sell the lipstick for cash. The government is fine with arrangement because it forces the revenues through a taxation system. The govenment wants to get payed when you use their currency. Which is fine by me. It does say in the ruling that miners can exchange thier coins for goods. Of course it you sell for cash it is pretty easy to hide that revenue so small ex-changers will still sell for cash. Title: Re: FinCEN says you must be MSB if you sell bitcoins for $ Post by: iluvpie60 on December 22, 2013, 05:09:32 PM Did they bother to quote any:
Don't be fooled. You will be tracked down through the blockchain. It IS NOT ANONYMOUS, there are a ton of ways to figure out who is who based on the exchanges logging your IPS and bank information. Whenever the government feels like it they will take the data. They are already hacked into everything else and can do whatever the F they want. You are legally required to report any profit gained as a "Capital Gain" and eventually the government will get enough stuff together to prosecute people who don't. So if you made 10K profit and transferred to your bank or anything, it all has a trail, and the bank will be "obligated" to notify the government of your spending habits and income. That's kinda how it works. be prepared to get F-ed in a year or so. Title: Re: FinCEN says you must be MSB if you sell bitcoins for $ Post by: Razick on December 22, 2013, 05:16:33 PM I was looking at starting up a site that would sell bitcoins through credit card transactions as a US based business. Not wanting to run into immediate regulatory problems I gave FinCEN (Financial Crimes Enforcement Network) a call. It took them a couple of weeks to get back to me but the answer was yes that business would be required to register as a Money Service Business. Yes, that is expected. BitInstant is a register MSB, AFAIK. A couple other exchanges based in the US are registered, or in the process of registering. According to my research (WARNING: not a lawyer, seek your own professional advice) online bitcoin exchanges in the US would need to register in ~47 of 50 states, as well as registering as an MSB with the federal government. (or limit the users accessing the website to a select few states) There is a multi-state surety bond and registration process, making multi-state compliance a bit easier, but it is definitely a lot of paperwork and background checks required. Heh, and thats the easy part! You also need to do the following, just off the top of my head: - Quarterly audits that you pay for - Every 6 weeks you need a verified and updated AML Program - Attend BSA training twice a year - Bend over backwards and get anally raped every day.... The amount of red tape the government requires to do anything more than piss is just so beyond sanity it would be funny if it weren't ruining lives. But people watch MSNBC and ABC and think our problems are caused by Coca-Cola overpaying it's CEO. Give me break. Title: Re: FinCEN says you must be MSB if you sell bitcoins for $ Post by: jbreher on December 22, 2013, 06:47:20 PM Did they bother to quote any:
Don't be fooled. You will be tracked down through the blockchain. It IS NOT ANONYMOUS, there are a ton of ways to figure out who is who based on the exchanges logging your IPS and bank information. Whenever the government feels like it they will take the data. They are already hacked into everything else and can do whatever the F they want. You are legally required to report any profit gained as a "Capital Gain" and eventually the government will get enough stuff together to prosecute people who don't. So if you made 10K profit and transferred to your bank or anything, it all has a trail, and the bank will be "obligated" to notify the government of your spending habits and income. That's kinda how it works. be prepared to get F-ed in a year or so. I must admit that I am somewhat mystified by your response. The topic was whether or not someone would need to register with FinCEN as an MSB. Nobody is talking about breaking the law, trying to hide behind the obfuscation of the blockchain. Yes, bitcoin anonymity is fragile, and not something one should stake their freedom upon. We all get that. I guess the second half of your response has to do with tax issues? Again, nobody is talking about tax evasion. How would someone 'get F-ed' when they are following all applicable laws and regulations? Title: Re: FinCEN says you must be MSB if you sell bitcoins for $ Post by: nodroids on December 30, 2013, 03:25:13 PM Fuck them! Bitcoins in fact are digital signatures. You sign integer and recipients public key with your private key. So Bitcoins are more like service like SSL root authority instead of money like paypal. P.S. next time call DEA and ask them what license you need to sell drugs on Silk Road. The future of Bitcoin is illegal that might destroy current establishment and governments. Again, fuck the government, fuck any regulations and fuck them all! You have the tool in your computer - Bitcoin! Great stuff! And ya, making the banksters into ancient middle-men is likely to land many of us in jail. Title: Re: FinCEN says you must be MSB if you sell bitcoins for $ Post by: xtraez on January 02, 2014, 03:12:49 AM Trying to get my head around the (FinCEN) "money transmitter laws". They're wording for "stored value" means cash, money orders, gift cards or anything with a fixed value from my understanding. Does that mean that anything that doesn't have a fixed value isn't considered a "stored value" and therefore doesn't fall under the "money transmitter laws"?
Example: If I run a service that trades bitcoin for pocket lint and there's an exchange for bitcoin and an exchange for pocket lint. Since both bitcoin and pocket lint are fluctuating in price at all times are they both then not considered a "storeded value" and legally I could run my shop and not be bound to the "money transmitter laws" when accepting one for the other? Title: Re: FinCEN says you must be MSB if you sell bitcoins for $ Post by: BCB on January 02, 2014, 03:20:10 AM Trying to get my head around the (FinCEN) "money transmitter laws". They're wording for "stored value" means cash, money orders, gift cards or anything with a fixed value from my understanding. Does that mean that anything that doesn't have a fixed value isn't considered a "stored value" and therefore doesn't fall under the "money transmitter laws"? Example: If I run a service that trades bitcoin for pocket lint and there's an exchange for bitcoin and an exchange for pocket lint. Since both bitcoin and pocket lint are fluctuating in price at all times are they both then not considered a "storeded value" and legally I could run my shop and not be bound to the "money transmitter laws" when accepting one for the other? As far as I know pocket lint has no value and does not substitute for currency so you would NOT be a money transmitter. However if you trade any other value that substitutes for currency you would be a money transmitter. Also bitcoin is NOT "stored value" (the term now is prepaid) because this implies an issuer has a liability to pay at a later date. With bitcoin there is no "issuer" and any "liability" is extinguished the moment you broadcast the bitcoin transaction. Hope that helps. Title: Re: FinCEN says you must be MSB if you sell bitcoins for $ Post by: xtraez on January 02, 2014, 12:49:11 PM What is defined as being a "substitute for currency"? If I have a staple such as soap or a commodity such as oil and I open an exchange and trade bitcoin for them am I considered a "money transmitter"? To me both of those items, soap and oil have a price that is not fixed and wouldn't fall under the "money transmitter" laws or am I not understanding correctly? If they still do fall under the "money transmitter" laws what is the difference then if I was to work for bitcoin and got paid by my job in bitcoin? My value is not set and at anytime I could get a raise or a deduction in pay. I guess what I'm getting at is as long as I don't fall under the "money transmitter" wordage I'm legally able to take and exchange any item for bitcoin and only pay a tax when I convert my bitcoin to currency be it dollars or euro's correct?
Title: Re: FinCEN says you must be MSB if you sell bitcoins for $ Post by: Money Boy on January 02, 2014, 01:39:37 PM Do I need to register with FinCEN if i from oversea and I am just buying BTC from US resident without physical presence in US.
Title: Re: FinCEN says you must be MSB if you sell bitcoins for $ Post by: BCB on January 02, 2014, 05:43:39 PM What is defined as being a "substitute for currency"? If I have a staple such as soap or a commodity such as oil and I open an exchange and trade bitcoin for them am I considered a "money transmitter"? To me both of those items, soap and oil have a price that is not fixed and wouldn't fall under the "money transmitter" laws or am I not understanding correctly? If they still do fall under the "money transmitter" laws what is the difference then if I was to work for bitcoin and got paid by my job in bitcoin? My value is not set and at anytime I could get a raise or a deduction in pay. I guess what I'm getting at is as long as I don't fall under the "money transmitter" wordage I'm legally able to take and exchange any item for bitcoin and only pay a tax when I convert my bitcoin to currency be it dollars or euro's correct? That is a question beyond my pay grade. But FinCEN makes these determinations based on "Fact and Circumstance." (As they did on the Milly/Atlantic City Bitcoin case). So you would have to request an opinion from FinCEN. Title: Re: FinCEN says you must be MSB if you sell bitcoins for $ Post by: BCB on January 02, 2014, 05:51:54 PM Do I need to register with FinCEN if i from oversea and I am just buying BTC from US resident without physical presence in US. I don't believe so. As long as you were not turning around and selling that virtual currency to another person in the US in one of the 48 States with Money Transmitter Laws. In the March 18th "interpretive Guidance" FinCEN defined three categories for persons dealing with virtual currencies: Users Exchangers Issurer "A user of virtual currency is not an MSB under FinCEN’s regulations and therefore is not subject to MSB registration, reporting, and recordkeeping regulations." FinCEN’s regulations define “person” as “an individual, a corporation, a partnership, a trust or estate, a joint stock company, an association, a syndicate, joint venture, or other unincorporated organization or group, an Indian Tribe (as that term is defined in the Indian Gaming Regulatory Act), and all entities cognizable as legal personalities.” "A user is a person that obtains virtual currency to purchase goods or services." How a person engages in “obtaining” a virtual currency may be described using any number of other terms, such as “earning,” “harvesting,” ”mining,” “creating,” “auto-generating,” “manufacturing,” or “purchasing,” depending on the details of the specific virtual currency model involved. For purposes of this guidance, the label applied to a particular process of obtaining a virtual currency is not material to the legal characterization under the BSA of the process or of the person engaging in the process. http://fincen.gov/statutes_regs/guidance/pdf/FIN-2013-G001.pdf Title: Re: FinCEN says you must be MSB if you sell bitcoins for $ Post by: ISAWHIM on January 02, 2014, 07:06:51 PM This is not legal advice, this is just food for thought. Possibly for a real horrible defense. But one that is real. All businesses should seek professional business legal guidance. Or just not become a business. If you can't afford the lawyers, you shouldn't be operating a business, try tag-sales.
Cupcakes do not have a fixed-value... (Asset) Bitcoins are cupcakes, they have value in Yuan, Yen, USD, Euro... but not a "fixed value". Selling a cupcake for someone does not make you a money transmitter. You have no idea if they purchased the cupcake in Yuan, Yen, USD, Euro. The only thing that matters is what you give them, for the cupcake. If you give them cash, then you just purchased an asset of cupcakes. If you sell the cupcake for cash, you just made a capital gain on that cupcake asset. You are a store, selling assets, if you use YOUR money to purchase the assets. If you use other peoples money, that makes you a distributor or drop-shipper of assets. (Which is similar to capital gains/losses, as you are a broker of an asset.) Only sell what you BUY, and you are just a reseller. (Working within the confines of your own risk/loss, limited by your personal finances. Not using others finances and placing them at risk. By say... selling BTC that came from a forked-chain, which would require "insurance", to get your losses back, or require you to cover losses yourself.) BTC is NOT... A currency. It has no regulation or sole-ownership or fixed value. A check. It has no regulation or sole-ownership or fixed value. A bond. It has no regulation or sole-ownership or fixed value. A stock. It has no regulation or sole-ownership or fixed value. A commodity. It has no physical origins, regulations or sole-ownership. BTC is... A non-material virtual Asset. It has "claimed community-ownership", with "community accepted-ownership", with an "implied communal value". This is like saying you own the number "2", and want to sell it to someone. Only you have proof of ownership, of the number "2", in electronic form, that the community accepts as proof of ownership. There are no laws for claiming to own the number "2". However, there are laws that determine what you can do with the claim of ownership of number "2". Which is standard tax laws, if you accept "money". But accepting to exchange number "2" for number "86", does not fall within the rights of any government, as the government does not own electrons, or the physical representations of those electrons, we call bits and bytes. Electrons are non-country-specific. Just because the "record" is on a US computer, does not make the COIN "2" property of the US, that simply makes the "record", property of the US, in the US. (Same if you kept a bank-statement here, for a swiss account of a friend. They can not claim ownership of the swiss account, because the record is here.) Physical things created in a country, are not YOUR property. They are property of your country, with you having the right to USE the item, if you live in that country. Bitcoins have no physical form. Only physical "records". (Like a check, which is also not money.) Saying you have to register as a money transmitter is like saying the airlines have to register as a money transmitter. Because they transport physical money across borders, from country to country, for exchange. Bitcoins are just the physical representation of ownership. The network/electrons are the transmitter, and is not a person, and there are no laws that machines/electrons must follow. That would make the ISP, the state, the govt itself, and the banks, the transmitters. They are already registered as money transmitters. P.S. It is not LIKE owning the number "2", it is EXACTLY owning the number "2". You own the hash-value, which is a numerical representation of your ownership. It exists in every country, on the record, called the block-chain. It originated in-between atoms, as electrons, and was given "proof of ownership", by no specific regulated entity. Title: Re: FinCEN says you must be MSB if you sell bitcoins for $ Post by: xtraez on January 02, 2014, 08:12:54 PM Good explanation ISAWHIM. I've read the (FinCEN) PDF document twice now that BCB posted. To me two things stand out and correct me if I'm wrong but the below sounds like they're taking the term "convertible virtual currency" as meaning an item that holds a value such as a deed, title or bond that's held in electronic format and used to exchange for legal tender.
Currency vs. Virtual Currency FinCEN’s regulations define currency (also referred to as “real” currency) as “the coin and paper money of the United States or of any other country that is designated as legal tender and that [ii] circulates and [iii] is customarily used and accepted as a medium of exchange in the country of issuance.” In contrast to real currency, “virtual” currency is a medium of exchange that operates like a currency in some environments, but does not have all the attributes of real currency. In particular, virtual currency does not have legal tender status in any jurisdiction. This guidance addresses “convertible” virtual currency. This type of virtual currency either has an equivalent value in real currency, or acts as a substitute for real currency. The other thing that stands out to me is the wordage on "prepaid". Does the below mean that prepaid is perfectly fine to exchange bitcoin for and doesn't fall under (FinCEN)? A user of virtual currency is not an MSB under FinCEN’s regulations and therefore is not subject to MSB registration, reporting, and recordkeeping regulations. However, an administrator or exchanger is an MSB under FinCEN’s regulations, specifically, a money transmitter, unless a limitation to or exemption from the definition applies to the person. An administrator or exchanger is not a provider or seller of prepaid access, or a dealer in foreign exchange, under FinCEN’s regulations. Title: Re: FinCEN says you must be MSB if you sell bitcoins for $ Post by: ISAWHIM on January 02, 2014, 09:01:52 PM Your observations are correct... except on the prepaid component... I believe that is too open-ended of an observation there.
It depends "what you do with the asset". This is coming from a loose explanation from my mother, who works for the IRS. She deals with these questions every day at work. Again, consult an actual lawyer. This is just third-party translation. In the USA... If you accept USD, and give Yuan... you are, "yourself", acting as an exchange/money-exchanger. (Trades for differences.) *** Grey area... (Just this one below.) If you accept Yuan, and give USD... you are, "yourself", acting as a store/reseller or an exchange/money-exchanger. (Depends WHO you give the money to.) If you accept USD for YOUR BTC, and give YOUR USD for BTC... you are, "yourself", acting as a store/reseller. If you take USD on someones behalf for someone-else's BTC, without using YOUR BTC, for sale to another person... You are a broker/money-handler. * Replace any "prepaid", credit/dollar with USD/Yuan, and it is the "same as", currency. (Except BTC.) The purpose of registering, is for volume-records and fraud-protection and possible insurance. Since you are handling "potential", large volumes of "potential", stolen funds. They want to make sure you have the ability to confirm the owners of the transactions, and have the ability to reduce loss to the ones who would be the "victims", from YOU handing out MONEY (which is not yours), to the thieves. If it is YOUR money... the risk of loss is all yours, and they don't care if you lose. As an individual. That is all registration is for. If you are the one assisting laundering, inadvertently, that too is your risk, if it is your money used. (Used = exchanged for BTC. It is a crime to accept money/assets from criminals, or to fund criminal activities with money/assets. Which is why you should always know who you get the money/assets from, and who you give it to.) Then, there is the tax-reasons... But, if it is your funds, you are the only one responsible for your claims. Your registration as an exchange/broker, is so YOU don't end-up having to pay taxes on your-customers holdings, as if they were your own holdings. (Any unidentified funds will be audited as if they were your funds, and you will be held accountable for those taxes on those unidentified owners gains/holdings.) Also, when "holding" others money, to ensure you are not just spending all the BTC and FUNDS, thus fraudulently just giving people fictitious "credit", waiting for others to forward-deposit replacement funds... They require things like "auditable public accounts", which can be "seen", holding a percentage of the "credited funds", that you are giving these people credit for. (Eg, you can't just say someone has 100 BTC and another person has $10,000... but have yourself cashed-out the BTC and spent the $10,000... and hope they just don't withdraw before a new person deposits another 100BTC or $10,000 to cover the withdraw request. That would make your operations a pyramid-scheme, or a HYIP-scheme, which is another reason they want you to register.) Title: Re: FinCEN says you must be MSB if you sell bitcoins for $ Post by: ISAWHIM on January 02, 2014, 09:16:57 PM Also... FinCEN also says...
If you MINE/BUY BTC for YOURSELF to SELL, in your own countries currency, to a confirmed person in your country... you do not have to register. (But the IRS laws still require you to claim ASSET-VALUES for holdings and losses/gains, on a personal/business level.) This is old news though... This has already been beat to death with IMVU.com funds, Second-Life Lindens, World-of-warcraft gold, and various other forms of online virtual funds. Good resources there. Just ask any of those exchangers how they do it. Most of them operate globally, legally. Title: Re: FinCEN says you must be MSB if you sell bitcoins for $ Post by: BCB on January 02, 2014, 11:33:47 PM Good explanation ISAWHIM. I've read the (FinCEN) PDF document twice now that BCB posted. To me two things stand out and correct me if I'm wrong but the below sounds like they're taking the term "convertible virtual currency" as meaning an item that holds a value such as a deed, title or bond that's held in electronic format and used to exchange for legal tender. Currency vs. Virtual Currency FinCEN’s regulations define currency (also referred to as “real” currency) as “the coin and paper money of the United States or of any other country that is designated as legal tender and that [ii] circulates and [iii] is customarily used and accepted as a medium of exchange in the country of issuance.” In contrast to real currency, “virtual” currency is a medium of exchange that operates like a currency in some environments, but does not have all the attributes of real currency. In particular, virtual currency does not have legal tender status in any jurisdiction. This guidance addresses “convertible” virtual currency. This type of virtual currency either has an equivalent value in real currency, or acts as a substitute for real currency. The other thing that stands out to me is the wordage on "prepaid". Does the below mean that prepaid is perfectly fine to exchange bitcoin for and doesn't fall under (FinCEN)? A user of virtual currency is not an MSB under FinCEN’s regulations and therefore is not subject to MSB registration, reporting, and recordkeeping regulations. However, an administrator or exchanger is an MSB under FinCEN’s regulations, specifically, a money transmitter, unless a limitation to or exemption from the definition applies to the person. An administrator or exchanger is not a provider or seller of prepaid access, or a dealer in foreign exchange, under FinCEN’s regulations. The operative phrase here is "other value that substitutes for currency" thus "convertible virtual currency" is currency (USD) that is converted to "virtual currency" (bitcoin) which is essentially "other value that substitutes for (real) currency" which depending on the "facts and circumstances" of how you used or exchange or trade virtual currency, could fall under the definition of a "money transmitter" which is a form of "money service business" http://www.gpo.gov/fdsys/pkg/FR-2011-07-21/pdf/2011-18309.pdf With regards to "prepaid" that is a whole other ball of wax, and was actually carved out as a separate type of Money Service Business, and again depending on the "facts and circumstances" may not fall under the AML/KYC requirements. http://www.gpo.gov/fdsys/pkg/FR-2011-07-29/pdf/2011-19116.pdf Title: Re: FinCEN says you must be MSB if you sell bitcoins for $ Post by: 2bfree on January 08, 2014, 08:29:29 AM I dont' think they are legal (constitutional) they just have force on their side but not the law to stop us from being free
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