Bitcoin Forum

http://www.fincen.gov/news_room/speech/pdf/20130613.pdf

Wow, that was super interesting and positive. Clearly FinCen is not trying to kill bitcoin. Hell, they seem almost fond of the idea.  :o

I didn't know that Fincen also dabbled in comedy.

Don't give them undue credit. They couldn't kill Bitcoin if they wanted to (and they know it). Bitcoin is global.

The whole thing seems to be about identifying the difference in their perspective on something like Liberty Reserve versus Bitcoin, and how they see the opportunities Bitcoin can bring. Hopefully they mean that, but the last paragraph is what I found most interesting:


Sorry FinCEN that's no more possible than doing so with how criminals use cash. Cash can be used anonymously too, and dollars are probably responsible for financing most of the world's criminal activity as the world's reserve currency. But people are not to blame the dollar for how some people use it, no more than people are to blame guns for the crimes committed with them. These are only tools.

Disgusting as usual.
These apparatchiks are using the well-being of children as an argument to legitimize the immoral use force of against innocent businesses and people who cannot afford millions to engage in legal Bitcoin businesses.

http://www.ww2incolor.com/d/679939-2/stalin+with+child

from the cover page...
Sounds like 1984 all over again.

So when it says, "Those who are intermediaries in the transfer of virtual currencies from one person to
another person, or to another location, are money transmitters that must register with FinCEN as
MSBs, unless an exception applies" does this apply to miners? If so they are most definitely trying to kill bitcoin as the network security would be destroyed by such a regulation on miners.

Bunch of war mongers and chicken hawks at that there Peace Institute:

http://www.usip.org/aboutus/board.html

overall very positive.

they just want to regulate the exchanges.

users/miners unaffected.

Did you guys even read it? This is a positive sign.

I read it a little differently. It sounds like they're claiming a wide territory:

It's never positive when the government puts its eye on your business.

yes, but she says flat out that users can buy goods or services w/o any restrictions.  that, at least, allows the economy to keep growing.

and what else can you reasonably expect them to do about the exchanges?  whether or not they'll be able to enforce this overseas is another matter.

Exactly... this is right out of the Nazi/Soviet Playbook.

The nice lady mentioned "exploitation of children" at least 4 separate times...
When Bitcoin has absolutely nothing to do with such evil.

US Govt: "Do whatever we say no matter how Draconian... or you favor "exploitation of children".

Yes, I read it.  I thought it ended abruptly.  The take away is that virtual currencies are here and becoming more prevalent.  Virtual currencies are under our domain of control.  Bitcoin is on par with Liberty Reserve.  Now let's adjourn for our closed-door meeting where the agenda is What to do with bitcoin.

I don't think reason has much to do with it. Fastcash4bitcoins was shut down for merely buying coins, not for exchanging them.

I don't think the Feds have much of a clue what to do so they're doing the only thing they know how to do: exert authority willy-nilly until the problem is subdued.

she mentioned the word "children" three times.

not one of the times did she try to tie exploitation of children to Bitcoin or virtual currencies in general.

Right, an intermediary, or a third party is a money transmitter.  A miner moving Bitcoin to an exchange has no middleman.  A miner purchasing goods directly from a store uses no third party.  It's the intermediary that has to register, not the miner.

In the 20th century people like you were called "useful idiots".

To be fair, it seems the event at which the speech was made was sponsored by the International Centre for Missing & Exploited Children (see second sentence of the speech) so of course she was tying this in to that theme.

Bitcoin will survive just fine even without any miners operating in the USA.

that's true.

You act like this was a coincidence... the entire speech was carefully staged.

As long as BTC is centered in Silicon Valley, USA...
With people like Gavin running the show...
Bitcoin is well on it's way to being neutered beyond recognition...
No wonder Satoshi quit and disappeared.

http://i40.tinypic.com/f0ql40.png

Sounds like the bitcoin community needs to crowd-fund and hire someone to Lobby for a Miner Exception!

Very quickly too, before they start making laws that ensure only businesses registered as MSBs can mine.

In my eyes very negative as it still throws around "virtual currency administrators" without clarifying who they mean. Do they mean miners? Just the pools? None? Bitcoin-Qt devs? Any devs working on any Bitcoin software? Any user selling bitcoins for fiat??

Until they clearly say they'll leave everyone except exchanges alone I see this very negative for the short term.

From the beginning of the second page:


I know I'm hyperventilating, but I could never imagine they had the Office of Terrorism!!! Ouch! I mean should it read Anti-Terrorism?

Well, on the other hand, if you check out one of the recent threads
https://bitcointalk.org/index.php?topic=231091.0
things will start to add up.

Bankers and economists would need a mini-course to understand the word "decentralized".

But try to make them grasp the idea of money with no administrators, well the blood's on your hands...

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http://farm4.staticflickr.com/3018/3050354749_8d2ce85f29_o.gif (http://farm4.staticflickr.com/3018/3050354749_8d2ce85f29_o.gif)
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soooo is that the downplaying "ignore you" phase or the covert-cynical "laugh at you" phase or the passive aggressive "fight you" phase? ???

Love the way they whoop whoop about this victory, when Standard Chartered ($250B (http://www.bbc.co.uk/news/business-19159286)) and HSBC ($680B (http://www.bloomberg.com/news/2012-12-12/hsbc-mexican-branches-said-to-be-traffickers-favorites.html)) were basically too big to prosecute. :-\

+10

+10

i say this because they only care about the virtual FIAT exchanges. this does not mean mining pools have to start taking identification. this does not mean bitcoin-QT needs to have a registered usernames linked to birth certificates and such. its still all about the digital (on computer database balances of FIAT) such as mtgox/btc-e/bitstampt/vircurex/etc

remember the last fincen report

this means a digital database balance of 10.00 which represents a withdrawal equivalence of a $10 bank note. it has nothing to do with 0.09 bitcoins, 145 bunny rabbit credits, 10000 world of warcraft gold. etc.

Wow, this is SO bullish you can't even imagine...

Bitcoin rising :D

http://3.bp.blogspot.com/_6hG0tMi6pJE/TP6CmcG1btI/AAAAAAAAEMc/Gl-RcBgkhAs/s1600/bull%2Bfighter.jpg

Office of Terrorism? Isn't that just CIA?

Correct, this just means that miners would have to go through an exchange if they want to convert their btc to fiat. However, this seems to mean that even individuals that convert btc to fiat must register as MSB.

My theory is that most of the actual humans who work in financial regulation - these are smart people working in a huge, inefficient machine of byzantine rules designed for another era - totally love Bitcoin.

There's a bit in one of the P J O'Rourke books - I think it's Parliament of Whores - when he talks about going to meet the motor vehicle regulators and finding they all loved to tinker with cars, and feeling like he'd gone to the DEA and found them making bongs. I bet loads of people in FinCen and other financial regulators hold Bitcoins, and a lot more think it's awesome.

Pretty depressing really.

They could replace "Liberty Reserve" with "Bitcoin" and it would still be just as accurate, more so actually.

Yeah... "A great bestowal of trust". It has nothing to do with preventing competition. no no.

The saddest thing about this entire document is that they never mentioned that foreign companies / individuals are exempt as long as they do not deal with US.

Guess nobody is really exempt from the almighty world police of USSA (http://www.youtube.com/watch?v=tX5ZRE26YWM).

The "think of the children" card, honestly, it's getting kind of old.

Oh, the sweet sweet irony.

LOL

Here is my theory (it was revealed to me in a dream). They want to amass more bitcoins via market manipulation err regulation so that they can fund more terrorism (through the Office of Terrorism of course) so that they can in turn push for more regulation. In the mean time they want complete records of MtGox database so that they can track down large bitcoin holders around the world and extort their bitcoins by fabricating fake sex charges against them (http://youtube.com/watch?v=hl4NlA97GeQ at 5:07). In order to achieve their ends they pretend to look as friendly as possible and all wear smiley shirts (google George Carlin smiley shirts, http://youtube.com/watch?v=eWhdDypWJPs at 5:50).

this is warspeak. The translation is:

Make us a proposal about the conditions of your surrender.

translation is get rid of tin foil hats and chinese whispers. read the regulations about FIAT and realise they can only control the FIAT. so get regulated if you are touching FIAT.

bitcoin unaffected, pools unaffected bitcoin-QT unaffected.

just those innovative teentrepreneurs (teenage amateur entrepreneurs)wanting to exchange fiat for other currencies GET REGULATED.

thier defineition of virtual currency is the difital database balance which resemble FIAT. such as 10.00 which can be cashed out as $10 bank note.. not facebook credits. world of warcraft gold, linden's, bitcoin, litecoin.

so chill out guys gavin andressen has no plans to make logging into bitcoin-qt a manditory registration process involving birth certificates. neither do any of the pools or merchants accepting bitcoin.

just the bitcoin-fiat exchanges.

I totally agree with you on this, but the value can't be kept crypto/virtual forever. Merchants have to pay their bills, Miners their energy and so on.

Sure, just provide the money necessary for the paper-shuffling beaurocracy, time wasted (because time = money) and to cover the alternative cost of having less clients.

I found it disturbing to read a lot of bitcoin-related headlines being cited in this document, while the body doesn't even mention bitcoin.
The message, to my hears, is :
1. "We know this virtual currency thing is mostly about bitcoins"
2. "We will not confirm or deny we are currently working on regulating bitcoin"
Which is quite disturbing to me. Maybe they want to keep all options on the table while they try to find ways to regulate bitcoins behind their "closed doors". Maybe they're not sure if they can or cannot, technically speaking, at this time.

that is how i understand it. miners get rewarded for the computing power they contribute. the reward is in bitcoin. no third party.

They can pay their bills in Bitcoin. This is why it was so important when Bitcoin suppliers started popping up instead of just sellers, because it's important to have a closed loop without fiat. Supplier -> Reseller -> Customer -> Wages

I suppose if you have built your world around the idea that the government is an evil institution who's secret plans are to get you, then you will read this as evidence of their scheming.
Here in the real world a document like this is a welcomed addition to the legal precedent. It is the most positive document I have yet seen from a regulatory body. You can all send FinCen a tip from the profit you are about to realize due to this.

If your problem is that any regulation is unwelcome, then stick to shitcoins. Under no legal scenario are you going to be able to make fiat money off bitcoin and not pay taxes. The moment you turn your BTC into $USD you are using THEIR money and must play by THEIR rules.  You can't have it both ways.

I'm fine with this - but what will it be then? Paypal light?

+1

with a few sentences they could have done much harm to the bitcoin price, which is in some critical phase anyway. and they know that. if they would want to destroy it anyway, there would be no need for this soft talk. they decided not to destroy/fight/harm it. that is a good sign. there is some protection/pro bitcoin lobbying going on already. maybe the governments actually welcome this new competitor to old-fashioned banking. bankers have lots of political power. sometimes it is not really clear who is the one with more power: bankers or politicians. politicians know that we know and that is emberrassing. if a competitor for the banking moloch is rising, it can be used by politicians as a tool to regain some influence. if there is a power you are struggling with, anything that weakens your opponent is welcome. the higher ranking a politician is the more strategic his views are. going after bitcoin only because some traditonal bankers say so would be a terrible strategy for anyone who feels the power of the bankers daily.

this does not mean that all the bankers hate bitcoin. most of them think in terms of profit. if they can profit with bitcoin they will do so. bookshops sell kindle devices. banks will sell/handle bitcoin. they will be happy to dig their own gaves as long as they get payed for...

Think of the children!

Now please keep paying the inflation tax so we can start more wars. And keep paying bankers to evict families out of their bubble-priced homes. And support our drug laws that make medicine expensive and encourage underage drug mules.

I'll just say I'm happy I live on the european continent and have no chosen intermediaries of mine having to report to the FINCEN.

I counted the times that child exploitation was mentioned in a speech AGAINST, not for virtual currencies and just left it at that.

There may be people who cannot see what she truly is communicating but I know what my opinion of this american posse move is and it is not "positive in overall" at all. A war and hunt clearly was initiated evenso if it will be impossible as bitcoin is a global hydra.

Finally, with the spying scandal of NSA and bonus with america using rape of enemy territory teenage girls as an experimental weapon which was filmed for study, the integrity of the country is in my book a full round zero.

Simple as that, my BTC0.00000002.

The evidence of their scheming is the fact that the US govt. has just admitted to the largest spying operation, on its own citizens, in history.


If you don't like BTC, why do you hang around this forum?

Yeah wth is that guys problem, "shitcoins" ffs

It is an odd sentiment for a lifetime member of the Bitcoin Foundation to express.

Let me explain. First the shitcoin thing. Shitcoin is one of the many alt coins out there. I do not think it has a future at all, so I was suggesting that bitcoiners who want to live tax free should focus on such an alt coin and leave bitcoin alone. Bitcoin does have a future.
I am NOT a fan of regulation and feel that regulation often "kills the golden goose". However it is not unreasonable that the government demand their share of tax revenue, just like all other commerce. Without guidance on how that will be accomplished few serious businesses will risk accepting BTC for payment. That is why I welcome some non-destructive regulation.
I don't like how my taxes are used. As you point out the government is not without scandal and has done many immoral and illegal things. But that is another issue. 

I have to disagree. This government has proven itself nothing but unreasonable. The unreason that emanates from DC results in more evil than good in this world.

They may be able to force some people and exchanges to pay up with the usual threats, but why would a reasonable person willingly want to cooperate with evil?

We are not so far apart. I don't think the US gov is "evil" though. If I did I would not only not pay taxes, I would fight them on the battlefield. But this is not Syria. I think of governments like people. They are a complicated mix. sometimes acting foolishly or even against the people. But at least here we have hope to change things. Even in my lifetime I have seen bad ideas turned upside down. When I was born it was illegal for a black man to marry a white woman. And look at how far we have come with legalizing drugs, or solidifying our right to carry firearms.  It is far from perfect, and probably trending in the wrong direction, but it is worse for most people on Earth. In fact I live in one of the safest place and times in all human history. No one has been as free as we are now.  

There were far more freedoms before the increasingly centralized police states that typify the modern State:


The difference is that now we have the same tools that the State has had over us: crypto.

I teach all the kids in my sphere about crypto if they're interested. That's how things will change within the next generation. ;)

I don't have any kids. But if I did I would also teach them to resist any kind of tyranny. Crypto, weapons, survival... Hey, we should arrange a playdate! lol

I read this guys book last year and I thought he made a good case for our relative freedom. Here is his TED talk.
http://www.ted.com/talks/steven_pinker_on_the_myth_of_violence.html

Hopefully our luck won't run out and see a slide into some kind of Orwellian future. With people like you and me and our kids, anyone oppressing us is at least going to get hurt trying.

well this is where people have to get their head out of the sand and stop thinking mining is the only way to make money.
average joe with fiat in his hand does not make money by minting coins or mining gold, printing bank notes. he works for companies that give him fiat.

so if you work. get your boss to accept bitcoin for the services they offer and you will happily accept that received bitcoin as your wage. if everyone done this, it would change everything

We're already there. I'd say it's more Huxleyian than Orwellian, but that's just hairsplitting about what kind of totalitarianism is looming over us.

yes, +1

but no, orwell couldn´t even imagine that...

...for example people would pay for their own surveilance devices, carry them around 24/7 and re-charge them themselves, when they run out of energy.

...for example people would have their body fluids scanned by the police and if a metabolic trace of a forbidden fruit is found, they get punished.

...

...

What do you guys think about a business like mine, Coingig.com (http://Coingig.com), we allow sellers to create a store and sell products to other users. We have an intermediary escrow system that keeps the bitcoin the buyer pays and we don't release it to the seller until the buyer has received their item.

Are we classified as a money transmitter? I would guess so, what are everyone's thoughts, what is the best way to work with FINCEN to remain open?

Any help is greatly appreciated.

if you touch fiat then i would call your countries financial authorities. if you only accept bitcoin, don't worry

oh awesome, yea we dont convert for fiat we just collect bitcoin, take our fee, then pay out the bitcoin to the seller.

meanwhile the bitcoin community think that bitcoin will ruin the fiat currencies somehow.

so the main face of the UK pound coin made a statement

https://fbcdn-sphotos-d-a.akamaihd.net/hphotos-ak-frc3/972256_674430722583756_15991140_n.jpg

The European Central Bank has already said it was a threat to the reputation of central banks.

In my opinion, if you are not offering to exchange for fiat, you should be fine. But, keep detailed records. If you are making any kind of money off this enterprise, fiat or otherwise, sooner or later the Taxman will request his due.

Personally, I am keeping a ledger of all Bitcoin related expenses and income. As long as i keep investing in new equipment to keep up with the ASIC arms race, my mining will be considered a Hobby. Eventually, I'll start taking a percentage as profit and then i'll just pay taxes on that. As long as you stay above board with what you are doing i doubt the US Gov. will really care.

nah its not bitcoin causing negative impact... its the bankers of 2007 that done that, all by themselves

Bitcoin is a threat because banks can't manipulate its creation or distribution. They can only attempt to manipulate the price and try to surreptitiously keep as many bitcoins out of circulation as possible.

If Bitcoin wasn't a threat to banks, Fincen wouldn't be interested in Bitcoin.

Thank you for that, it really helps, yea we are keeping very detailed records of all our transactions so that should help us with any issues that we may come by. We will also be making a profit so like you said once we move to to fiat we will have to pay taxes on it.

Now another question what if we never change to fiat and use the bitcoins to make purchases lets say for non-business related expenses?

Hey! Look over there! *quickly runs the other way*

heh. I'm not a lawyer or a tax accountant. What you are asking is uncharted territory. Gov.s aren't stupid. They are going to demand their piece of the action one way or another. Once enough people start using Bitcoins in their daily transactions the Gov. will notice and demand their taxes. It will probably take some time though. Perhaps the day will come when the Gov. will accept the taxes on the bitcoin portion of your income in bitcoins. Most likely though, they will factor in some average exchange rate like they do for capital gains made on multiple stock purchases all liquidated at once.

haha, yea I agree with what you're saying it does make sense and will most likely be awhile before they actually make it mandatory. I was just curious to see what people's thoughts were. Thank you again for the advice.

We are keeping very detailed records of all orders and expenses for the business so that should help us with any issues that we face when regulation starts to take place. Now that's a great idea, a bitcoin based accounting software would be amazing.

bitcoin is not a threat because:

1) the banks only care about FIAT.
2) when you buy bitcoin you hand over FIAT to another person... its the same as buying a tin of baked beans.. money moves from one account to another. but essentialy stays within the financial system, which they love.
3) bitcoin can help banks. instead of polish, mexican, asian workers putting FIAT into envelopes to send to their birth countries. they will in the future buy a bitcoin locally (keeping FIAT in country) and allow the bitcoin move across borders.
4) as long as the gateways in and out of FIAT are secure. they dont care about other currencies.
5) as long as minimum wage laws exist the 99% population that work hourly wages will get paid in FIAT so bitcoin will not "take over" the world.. but may when more popular, work along side it.
6) fincen (america) is only as interested in bitcoin as interested in the EURO.

bitcoin has POTENTIAL of being a threat,

but right now the Yen and Euro concerns them more then anything. and these fincen meetings are not about BITCOIN par Say. they are about FIAT exchanges that don't obide by FIAT rules, which are now popping up due to naive teentrepreneurs.

instead of forming opinions based on chinese whispers of other people on the forum.. PLEASE go to the source, read the material properly. learn what the rules are the limits to their powers and read their concerns and you will see that bitcoin is not a threat. just the naive law breaking people that want to convert their illegal activities into FIAT.

the sponsors of the meeting : child exploitation charity, where their due to LIBERTY EXCHANGE (a FIAT exchange) but not due to bitpay, bitinstant, bitcoinQT, bitcoin mining...

The source is the European Central Bank.



"Would threaten" is Bankerese for "does threaten".

nice quote. which IN CONTEXT is about saying dumb naive FIAT exchanges saying this person should be credited wth 1 billion dollars/euros when in actual fact they only have $10, 10 euro to their name. causing the "value" of their single unit of account (FIAT) to go haywire affecting the whole FIAT economy.

causing for instance a liberty reserve dollar being worth more then a bank note dollar, which would be different Value then a bitstamp dollar, all because of the credibility of the FIAT exchanger manipulating the bank's accounting systems.

as you read the ECB report you see it does not care about second life (the game) which creates and trades lnden dollars. it only cares about the FIAT-linden exchangers. same as the other examples..

its all about the FIAT

Reading this I am still left wondering if an exchange is a money transmitter. Seems like it would be a money services business, but not necessarily a money transmitter.

simple answer logically
money= FIAT (finances insured and taxed by governments)
a money services business trades money for products and services . EG buying a bitcoin or a tin of baked beans.
a money transmitter puts and takes money from peoples bank accounts

your not a money transmitter. imagine you would only sell for dollars. that would look like a regular web shop. does a webshop need a banking license ? now you are adding other currencies. (maybe you should actually consider having your prices in some additional currencies). one of them is bitcoin. i don´t see how that would make you now a money transmitter. it is still plain e-commerce webshop. the escrow is a service, other webshops may have smiliar services. find a lawyer, get one or two expert opinions. i would not recommend asking them.  

great idea, nice website!

I would guess we are more of a money service I presume after reading through the last posts. You are right about being a plain webshop if you take out the bitcoin aspect, we won't be considered a money transmitter. The question comes into play when this webshop starts accepting other currencies unlike other webshops that just deal with their local one, in our case bitcoin, so although we are not a money transmitter we would maybe be considered a money service. Like you said the best is to get an expert advice from a lawyer for clarification.

Thank you for the feedback about the site and my question :)

laywers are limited in their knowledge. speak to the financial regulators of your country.

if you buy something and pay, the taxes are included. it doesn´t matter with what you pay. most people use money, but you could also try to pay with grandpa´s stamp collection. if the shop takes it - fine. only because you use bitcoin does not avoid any taxes at all. (in addition, the bitcoin may have been obtained with dollars you owned legally, therefore all taxes paid) the shop that receives an payment in bitcoin owes the same amount of taxes to the irs as an other for the same deal.

+10
Great Post

It means they expect us to implement a coin tainting system.

GOOD LUCK WITH THAT!  ;D

I kinda wonder why there is any interest in bitcoin. With a market cap of only a billion, it wouldn't pay the catering for the conference.

Yepper. And Bitcoin's existence threatens the reputation of those that issue the fiat, unless they can control the price or the gain a significant share of the Bitcoin supply.

You glossed over the important part of the excerpt:


They know they could lose the store but I don't think they have anything to fear. I expect that the "REGULATE ME, PLEASE!" crowd will save them the worry and just hand Bitcoin over to them in their zeal to be compliant.

If this post were from a noob I would take exception. At this point I will scratch my head. My understanding is that it would take a major fork to hand over the keys to regulators. I don't see that happening. Voluntary compliance should be more than enough to satisfy them, especially if they offer monetary incentives to do so.

"The United States Institute of Peace (USIP) was established by Congress in 1984......."    :D

it might be as well targeting everyone running a full node, validating and forwarding transactions in the p2p network. miners who do not listen to transaction broadcasts, do not store blockchain and do not validate transactions, just work in a pool, are not affected. pool operator however distributes mining reward and could be intermediaries. so, i would worry about pools and full nodes. pretty much the whole network.

Interesting read  ;D

http://www.fincen.gov/contactus.html (http://www.fincen.gov/contactus.html)

I wonder which one of those inquiry lines can provide clarification on what's what in relation to Bitcoin.

We'll have to disagree on arbitrary authority ever being satisfied. I've never known it to happen.

Bitcoin under "voluntary compliance" (an oxymoron, btw) is like taking the best engine ever built and unplugging half of the sparkplugs from the distributor. It would decrease the value of the engine, as has happened with Bitcoin under voluntary compliance thus far.

The main problem with regulation that there are lots of people regulating who don't get it.


Basically, again, this woman is talking about children and her wide interpretation means that every miner is a money transmitter. Consider this: The miner creates a block which includes transactions. Anyone who creates transactions is theoretically transmitting money now.


That is the idiotic part. The woman does not get Bitcoin. It is not a virutal currency that is emitted by an entity. THIS is the problem. If the FinCEN regulates LR, that is kind of alright. There is a service provider giving out a currency and therefore its emitter has certain rights and regulations to uphold.

For an exchange, yes, I also think that a bank should be regulated. But the non-existence of an emittent and the handling by decentralized networks is unknown in our systems before. It is a completely new variable, that with old thinking, will be squashed.


Apart from the usual propaganda talk (Those who exploit children), it demonstrates a clear misunderstanding in how laws will affect this thing. Apart from the fact that the "child exploitation" market is not even financially very relevant, they are all already taken care of by asking for AML laws. There is nothing new needed. No new regulation at all. the only thing necessary is existing exchange businesses running compliance. New regulations regarding Bitcoin will, in every case, miss the mark and the system.

But is this going to be a problem? No. Not for Bitcoin. BTC will go back to obscurity and stay where it is. It will say "Fuck you." And with this single move, that a mienr could be considered a money transmitter, the governments will have created the ultimate underground system. Basically, they declare it illegal to mine it and emit it, because mining it is transmitting it. And there you go: The system has been set up. Instead of creating a legitimate system that is like cash, they have created a virtual Hawala banking system in the underground.

Dear Jennifer Shasky Calvery,

Why haven't any of the CEO's, chairmen, or directors of HSBC, Wachovia or other banks caught money laundering over the past several years gotten thrown in prison or personally paid enormous fines?

Until these injustices are remedied you can't expect the Bitcoin community to cooperate.

Because anybody with half a brain can see its game-changing potential. It can subvert the current power structures, which are dependent from financial lobbies that control the usd

Well technically it's not that simple, transactions that miner includes in a block are already transmitted by the network and most of the nodes have them. Miner only provides a time stamp (in terms of blockchain's block count) for a bunch of transactions by publishing a solution to the proof of work problem along with already existing and already transmitted transactions. So technically miners do not transmit transactions (full nodes do), they only time-stamp them.


+1000

They really need to fix their own problems on the part of "integrity and transparency", as they claim in the document, before exploring new territories. Yeah and rename that "office of terrorism" too! I mean, who in their right mind would want to cooperate with an organization who reports to the office with such a name. Maybe it's a trap and we all will be later tagged by the Prism as "aiding the enemy" ;D

I'll just leave it here:
http://youtube.com/watch?v=KP6pBS6uptE

I'm afraid it's probably not so easy. Point 3 is highly ambiguous and leaves lots of doors open.

They should have thought of that before they let Al Gore invent the internets. They haven't really discussed any game-changing potential, possibly because of the half-brain requirement. If they did, they would be talking about all the beneficial things crypto-currencies offer. Instead, they frame Bitcoin as a foreign currency sponsored by "all kinds of mean nasty ugly looking people."

Again, this "conference" sounds like it's nothing but a lobbyist effort to kill Bitcoin with no evidential reasoning. Hopefully, they will someday focus on administering the network competitively as it is designed rather than fighting it idealistically which they have no moral standing to do so. There are real threats out there now from banks like HSBC that need attention.

HELP banks? How? By taking away their business? I'm sure, they will literally smash in your door to get this service.

Do you think its particularly difficult for them to transfer money in other countries? Why? Because its so expensive? For who?
Do you think that when the asian worker comes to them and wants to send money home, they say: "Oh no, not you again. Please go away, we don't like this kind of business, its too much work. Do it in bitcoins."
(Furthermore, I wonder how the asian family handles bitcoins and what the merchants at the local farmer market think about bitcoin payments.)

Don't get me wrong, I highly sympathise with your ideas, but I fear, they are a bit quixotic in some parts.



There is no need of a coin tainting system. Through the full controll of all exchanges (work in progress), all coins which go through them will be "tainted".

This will be the time when they come to tear down the last pillar - mining. They will knock on your door and say: "Hi Grumpy! We saw that you were quite lucky lately and put some nice chunks of bitcoins in your online wallet. Congratulations. Lets talk about this, we are sure you understand its inappropriate that individuals create value out of nothing and distribute it. Imagine people start printing their own dollars, haha."

Coinbase comes to mind.

This is my favorite quote:

"FinCEN’s guidance explains that administrators or exchangers of virtual currencies have
registration requirements and a broad range of AML program, recordkeeping, and reporting
responsibilities. Those offering virtual currencies must comply with these regulatory
requirements, and if they do so, they have nothing to fear from Treasury."

"Virtual currencies are a financial service, and virtual currency administrators and exchangers are
financial institutions."

"we see virtual currency administrators and exchangers as a
type of money services business. These businesses are as much a part of the financial framework
as any other type of financial institution. As such, they have the same obligations as other
financial institutions, and the same obligations as any other money services business out there. "

"action taken against one financial institution [Liberty Reserve] and one type of
financial service ... [in a [ criminal case is [or a] regulatory action is – an
action against a particular violator. With this action we were not painting with a broad brush
again"

Jennifer Shasky Calvery, Director of the Financial Crimes Enforcement Network says:
" keep in mind the combined actions by the Department of Justice and FinCEN took down
a $6 billion money laundering operation (Liberty Reserve), the biggest in U.S. history."


However she somehow fails to mention:


Standard Chartered had processed $250bn
in illegal transactions over nearly a decade of business
 with US-sanctioned countries including Libya, Burma and Sudan.

Two HSBC affiliates sent nearly 25,000 transactions involving $19.4 billion
through their HBUS accounts over seven years without disclosing the transactions’
links to Iran.

HSBC cleared $290 million in “obviously suspicious travelers cheques”
that benefitted Russians “who claimed to be in the used car business.”


Previously HSBC processed $60 trillion (that it TRILLION with a "T") in wire transfer and account activity and
had a backlog of 17,000 unreviewed account alerts
regarding potentially suspicious activity
and a failure to conduct anti-money laundering due diligence
before opening accounts for HSBC affiliates.

????

You're right of course. HSBC did pay a $1.9 Billion fine for facilitating money laundering.

http://www.reuters.com/article/2012/12/11/us-hsbc-probe-idUSBRE8BA05M20121211

Not likely.

FINCEN only has 300 employees...
Of which maybe 3 are working on virtual currencies.

This is all about to change FAST...
When Obama will double the FINCEN workforce with a stroke of a pen.

Once they have detailed lists of Early Adoptors hoarding BTC...
They will pick a few high profile targets from BitCoinTalk...
And heavily armed SWAT teams will descend on your humble abode...
You will be perp-walked in front of your neighbors in handcuffs...
While the nice, sexy TV reporter talks about terrorism, money laundering, and porn.

Let's say you have 5,000 BTC worth $500,000 (and who doesn't, baby)...
But have not been filing Tax Returns and just chilling like Satoshi...
Well, the fine is confiscation, up to 300% in additional fines, plus some quality Club Fed time.

So, theoretically, when our First Adopter friend gets out of the joint...
He will owe the US Govt $1,500,000...
Less $231 that friend-o earned working in the Prison Library at $0.11/hour...
So our First Adopter buddy will owe the US Govt only $1,499,769 plus interest...
Certainly not enough to rat on his business associates and cut a deal.

its not taking away any business from banks. when you put fiat into a payment gateway such as paypal. it sits in a bank account. banks love this as in the middle of the night they can play with your money on the stock markets making their profits in the miliseconds of the days. and you are unaware of this.

but putting fiat into an envelope to then send to another country does not allow the banks the same pleasure of playing with your money. so by bitcoin being the border crossing exchange changes this:

person A take money out of bank -> places in envelope -> send to another country -> poof bank note never seen by a bank again

into this
person A does bank wire to exchange in the same country -> money remains in the country -> bitcoins go where they want -> but fiat money still sits in the bank accounts of the same country

the only thing banks dont like is having to freeze accounts while DOJ/SOCA investigate it. because then even banks cant play with the money when its frozen. so do the banks a favour.. read the regulations about FIAT in your country, follow them and you will see that there is no big deal bitcoin related


again fincen is not after bitcoin people. they are after FIAT traders that are not licenced. the words virtual currency which they wish to regulate are the digital forms (virtual, not physical) of bank notes

That's not accurate as Fincen engages in arbitrary enforcement. We have no idea what they're up to.

I suspect that they don't either. I think they are making it up as they go along.

Severian:

According to FinCEN:

"FinCEN’s guidance explains that administrators or exchangers of virtual currencies have
registration requirements and a broad range of AML program, recordkeeping, and reporting
responsibilities. Those offering virtual currencies must comply with these regulatory
requirements, and if they do so, they have nothing to fear from Treasury."

Now if you are allowing illegal activities on your system then are you liable for Criminal enforcement from DOJ/DHS etc.

See: Liberty Reserve ( and possibly Mt. Gox)

Ah, government!

And they might decide something that's legal this week will be illegal next week. That's arbitrary authority.

I agree that this uncertain regulation is very unsettling however FINcen and DOJ etc has made it pretty clear that they are not big fans fan of the following activity.

Money Laundering
Terrorist Financing
Child/Human Exploitation

If you plan on engaging in or allowing this type of activity then you could be prosecuted.

It's the crux of the issue. Fincen is destablizing Bitcoin by wielding arbitrary authority. Taking down Liberty Reserve while allowing the larger banking players to continue with their criminal behavior for a fine/fee is a good example of such arbitrary power. It even undermines Fincen's own enforcement authority in the larger world such that future regulatory actions will likely focus on increasingly smaller players.

Yes, but since the days of Al Capone they have gone after the money when they were unsuccessful at stopping the crime. In their view eliminating Bitcoin in the USA = stopping crime.

The worst part is that the "Money Transmitter" classification is a poison pill.  Not at the federal level where the requirements are no different than any other MSB.  The issue is that at the state level MT are very heavily regulated, licensed, and bonded.  If FinCEN says virtual currency exchanges are money transmitters according to federal law will the states follow the same path.  Remember each state has a byzantine set of different regulations, licenses, and requirements.  Licensing even if a startup can meet the high cost, capital requirements, and can secure an expensive surety bond can take anywhere from 6 to 24 months.  Now repeat that for every single state.  There is a reason there are only roughly a dozen companies with MT licenses in all the states*, those companies employ an army of lawyers to keep compliant. There is no business with more regulatory overhead than money transmitters, except maybe banks.  It may be cheaper for a well capitalized company to form a National Bank as that bypasses all state regulation.

Now I am not saying Bitcoin brokers/dealers/exchanges shouldn't have some regulation, that is likely inevitable in every country.  The MT classification is a regulatory sledgehammer and it will stifle innovation and reduce the number of players to the few very well capitalized companies (i.e. PayPal 2.0) which can afford to play that game.  Of course the cost of that regulatory overhead doesn't vanish.  It is a perpetual costs which will be passed on to users in the form of higher fees.  Higher fees will make Bitcoin less attractive (as least in the US) and that will slow adoption.

Just to give you an example:
Gold Dealer?  Regulated?  Yes.  Money Transmitter? No.
VISA? Regulated? Yes.  Money Transmitter? No.
Commodities Broker?  Regulated?  Yes.  Money Transmitter? No.
Securities Broker?  Regulated? Yes.  Money Transmitter? No.
Currency Dealer/Broker?  Regulated? Yes.  Money Transmitter?  No.
Tiny Bitcoin startup?  Regulated? Yes.  Money Transmitter? Yes (if they exchange virtual currency for real currency)

All of those entities send and receive funds but they aren't considered money transmitters.  That expensive definition has generally been reserved for the transmission of funds from one person to another one.  Now FinCEN doesn't say that a MT at federal level makes one a MT at the state level but it leaves the door wide open.  Using logic or common sense, the action of exchanging BTC for USD is far more similar to the action of exchanging EUR for USD than any other classification, yes FinCEN took the MT route in their guidance.  FinCEN already has a classification for exchanging "real" currencies, it is called "Foreign Currency Dealer/Exchange".  Now this is still a type of MSB and thus still regulated at the federal level but almost no state require licensing for that activity.  Of the six categories of MSBs, FinCEN just happened (in a legal stretch) to put Bitcoin exchanges into the category which faces (by many magnitudes) the highest level of potential regulation at the state level.

As an example lets look at the actions of three theoretical companies:
BitBase accepts a certain amount of USD from a person and provides the SAME person a certain amount of BTC based on a published exchange rate.
FiatBase accepts a certain amount of USD from a person and provides the SAME person a certain amount of EUR based on a published exchange rate.
Western Union accepts a certain amount of USD from ONE PERSON and transmits it to a DIFFERENT person for a fee.
Of these three which seems the most dissimilar?

Common sense says WU is the different one.  FinCEN says no, FiatBase is the different one. The first and third examples are money transmitters and FiatBase is a Dealer in Foreign Currency.


Now I know the tone was gloomy but the actions of FinCEN won't kill Bitcoin, Bitcoin will route around the damaged parts of the system.  The Canadian equivalent of FinCEN has indicated the action of exchanging virtual currency for real currency simply doesn't fit under any existing law and thus (for now) is unregulated.  This doesn't mean Canada will need to pass NEW LAWS rather than take the "guidance" route that FinCEN did.  You know that whole concept of "of the people, by the people, for the people".  The situation in the US however is now open to uncertainty, risk, and additional cost.  Coincidence?



* "all" = 47 states and 4 territories which require them.

DeathAndTaxes

We should schedule a trip to Washington D.C.

BCB

I'll go! I hear you can score some of the youngest hookers and best drugs in the country in the park across the street from the White House.

Exactly! They should have just taxed Gin in the first place.

And btc sales will be tied to a person's bank info, tainting the coin and allowing coin tracking to those with access to the bank's info. I think the longterm goal is to be able to allow them to track coins if they can't shut Bitcoin down.


The price drop is clearly due to Fincen's actions, at least in part. But I've been wrong before.

tainting coins can NEVER be allowed.

it's an easy excuse for not catching the criminals in the first place.  just destroy the currency.

Coinbase has been doing it for as long as they've been in business and people jumped on board. A perfectly good decentralized, P2P currency wasted on people who WANT to be tracked.

what exactly are they doing?

are they confiscating tainted coins when they enter their system?  or are they just labeling coins as tainted when they connect them to an address in their system discovered to be engaging in illicit activity?

if they are doing this then eventually everyone/investors will start bypassing their system.

Just found this thread.... you guys know that there's a legal forum right?!  :P

I just post and let the mod's move if necessary.

As you can see the sub-forums get MUCH LESS traffic as I just found your thread and you just found this one.

Yes, thank you. Do you know, that there is the possibility to buy ad space?
https://bitcointalk.org/index.php?topic=229054.msg2411569#msg2411569 (https://bitcointalk.org/index.php?topic=229054.msg2411569#msg2411569)

I'm mostly just bitter that I post in the less-popular forum  >:(

Me too!

There was a lot of GREAT info that I totally missed!

What is unclear to me is whether they are talking about regulating the exchanges or regulating every single individual who uses an exchange.  Seems uncomfortably vague to me.  What happens if every Joe who trades a single bitcoin for cash becomes "an agent"?

I freely admit that I'm not well-versed in financial legalities, so enlightenment is welcome...

You think I should advertise?

NO. Adds are spammy and SCAMMY.

You knowledgeable posts are all you need to advertise. 

Fidgets,  Unfortunately that is currently the case.  Every Joe who trades a bitcoin for cash become a MSB that is probably required to get a MT license in every State in which he has clients.

So what started out as a hobby or small business just turned into a $7M venture.

It has been discussed here and other places, that bitcoiners need to come together and engage policy makers.  I've heard this is happening with a group in Washington and I know that Bitcoin Foundation (Peter Vannesses's club) is making overtures in that area, however I've yet to hear or read any official info.

Gavin and Patrick Murick( attorney for Bitcoin Foundation) spoke at a panel in Washington last week.

http://www.washingtonpost.com/blogs/wonkblog/wp/2013/06/17/can-bitcoin-make-peace-with-washington/

I started to get a feeble impression you were doing this already


But reading through your posts again, I saw a lot of useful information too. So never mind, I'm just a cheeky monkey ;D