Bitcoin Forum

If a person buys or sells bitcoins for dollars, they are supposed to register as a Money Transmitter. This is being applied to the average person even Foundations that do not angage in this, based on the associations of their members.

So, I propose nobody ever buys or sells bitcoins for dollars anymore. I propose we give them away for FREE whenever someone buys or sells a piece of blank paper, valued at approx the same price as bitcoins.

If someone is willing to buy my "pet rock" for $105.00, I'll include a FREE Bitcoin!

I heard a story once of people in the depression, who were forbidden by law from selling chickens.
So, they sold chicken feed instead, and gave away a free chicken with every bag sold.

There is always a way around the legal madness.
Because legal writings are nothing more than contrived madness, and so all laws must be "strictly interpreted", without room for error or misunderstanding.

If 10000 US Bitcoin users opened accounts on LocalBitcoins (https://localbitcoins.com/?ch=105) and started actively trading, there would be little anyone could do about it.

check out this livestream: http://new.livestream.com/accounts/1409343/events/2202468

"Bitcoin and Beyond: Financial Privacy and Censorship" LiveStream CFP2013

 Personally I believe they are trying to create legal barriers from exiting the failing USD.

 They won't be successful in the long run.

I doubt that would happen unless opening an account on LocalBitcoins and actively trading was transformed into a "cool" social activity (and not a nerdic activity).  A "hero of the revolution" or something.

And Craigslist is another possible fertile field.

I don't think that's impossible to achieve.

Not impossible.

Imagine thousands of people eager to be an Independent Bitcoin Mercenary.

Identified by a cool logo or graphic on their laptop computer, iPad, cap, or clothing.

Using the free Wifi at thousands of Starbucks, McDonald's, and other locations.

Conducting face-to-face transactions between Bitcoins and cash, with an aura of excitement and adventure.

With well-timed, discounted loss-leaders such as flash drives, android tablets, etc. that can only be purchased with Bitcoins.

Advertised via internet social media.

If you're interested in legal loopholes...then here's something to think about : https://bitcointalk.org/index.php?topic=234731.0

Don't just read the thread. Read the paper! Come to your own conclusions.

Also, infrequent traders (five times or less per year) not doing it for profit are not money transmitters (at least that's what might be deduced from U.S. federal law):

Limitation On MSB Regulations For Infrequent Trading
 - http://bitcoinmoney.com/post/52305091840

Yes, I made this argument a couple years ago, on these boards. I agree, it's Memory and not currency, but if the government wants to fuck with the definition of "currency", then they can try to. If it works for them, then all we have to do is "give them away FREE", with the purchase of something of (=) decided value.

could btc transactions be structured something like, the btc is free of charge, but i charge a ... usd "admin fee" per btc, or part thereof, to "guarantee" i will sent it from my wallet to yours ... ??

make the actual fiat value a "guarantee" of service, the service being delivery of a free bitcoin

The only way that the authorities can control the Bitcoin was at the point of exchanges, I won't be surprise at their rules.

what if you trade them for gold?

I completly ignore FINCEN regulations and I encourage everyone else to do the same.

lol I remember the "Pet Rocks" they were actually a thing when I was a kid and people used to actually buy them.

The Pet Rock was a throwaway idea, for the thought. What we really need is a Digital Good, capable of being sold or transferred. It can be paired with bitcoin, and then all transactions are for that product, not the bitcoins. Could be a e-card or something like that. As long as Bitcoin itself is not the item being sold for dollars, then it can be used as a part of the transaction.

An e-card would be difficult to justify for such a large transaction though. Maybe if someone developed a simple piece of software around bitcoin, made it open source, allowed people to alter and update it, or it could be a simple program, with updates. It could potentially justify the sales transactions. In essence the software would be free, but people could charge any amount they want for it, and that is the product being traded between people, not the currency of bitcoin.

Are you saying if someone sold you an iPhone and an ounce of weed for $100, they are not a drug dealer, just a lowly handset merchant?

Edit: I think drug dealers just be drug dealers and not worry about selling eg Amazon vouchers as well.

Bitcoin is not drugs and they are not illegal. This is only for the future event that FINCEN decides all transaction in bitcoins should be money service registered, when trading for dollars.

Drug dealer in this case == someone doing something that the gov has interests in regulating

If a drug dealer registers as a 'pharma services business', they turn into a pharmacy. Or something like that.

I have a feeling there are a lot of very artistic individuals in the bitcoin community.  Perhaps these Picassos could create some artwork in Microsoft Paint.  The more fiat that someone is willing to pay for one of these digital masterpieces, then the more free bitcoins they could receive as a bonus.  ;D

This is EXACTLY what I'm talking about!

Great Idea!

This will work great! (Or at least it should)

Now, you are not selling any bitcoins, PERIOD!!!

No FINCEN regs can apply anymore!!!

Bingo!

This is a great idea. Reminds me of how they sell raw milk. Instead of selling you the milk, they sell you a share of the cow, and you get the milk from your own cow.

So to do this with bitcoin, the exchange sells them a portion of mining equipment for a specified time, and they get a share of the mining output during that specified time(bitcoin).

Actually, there's a mining union trying to get funded this way that has exactly this proposal: you fund them, and you get the share of the output for a whole year.  I'm tempted to throw a bitcoin their way, but they are asking for 10 BTC and no one has donated yet.  Anyone else interested in helping fund their project?  https://bitcoinstarter.com/projects/97

Or, you could just buy shares of ASICMiner and get paid dividends derived from the revenue that is generated with their mining operations and hardware sales.  Those shares don't expire after one year and are transferrable.

Back to the original topic...Selling digital artwork for fiat and giving away bitcoins as a free bonus may help you stay in compliance with FINCEN guidelines/regulations, but then the IRS bureaucrats will insist that Americans report those artwork sales as income.  I still think it's best to exchange your artwork for cash--the actual FRNs--and to transfer the free bitcoins to the buyer in a face-to-face transaction.  Transacting in electronic fiat just makes their job too easy with the surveillance apparatus that is in place.

The whole point of my post was not to avoid IRS taxes. That can be done lots of other ways.
The main point of this idea, is to keep average Joe from having to register as a Money Transmitter when he is just buying and selling bitcoins.
FINCEN regs would like to make it so everyone who transfers bitcoins, and accepts dollars, could be identified as a Money Transmitter.
But, if they are selling digital artwork and giving away FREE bitcoins with it, they are not selling Bitcoins for dollars, then there is NO Money Transmitting service provided.

As well, Paypal TOS claim they do not allow the sales of virtual currencies, for dollars.
A Physical Item MUST accompany the transaction, in order to avoid this. A Digital Artwork item fits that definition, and should work to keep paypal at bay.

what if we buy and sell Magic Cards?  is that currency?

Not making sense?

The problem with something "physical" is that it has to be mailed, to complete the transaction.
Magic Cards have actual value, so it will not work.

Replacing Bitcoins with Magic Cards, is going 2 steps backward.

"Stored value" refers to CARDS that store value, in US dollars. Bitcoins do not store value, and they are not "Stored Value Cards".

It's still a bit strange, if a consumer in the u.s buys foreign currency does that make him need some kind of license ? :) Why would that same consumer not be allowed to buy bitcoin ? Assuming that the people / biz he buys it from are outside the U.S located.

Those guys are the subject of this film, huh?
http://www.youtube.com/watch?v=b8bG5NxQ66g
Bunch of racist, hate mongering zionist fascist piglets.
Fuck the ADL, and Fuck you if you support them and their bullshit.

Personally, I think the best interim solution is distributed exchanges and in-person exchanges. The best long-term solution is when one buys and sells other items with BTC directly, avoiding the need for exchanges.

I just came across one attorney's opinion on selling digital goods for fiat and giving away bitcoins in order to comply with FINCEN regulations:

https://bitcointalk.org/index.php?topic=205385.msg2276374#msg2276374

I still believe something along these lines can be done without running afoul of FINCEN regulations.  Maybe two separate transactions would help keep things in accordance with FINCEN's regulations or at least make it more difficult for them to enforce.  Suppose Alice has 5 BTC that she wants to convert to $500 in fiat and Bob has $500 in fiat that he wants to convert to 5 BTC.  Alice could agree to buy some of Bob's artwork for 5 BTC and Bob could agree to buy some of Alice's artwork for $500.  They could use alternate identities for each transaction and they could also use an escrow agent that's located in Russia or China.  Countries like these might be less likely to waste their time assisting American bureaucrats trying to enforce asinine regulations.

Where did you get this information from? Please provide a source, it is false.

The aim of FinCEN is to control money laundering from US->Other countries.

FinCEN does not apply to personal transactions only to companies in the money transmission business e.g. Western Union.

A FinCEN Advisory from a little while ago made it clear that personal transactions are exempt.

Using this logic then selling gold, silver or anything of any value would fall under FinCEN? Even your pet rock.

I found the advisory

http://fincen.gov/statutes_regs/guidance/html/FIN-2013-G001.html

And I quote


and the definitions of user, administrator or exhanger


Draw your own conclusions but it seems clear to me that unless you are in the business of buying / selling or exchanging bitcoins then FinCEN clearly does not apply.

I would wholeheartedly agree with you on this. You are correct.
However, businesses like Paypal and Moneybookers Skrill, do not see things this way. They probably just choose to see it this way because it competes with their precious dollar.
Until they agree that people who buy and sell bitcoins, not engaged in the business of it, are users, still....it may be difficult to bypass unless there is another alternative.
But, as far as your interpretation of this law, I believe you are correct.

US dictator Roosevelt was successful with outlawing gold for 40 years

Since BTC is a bit easier to own anonymously than gold, of course, they are trying to stop the USD flow into BTC. The US leaders know very well they are like Cyprus, just that Cyprus could not force others to accept the EUR they printed forever.

Here's another approach that will be hard for banks and regulators to respond to.  An escrow service that matches buyers and sellers in which cash is deposited by the buyer into the seller's bank account.   Seller's coins get escrowed to Bitcoin-Brokers.org.     

 - http://www.Bitcoin-Brokers.org
 - http://bitcointalk.org/index.php?topic=237164.0

The high volume sellers will have the risk of the bank concluding that the deposits are for bitcoin (or a sting) and the seller ending up without access to the funds in the bank account.

Instead of there being a handful of exchanges each with a high volume of cash deposits there will be a high number of exchanges (individuals selling coins) each with a low volume of cash deposits.   

Decentralization FTW!

I believe that this may be a practical approach.  And it might be possible to donate or loan addresses to the escrow services, to increase the decentralization.  But could the escrow services remain out of the grasp of FINCEN?  Can high-volume buyers or sellers remain out of the grasp of FINCEN?

"In addition, a person is an exchanger and a money transmitter if the person accepts such de-centralized convertible virtual currency from one person and transmits it to another person as part of the acceptance and transfer of currency, funds, or other value that substitutes for currency."
http://www.fincen.gov/statutes_regs/guidance/html/FIN-2013-G001.html

I can only see how that can be applied to escrows and exchanges, but not to (I)ndividuals who simply buy BTC from one person (A) one day, sell it to another person (Z) another day, with no express or implied contract between the two people who sold and bought the BTC, (A) and (Z), and the (I)ndividual. This is the "as part of the acceptance and transfer of..." clause. There is a contract with (e)scrows and (e)xchanges, that they will execute trades between two (sometimes anonymous to each other) people with mutually-agreed-upon terms.

I should point out that there are no administrators since the requirement states they be able to both issue and redeem (withdraw from circulation) --- nobody can withdraw a bitcoin from circulation - so we have no administrators.

so the only thing at applies is "as a business" re: exchange of bitcoin to fiat or vice versa.

So miners and users don't need to concern themselves - only exchanges and people who are registered as a business...

If I buy a currency via e-trade, scottrade, or the other with USD i'm not required to have a license.  Why would bitcoin be any different?

I'd be interested to hear arguments against.

99% correct - green is statement on point. red is not so on point.
miners making bitcoin are fine. but mining pools such as 50BTC.com which allows withdrawals in FIAT at the pool. have to be careful.
mining 'workers' dont need to be concerned but pools offering FIAT(direct bank transfer)/convertible virtual currency (dwolla /webmoney online representation of FIAT) Do need to be careful

anything touching FIAT has to be careful. fincen rules are all about dollars and always have been.

the words
Convertible virtual currency - is not bitcoin. so bitcoin remains unaffected just like the last 4 years.

convertible virtual currency = a database on a server(not owned by the banking sector) with a numeric amount that represents a FIAT value.

EG bitstamp dollar is not a legal tender dollar as its only viewable on bitstamp servers. so this is the convertible virtual currency.

bank account dollar is legal tender. so when bitstamp convert their online balance into someones bank account they need to be registerd as a MSB and regulated(licenced) for money transmission because they are moving legal tender aswell as convertible virtual currency.

for a mining pool owner just moving dwolla balances from his dwolla account to his mining workers dwolla accounts. he just needs to be a MSB registered but not money transmission licenced, due to the fact that they are not moving legal tender. only convertible virtual currency (dwolla dollars). so no money transmission licence.(because they dont touch BANK accounts of customers)

the simple rule is. if your moving FIAT around or handling the online digital form of it AS A BUSINESS you need to be MSB registered. if you are then doing specific things like moving it into bank accounts (legal tender) then you need money transmitter licences ontop.

bitcoin is not different. its just that a few numbskulls have mis-read the fincen guidelines and put on their panic hats.

You aren't, this is true.  But e-trade and scottrade probably have to have license to allow you to do this.

FINCEN issued guidance. None of his has actually been tested in a court of law yet. Ignoring until there are clearer legal cases and precedents seems a reasonable strategy for an individual, perhaps more risky for a business.

It just being used as a broad term it is going to become more of an issue as the years progress, all I have to say is hopefully it will move in a good direction.

Also when the reward halves, just have some funn!!