Bitcoin Forum

If someone were to sell bitcoins on localbitcoins.com in exchange for paypal my cash cards, which were then deposited into paypal. Is that legal as long as any taxable gains received in the transaction are paid? If the amount is under $500 per day and $4000 per month would there be any requirement to know the customer or comply with anti-money laundering laws?

I don't think the amount you're transacting matters, any time you're selling Bitcoin for profit in the US counts as Fincen's definition of an exchanger.

Registration as a money transmitter doesn't cost anything. You can do it here - http://www.fincen.gov/financial_institutions/msb/msb.registration.html

I guess it's the AML stuff that's the major grind.

Depends on if you live in New York or something like that.

I believe that they have laws on cryptocurrency.

The money transmitting thing is nation wide. And any jurisdiction anywhere in the US can nail you if you haven't sufficiently covered your arse.

It depends what country you are in and how good your lawyer is.  In the United States, technically, that fits the description of operating as a money transmitter.  There is no minimum volume for these operations.  There are local and federal laws regarding it. However, many times when charges have been pressed, the defendants have won their cases.  They don't always get the money that was seized though, and they spend a lot more defending themselves.

there is still no official mention of rules on the legality
of the law of bitcoin

There is no clear-cut answer to this question. But based on all the information available, you should be okay since you are acting as a merchant/agent for PayPal (which is licensed in every state) and since you don't hold customer funds on account like an exchange.

The concern ...and a very valid concern, would be the risk and exposure to charge-back fraud.

Would selling btc for paypal mycash falls under the MSB?
Because these are able to be purchased without no id and without paypal involved.

That's a great answer. We also gotta keep in mind that the law is way behind on this. There are almost no laws in the first world countries, definitely none in third world countries (or "developing nations"). In most of the US, you're going to have to be careful to adapt this new digital money to the laws that already exist surrounding money, debit and credit.
I highly suggest that you find a lawyer, or a law student about to graduate to talk to about it.

As far as the US goes, as long as you mine your coins you are selling. You are okay and will not have FinCen coming after you.  If you involve third parties or start buying and selling then you may have issues with being an MSB.

Laws on cryptos? It isn't regulated so I thought it is off limits until that is done.

Just sell bitcoins at an exchange and transfer to your bank, problem solved.  And do not try to be a pro trader on LBC without consulting legal advice.

Nothing wrong in selling in any country if you meet the person and collect the fiats in hand. Some country may track you if the money transactions involved with any bank accounts. With real person meeting up using localbitcoin is the best and safest way to deal.

The Florida bust (http://www.coindesk.com/localbitcoins-users-criminal-charges-florida/) related to localbitcoins was not only for money laudering but also for violating a Florida law requiring licensing as a money transmitter. Any state licenses would be in addition to the Federal registration. Check your state laws to see if you must register.

If you sell a small amount of bitcoin on licalbitcoins, it is legal. In the US, there is a certain limit. If you are above that limit, you are classified as money transmitter. You have to declare and register.

Paypal will freeze your account and take your money it is against their TOS.
Other methods depend on how much you trade (same rules as fiat)

Google search the story about guys being arrested by the FBI after meeting through Localbitcoins.
..and WHY

edit:
ya the guy above me has it right LOL

If you just buy or sell small amount of bitcoin in localbitcoin.com, it is fine. Do not do too much trading there. I think if you just buy bitcoin from others, you do not need a money transmitter license.

No dude it is not illegal. Knock yourself out.

I have to say it all depends on where you live.  In the USA, the IRS just released new laws around what BTC is considered and it seems that they consider it a possession and not a currency.  At the same time, they seem to be requiring some sort of record keeping laws when you are paying others with it or if you are giving it away.  I do not know if I read it right, but search BitCoin under the irs.gov website and this will help you a little if you are in the USA.

If you live in the USA its legal,
However, some people buy Bitcoins to launder illegally made cash.

I have noticed this and I have made sure to avoid this anytime I am thinking it is something fishy.  The people who use BTC for this, in my opinion, actually are ruining the BTC credibility.  When the government auctions off so much of BTC, it shows the general public this is not a currency and leads others to believe that BTC is the choice of illegal activity. 

BurtW case shows that if you are living in the wrong area of the US selling bitcoin can be illegal. You will be in trouble with police, FBI, homeland security and God knows what else.
To be sure about your bitcoin sell/buy transactions being completely legal to use registered bitcoin exchange. Yes, that is painful as your IDs can be probably leaked to IRS in the future, but at least you won't end up in jail.

How on earth would you know if something is fishy?
When you sell Bitcoins to some guy in person there is no way of knowing where he got the money from. He could just bullshit if you ask.

Is not possible to declare it like a  used article sell?  ::)

When you sell the bitcoin, you need to tell the buyer that the bitcoin should not be used for any illegal purpose.

Follow the rules of your state or country and you wont have any problems. If you sell or trade over the amounts then you going to need to submit tax form, so long as you follow rules and regulations selling if legal.

I heard somewhere thatits against the Tos of PP to use it for cryptocurrency exchamges so its probably a bit risky.

Yes, however the buyer could buy Bitcoin to launder his illegally made cash. He could then claim it on some online source.

selling bitcoins on localbitcoins.com is legal or not it is upto the seller or buyer country where they reside, i think in US their is a legal law on bitcoins and cryptocurrency , so their you can show your entrys and pay taxes according to it. but some countrys still dont have any law on bitcoins or crypto currency, so their it is upto user what way he takes it. or leave it

if a user does a cash and carry business then their is no way to show any entry.

in some case you need to carry a licence, or if you're in the usa, you would definitely end like Burtw, who was arrested for this

but for other country the jurisdiction should be different, i guess if you're from the usa and worry about this, why don't you travel abroad and meet a stranger in another nation for the deal?

Thousands of people do it every day so I guess it's gotta be legal enough for most of them. What happened with localbitcoins in Germany?

what you said is correct , i dont know much about usa, ya but it is true that the legal issues are different in different country, as such in india still bitcoin is in dark, so if anyone is dealing in bitcoin buying and selling and earning profit then i think he has to show as profit from short term gain.

untill bitcoin gets fully recognised its position in all country it is difficult to tell the legality of trading

I have to disagree with this statement.  There are regulations that were put in place by the IRS that determines which classification you are classified under, depending on the nature of what you are doing for business.  There is a lot of red tape around this subject and you are best in finding out for yourself by reading than you are asking us.  We can give you only so much information before you need to research into this information.

I think it is legal if it is actually used to exchange bitcoin, if of course it is illegal, but first you have to know the background and the origins of the exchange, I think so

I believe over a certain amount you need to get a license, I may be wrong anyone correct me if I am wrong. So if you are doing over a certain amount of money and don't have a license then it would be illegal, even if you did not know about it.

yes it is legal ! Because bitcoin exchange is legal all over the world so its legal for everyone in world


Hence it is one of the digital currency of the world

Never trust an answer on an Internet forum on this issue.

Ask an actual lawyer familiar with your local, state, and federal law.

Seriously.

What I love about this question is how it highlights the fact we don't have freedoms. Oh, helping with money laundering they'll argue. Right... because police actually can't find the real crime
Meanwhile, the USD remains the currency of criminals

i think that selling in this site bitcoins are not legal .

I think that is legal as long as still following the rules..
I think something is legal as long as we doesnt get caught...for example i stole your money its legal until i got caught and its illegal...this is just my opinion..

Exactly, and I think its legal to sell or buy bitcoins on localbitcoins.com as I am using since last 1 year, and I didn't face any issue with it, so at a moment its legal lets see whether it becomes illegal in future or not  ;D

Its depending on your location.
Generally selling bitcoins is legal, but you mostly have to pay taxes.

as far as i remember its legal aslong as you dont sell above $1000 a year in the U.S. if you sell more than that its considered money laundering.

Thats like 2.5BTC/yr... Nothing...

LOL)) Following the rules in this case is will be snth like getting the MSB license.  But if you are selling let's say 1 bitcoin you've mined and you are doing this one time - I don't think this will be offence. But why not just use coinbase or something like that? Extra $5 you'll maybe earn is not worth the possible trouble

It can violate local lawa, depending on how much u wish to buy or sell. everyone should do a little research of state laws and money regulations. Maybe u just need some paper work to be done and everything would be alright.

i cannot see any rules about bitcoin either to sell on special exchange and neither they banned bitcoin to be sell on specific exchange to it is looking legal to me.

but i think it is so clear if a country has not yet regulate a currency and not yet consider a currency as legal then i think no need to study the law for that, it  must be illegal to sell or even to buy that currency in local market.

You haven't faced anything yet because you haven't claim it on your taxes.

yes i agree with you, if bitcoin is legal in a country and they are collecting tax on bitcoin, on its income and also on its transaction then it is legal to sell bitcoin on local bitcoins,com but it the country has not legalize bitcoin and there is no tax on bitcoin collecting by the state then it is illegal and it is a type of money laundering. which is totally illegal.

Finding out Localbitcoin traders are making that much per month is alot of money not being assessed for an individuals total annual income.
If that is not put down as earned income then that is in fact hiding capital gains from the government.
How they will determine how much you owe to them is up to a tax officer to decide if you owe back taxes on that doing it for several years before this year is up.

you have a very wrong opinion, it is illegal if the state consider it illegal and you are engage in illegal activities and that is way the state is going to arrest you. other wise police is not going to arrest a person who i not involve in illegal activities.

it is not officially declare it as a legal currency then how can one sell bitcoin on local bitcoins.com. i think it will be illegal because the state has not consider it as legal currency and there is no such rules regulation for bitcoin or any tax implementation on bitcoin there fore i think it will illegal to sell bitcoin on local bitcoin boar.com

It depends where do u live.it is legal in my country as I live in India.

yes that is right to say and i think every state will have their own rules and regulation, but i to me as most of the countries have not yes consider bitcoin as a legal currency therefore to me it will be illegal to sell bitcoin on local bitcoins.com.

Many countries do not think the bitcoin is a legal currency, but it is a kind of commodity. So it is still legal.

Depends upon your local laws. If your country/state regulates such transactions or requests you to report such sell/buy transactions, you may want to comply if you want to make everything 'legal'.

What you do in your country might be illegal for me in my local jurisdiction and vice versa.

Well yeah, it depends on how much you are trading, if its 5$, noone is really going to be caring, however if amounts are getting bigger, in most european countries they'll ask about it, if you fill in your tax returns.

I am new, and may not have much insight to offer yet, but I did find these useful. 

https://coincenter.org/entry/tracking-bitcoin-regulation-state-by-state
https://www.bitaml.com/

I think the answer depends on the country where you live in.  In my country there is no rule yet for cryptocurrency and transacting bitcoin thru localbitcoin is not prohibited.  It was not labeled legal or illegal by the government simply because they are busy with other stuff that they forget about current technology that is trending.

If I remember correctly then that would be the case if you are resident of New York, There laws consider anyone sending BTC an exchanger needing to comply with the anti-money laundering laws, However if someone state they will use illegally you should not sell it "someone got into trouble because of that".

It depends what country where you from here in the philippines buy bitcoins in localbitcoins is legal but just a few people buying bitcoins in localbitcoina hete because it is easy to buy bitcoins here just in convenient store you can buy easily and easy to cashout the money from bitcoins.

I suppose it depends on the country but I would say it is mostly illegal but not very bad, sort of. I doubt Localbitcoins is a registered company paying taxes for all the money they make on these people meeting, so I guess it just can't be considered as legal. To which country does this stuff belong anyway? Or to none just like the btc itself?

The legality of your transaction depends upon your locality and if you could do a little research about that then you will understand whether you are doing something illegal or not.Every country has different rules and regulations regarding taxes so be aware of those while doing anything so that you wont get into trouble.

I think it is legal world wide because i never heard that someone are experience of illegal just buying bitcoins or selling in localbitcoin.. you are just selling bitcoin and i think you will be still use an escrow for dealing to someone so that you are far in scam.
localbitcoin or a company? i think they are not paying in tax except for a website or other needed in the site just to secured or increase the availability of the site..

Owing bitcoin is legal in many countries.

Ofc you can sell if u don't try to cheat.

Since Bitcoin is broadly regarded as property by the US government, it would be simple exchange of goods, which would be legal in nearly all cases.  However, if your earnings for working are in Bitcoin and you try to convert them to fiat currency, especially in a bank or digitally in general, might be regulated or taxed.

A lot of transactions on LocalBitcoins are with cash in person though, and this is a a tad more hazy as in a few cases it could be regarded as tax evasion.

it depends on which country you are transacting because each country has regulatory policies different laws regarding bitcoin, I think if you are transacting of bitcoin to localbitcoinc for cash card paypal you usually pay a fee transaction fee, usually in need ID verification for security process your transactions

i agree its depend where you live..

for exemple i can sell for any big amount on LCB and i m not gona  pay any taxes.

Yes, I don't find any bad with local bitcoins till now, but it completely depend on your country rules and regulation about the tax paying, whereas when you convert to fiat and withdraw to banks, government sector will easily identify your transaction, if you reach minimum number of transaction per year, then definitely you have to pay taxes on it.

Yeah, it depends on the country whether they will consider that legal or illegal.  In our country (Philippines) bitcoin is neither legal nor illegal. But there is this one company (coins.ph) which allows us to pay bills, convert to fiat and do transactions with ease and we are not having trouble about that. Not even in the government.

I do consider bitcoin is legal in our place because we can easily make transactions with it and the government do not permit us to do so.

With genuine individual getting together utilizing localbitcoin is the best and most secure approach to bargain. On the off chance that you offer a little measure of bitcoin on licalbitcoin, it is lawful. In the US, there is a sure point of confinement. On the off chance that you are over that point of confinement, you are declared as money transmitter.

 Depends where you live In my country there is no rule yet for cryptocurrency and transacting bitcoin thru localbitcoin is not prohibited.

Indeed every country certainly has different rules about bitcoin.
So is my place that does not currently have binding rules about bitcoin transactions.and can do exchange to localbitcoin with no nominal limit.

It's legal, but you have to respect the delivery deadlines.
I know that in France and the United States it is legal.

Although government in my place does not declare legal about bitcoin but so far my bitcoin circulation in my place is not prohibited.
And until now did not get into trouble doing bitcoin transactions using localbitcoin.

Perhaps currently only local bitcoin facilities that i can use to buy and buy bitcoin transactions in my place. Because there is no store that provides transactions with bitcoin services

I've always thought paypal had a clause in their rules you agree to when you register an account with them you were not allowed to obtain digital currency of any kind even purchasing them with this cash in paypal cards if used?

Very confusing if you are able to.
A loophole of some sort I would assume.

Yes there is no rules on the legality of the law of bitcoin

its legal bro . as long as your in the u.s and your above 18yrs old. just be cautios of who you are selling to avoid getting scamed. ok bro gudluck and have fun.

Until you are selling the bitcoins for the payment which is you own country fiat currency till then i dont think that it is illegal or money laundering or foreign currency, when you are accepting other fiat currency which comes under foreign currency then i think you have to rethink it as it will become like trading in foreign currency and for that you have to take the legal steps

It is legal because it assumes KYC at the personal business level.  The site does not directly exchange FIAT for anything, so it does not have to collect the regulated information.  However, the unspoken assumption is that both parties, being citizens of their countries, are fully aware of all local and federal laws and are keeping with those laws by sharing the proper background/identity information with each other.

It is like asking why a car can do 100 MPH when it illegal it most places.  The car manufacturer assumes the driver is going to behave in a legal manner, the site is "assuming" legally that both people are being 100% legal.

There really arent any major laws related to it. All that matters is that you have to pay adequate taxes and thats it. There are no other such compliance laws. Moreover localbitcoins.com work because it is legal to sell btc. If it would have been illegal you wont have seen it operating on such a large scale. But yes I still prefer to use some different ways to sell your btc. This method is highly unsafe.

I believe that localbitcoins are charging some fee to the seller or buyer for every they made successfully. Besides that, Localbitcoins didn't holds any money and it acts only as medium for trading just like this forum so in my own perspective. Localbitcoins is legit AF.

There is nothing wrong with selling our bitcoins in localbitcoin.com because it is an exchange and you are using bank accounts for transferring your money so your transaction are also recorded so you need to pay taxes even.But if you do big trades then chances of your bank account will get freezed by governments so as long as we do small trades then there is no problem.

As far as I know localbitcoins is good as a decentralized exchange and as long as you trading cryptos i dont see anything wrong but if transactions involve fiat then your countries laws could be applied here and if cryptos are legal or illegal in a country that will tell if LBC is legal.

There is no issues in it unless the buyer and seller are genuine enough in dealing the deal genuine. This is another source of income. I love trading and wish to start trading. Discussing with my friends on getting a trading ideas. This is the right time to buy as many cheapest coins as i can to see a huge profits in not so far but in December 2018.