Bitcoin Forum

c. De-Centralized Virtual Currencies

            A final type of convertible virtual currency activity involves a de-centralized convertible virtual currency (1) that has no central repository and no single administrator, and (2) that persons may obtain by their own computing or manufacturing effort.

            A person that creates units of this convertible virtual currency and uses it to purchase real or virtual goods and services is a user of the convertible virtual currency and not subject to regulation as a money transmitter. By contrast, 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. 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.

If I read that right about 5 or so business I can think of, are in violation of U.S laws.

It can be interpreted differently

What is funny is we don't "create" the virtual currency.  We mine it ("find it").  You can create fiat, but not bitcoins.  This means FinCen's statement on de-centralized currencies don't apply to bitcoin.

tl;dr...  bitcoins are legal

An administrator is a person engaged as a business in issuing (putting into circulation) a virtual currency, and who has the authority to redeem (to withdraw from circulation) such virtual currency.

tl;dr...  bitcoins are legal

And you need a +$1million dollar worth money transmitter license if you want to mine and sell them for fiat  ::)

tl;dr...  bitcoins are legal

Yeah, I've been jumping with joy for the past 10 minutes :)

I also see this as a positive development, especially in the long run.

1 million? That is quite expensive. As far as I know that license in Finland costs like 5000 EUR, which our company is prepared to pay if this ruling spreads to Finland. Not sure how much these licenses cost for the whole EU though.

For mining though, I will venture to guess that people will simply not report any of it from now on.

Well, the way I read it:

emphasis added

While it is possible to "destroy" Bitcoin units, nobody has the authority to redeem it. So there is no such thing as "administrator" of Bitcoin.

When was bitcoins ever illegal? LMAO I was jumping for joy over 2 years ago when I got into bitcoins, cause they were never illegal.

Well, the way I read it:

emphasis added

While it is possible to "destroy" Bitcoin units, nobody has the authority to redeem it. So there is no such thing as "administrator" of Bitcoin.

A final type of convertible virtual currency activity involves a de-centralized convertible virtual currency (1) that has no central repository and no single administrator, and (2) that persons may obtain by their own computing or manufacturing effort.

You're not happy about having legal certainty, finally?

This is pretty much the best news regarding bitcoin we could have gotten from the government.

See some people have not contacted lawyers before jumping into bitcoin businesses, if you contacted your lawyer before doing business in bitcoin, you would know it was always legal.

I don't think this has anything to do with legality.

This is about regulation: The bureaucrats weapon of choice.

When was bitcoins ever illegal? LMAO I was jumping for joy over 2 years ago when I got into bitcoins, cause they were never illegal.

Are you out of your fucking mind???

Well, the way I read it:

emphasis added

While it is possible to "destroy" Bitcoin units, nobody has the authority to redeem it. So there is no such thing as "administrator" of Bitcoin.

It's about the law going forward.  Nobody had any certainty about that before.  Jesus, you're such a fucking buzzkill :)

They've been a legal gray area since they were created. We've always known that the Government would get into regulating them someday, but nobody knew what form that regulation would take. They could be all but ignored or they could do their level best to squash it like a bug. I believe this is a good sign in that it seems to be pretty light regulation and provides some security - the more official recognition Bitcoin gets, the less likely the Government is to try to crush it.

There will be better exchanges appear in bahamas and virgin island

You act as if this is a bad thing.

There is good and bad in this news, but the net effect is extremely good. Bitcoin demolishes all resistance, and just entered the next phase of its evolution.

And you need a +$1million dollar worth money transmitter license if you want to mine and sell them for fiat  ::)

I just wonder how miners will cope with this news. Technically they could just buy gold and silver and sell that to avoid needed a license.. but still..

1 million? That is quite expensive. As far as I know that license in Finland costs like 5000 EUR, which our company is prepared to pay if this ruling spreads to Finland. Not sure how much these licenses cost for the whole EU though.

For mining though, I will venture to guess that people will simply not report any of it from now on. If the coins are mixed, there is no way to really know where the coins came from.

No I agree, it is the best news US peoples could have hoped for. Bitcoin is now explicitly legal and will be regulated like real money (we knew it was already real money, but now the "normal business community" will as well).  I've long said that Amazon will not accept Bitcoin until the legal uncertainty is removed. This just removed it.

There is good and bad in this news, but the net effect is extremely good. Bitcoin demolishes all resistance, and just entered the next phase of its evolution.

I don't think this has anything to do with legality.

This is about regulation: The bureaucrats weapon of choice.

Is the bitcoin community radical enough to cut the US gov out? Like, if, says, the gov attempts to forbid bitcoin, or create unreasonable restrictions?

Is the bitcoin community radical enough to cut the US gov out? Like, if, says, the gov attempts to forbid bitcoin, or create unreasonable restrictions?

Is the bitcoin community radical enough to cut the US gov out? Like, if, says, the gov attempts to forbid bitcoin, or create unreasonable restrictions?

Administrators and Exchangers of Virtual Currency

An administrator or exchanger that (1) accepts and transmits a convertible virtual currency [,,,] for any reason is a money transmitter under FinCEN's regulations,

An administrator or exchanger that [...] (2) buys or sells convertible virtual currency for any reason is a money transmitter under FinCEN's regulations,

a.   E-Currencies and E-Precious Metals

Examples include, in part, (1) the transfer of funds between a customer and a third party by permitting a third party to fund a customer's account;

(2) the transfer of value from a customer's currency or commodity position to the account of another customer;

or (3) the closing out of a customer's currency or commodity position, with a transfer of proceeds to a third party.

I don't think this has anything to do with legality.

This is about regulation: The bureaucrats weapon of choice.

On the

"Bitcoin and government don't mix"

I'm a politician, I love bitcoin, I belong to a small party (atm, just wait until Cannabis is legaised in the UK ;)

And ye, bitcoin IS the future. Regulation IS key (and as someone rightly mentioned, it's the next stage of its evolution).

https://bitcointalk.org/index.php?topic=152651.0

It would be better to say "current governments (corrupt, greed, banker controlled) and bitcoin don't mix"

But the governments of the future, ohhhh, they're gonna LOVE IT, because using bitcoin will enable the people to love you (as you save them from this horrible state the planet is in).

tl;dr...  bitcoins are legal

But the governments of the future, ohhhh, they're gonna LOVE IT, because using bitcoin will enable the people to love you (as you save them from this horrible state the planet is in).

The anonymous BTC<-->USD exchanges are going to go two ways: Those that comply with FinCen and ask customers for full information

damn rothchilds and their ilk

Oh that's so cute! that you believe in conspiracy theories!

Me thinks somebody should get working on a decentralised exchange if its even technically feasible.

To the extent that you are exchanging and transporting your own money on behalf of yourself, you are not doing business as a money transmitter or a currency dealer or exchanger for purposes of the BSA, and thus, are not required to register with FinCEN as an MSB.

I've been considering how to do it. I'll need to obtain legal advice, though - there's one piece of it that will probably require a lawyer's advice (especially in the light of the guidance memo's mention of "e-precious metals").

It's even cuter that you believe in coincidences.

So does that mean that if I buy and sell my own bitcoins for USD on existing exchanges on behalf of myself, I'm not a money transmitter or exchanger?  I might ask for clarification from them on my business practices.

This ^^

"An administrator is a person engaged as a business in issuing (putting into circulation) a virtual currency, and who has the authority to redeem (to withdraw from circulation) such virtual currency. "

This is absurd, no one can withdraw bitcoin from circulation, maybe they think bitcoin is the same as FED's money printing business

There will be better exchanges appear in bahamas and virgin island

Why would you set up a decentralised exchange that could be hosted on multiple computers in multiple jurisdictions if you were going to comply with all their endless rules & regs?, especially if you are in multiple countries it will be infeasible to comply. What would be the point of the decentralisation?

Wow.  Watch out!  The Illuminati might get you tonight!  It's funny how crackpots and bitcoin fit together so well.

SN: "Hark! A tool with which you can create and move wealth away from the prying eyes of government and the grasping hand of banks is at hand! Use it wisely and create a new freedom for yourselves!"

Bitcoin user: "Gee, thanks! Which government agency do I contact to make sure it's ok to use?"

SN: "Nevermind. I'm going to leave now."

Yup.  There's really no way the exchange could prove the withdrawal was not to a third party.

Have you ever heard of the bank for international settlements?   

US Congressional Record, Feb 1895 (http://books.google.com/books?&pg=PA115&id=Nh42AQAAIAAJ#v=onepage&q&f=false)

Contract

This agreement entered into this eighth day of February, 1895, between the Secretary of the Treasury of the United States, of the first part, and Messrs. August Belmont and Company, of New York, on behalf of Messrs. N. M. Rothschild and Sons, of London, England, and themselves, and Messrs. J. P. Morgan and Company, of New York, on behalf of Messrs. J. S. Morgan and Company, of London, and themselves, parties of the second part...

    “The active cooperation of Grover Cleveland in the manipulation of the currency by the Rothschilds of London and J. Pierpont Morgan of New York was very unpopular with the people. He was accused by both leading Democrats and Republicans of having betrayed his party and of having turned his back upon the Democratic platform of 1884 upon which he was elected.”

    Reminiscences of Senator William M. Stewart (Nevada, 1908)

/Facepalm 

Why would you set up a decentralised exchange that could be hosted on multiple computers in multiple jurisdictions if you were going to comply with all their endless rules & regs?, especially if you are in multiple countries it will be infeasible to comply. What would be the point of the decentralisation?

Here's one a few years older than BIS.

This is a "guidance" posting.  It's a summary of how FinCEN feels that the already-existing regulations apply to the situation.  In reality, nothing much has changed except for providing some clarity.  All that verification stuff is required and the fly-by-night folks have got some worrying to do.

I'm wondering how things like the Linden Labs stuff comes out of this.  They have centralized virtual currency with an administrator.   On the other hand, they have third parties doing conversions so they might be ok.

JP morgan and Mastercard run the Electronic Benefit Transfer in the US

Why would you set up a decentralised exchange that could be hosted on multiple computers in multiple jurisdictions if you were going to comply with all their endless rules & regs?, especially if you are in multiple countries it will be infeasible to comply. What would be the point of the decentralisation?

I don't think this is a big deal.  As already pointed out this is just a clarification of rules that are already in place and it was pointed out it only applies to over $1000/day.  

This is a "guidance" posting.  It's a summary of how FinCEN feels that the already-existing regulations apply to the situation.  In reality, nothing much has changed except for providing some clarity.  All that verification stuff is required and the fly-by-night folks have got some worrying to do.

I'm wondering how things like the Linden Labs stuff comes out of this.  They have centralized virtual currency with an administrator.   On the other hand, they have third parties doing conversions so they might be ok.

Hmmm, so if I just buy bitcoins, and do not resell them later, I am neither a money transmitter nor an exchanger and thus is not subjected to any regulation?

For practically everything but bitcoin and other cryptocurrencies. Bitcoin->$0.01, no MSB/MT=criminal.

If you stick to selling under 1k a day

No activity threshold applies to the definition of money transmitter. Thus, a person who engages as a business in the transfer of funds is an MSB as a money transmitter, regardless of the amount of money transmission activity.

For clarity, that "$1K per-day" threshold is for use in determining if you would be considered a Money Service Business (MSB), and is not relevant in the discussion about whether or not an activity causes you to be considered a "money transmitter".


 - http://www.fincen.gov/financial_institutions/msb/definitions/msb.html

So now I'm wondering; is anyone free to use bitcoin? Or, is it only for those granted special permission by FinCEN to use in a specified way?  

I suppose if this community endeavors to interface with the establishment, it will have to get used to being constrained by its rules.  

Anyone who thinks this is a good thing for bitcoin is in for a rude awakening.
I had my fingers crossed that bitcoin would get much further along before this happened.

This is so full of loopholes.

In 2008, FinCEN issued guidance stating that as long as a broker or dealer in real currency or other commodities accepts and transmits funds solely for the purpose of effecting a bona fide purchase or sale of the real currency or other commodities for or with a customer, such person is not acting as a money transmitter under the regulations.

I'll just offer to sell bitcoin wallets instead of bitcoins then, after the sale is made I'll make a donation into their wallet.

"§1 C. All Bitcoin users are required to send one tenth of their transmissions to Realpra."

No, bitcoins are created, not "found". You have to be naive to think otherwise.

Definitions of User, Exchanger, and Administrator
[...]
* A user is a person that obtains virtual currency to purchase goods or services.
* An exchanger is a person engaged as a business in the exchange of virtual currency for real currency, funds, or other virtual currency.
* An administrator [...not relevant...]

With the standard "I Am Not A Lawyer" disclaimer, my read is that miners might be ok if

• They sell bitcoins for fiat, via a licensed exchange
• They purchase goods and services entirely within the bitcoin economy

The first is obvious.  The US government is certainly within their rights to regulate the US Dollar, and ditto for other government fiat currencies.

The second is vastly positive.  Stimulative for the bitcoin economy, encouraging a broad market of services priced in bitcoins.

And the third, more general point is implied:  bitcoins are legal for regular users to possess and spend.

It is true that bitcoins were never illegal, but having a big government issuing an affirmative statement "bitcoins are legal" (in effect) is great news.

As long as I only occasionally sell my own Bitcoins I am not engaged as business. As I see it all of this does not affect private users.

31 CFR § 1010.100(ff)(8 )

Limitation. For the purposes of this section, the term “money services business” shall not include:

(iii) A natural person who engages in an activity identified in paragraphs (ff)(1) through (ff)(5) of this section on an infrequent basis and not for gain or profit.

The way I read this is that mining for bitcoins and selling those for USD is now illegal unless you are a corporation with the right licenses (which cost many thousands) and hundreds of thousands (or even millions) of dollars for bonding requirements, etc.

A significant downside to the ruling, but one that's easily circumvented; all you need to do is cash in your mining spoils by actually spending them in the Bitcoin economy. Buying 1oz rounds, for instance (which can then easily be exchanged for fiat if that's your thing).

Edit: Of course, you could also just ignore the law, provided you're careful enough about where you cash out (and willing to risk the book getting thrown at you if you're discovered).

The law only covers those who "create" virtual currency. E.g. Linden Labs for SLL. I don't see how this can cover miners, who are "granted" virtual currency. I think you are drawing conclusions far too soon here.

c. De-Centralized Virtual Currencies

            A final type of convertible virtual currency activity involves a de-centralized convertible virtual currency (1) that has no central repository and no single administrator, and (2) that persons may obtain by their own computing or manufacturing effort.

            A person that creates units of this convertible virtual currency and uses it to purchase real or virtual goods and services is a user of the convertible virtual currency and not subject to regulation as a money transmitter. By contrast, 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. 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.

bitcoin --->gold---->fiat.

Problem solved.

What is funny is we don't "create" the virtual currency.  We mine it ("find it").  You can create fiat, but not bitcoins.  This means FinCen's statement on de-centralized currencies don't apply to bitcoin.

[...]

7 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.

Of course! Ben Bernanke told us under oath that gold is not money. If it is not money, then it is certainly not "real money" either or is it?

It seems they are starting getting diminishing return on legislation as well. It is getting more and more complicated because they have turned such a simple thing as money into much more complex one by all this money laundering BS and by adding more and more layers of BS that is self contradictory, sooner or later this heap of BS will fall down under its own weight.

One more observation. It was mentioned by someone before, that the Cyprus thing makes Euro less fungible. I would observe that all the AML/KYC multilayered legal BS is nothing less than a direct (and suicidal) attack on fungibility of all fiat currencies.

They are making their fiat currencies worse and worse and less competitive as money by making them less fungible. Should have been just doing decent police work instead of making their money vulnerable like that.

Perhaps the key to success of Bitcoin as money is preserving Bitcoin fungibility as much as possible and getting to the point where Bitcoins do not have to cross to fiat world and circulate within Bitcoin economy as much as possible. In this case Bitcoin will simply win because it is better money than less fungible fiat currencies. We are making quite good progress on this so far but this can be improved on a lot.

almost time to move the biz to cyprus.

See my emphasis. This is while not crystal clear but it is difficult to interpret any other way than as bitcoin miners are money transmitters if they sell for fiat. You can interpret it as you like, but what is important is how judges and regulators will interpret it and you can bet they will not be trying their best to bend over in favor of miners, the opposite is more likely.

However, selling for fiat on an exchange is unlikely to make the miner a "money transmitter", because "money transmitting" function is performed in this case by the exchange.

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 <---- They got it posted on the Gas station doors that sell green dot and netspend

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.

Now this brings up the states

The definition of money transmitter for purposes of BSA regulations found at 31 CFR 103.11(uu)(5) includes:

(A) [a]ny person, whether or not licensed or required to be licensed, who engages as a business in accepting currency, or funds denominated in currency, and transmits the currency or funds, or the value of the currency or funds, by any means 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, or an electronic funds transfer network; or

(B) [a]ny other person engaged as a business in the transfer of funds.

FinCEN does not currently interpret the definition of money transmitter to include the third-party origination service that is described in your letter. The nature of the transactions you describe is the transfer of funds through the ACH system from a customer to a merchant as payment for goods and services. [ ]’s role in the transactions is to provide merchants with a portal to a financial institution that has access to the ACH system. [ ] acts on behalf of merchants receiving payments rather than on behalf of customers making payments. For these reasons, the service that [ ] provides through [ ] more closely resembles payment processing/settlement than money transmission. Therefore, to the extent that the role of [ ] in such transactions is limited to submitting payment instructions obtained from a merchant to a bank for ACH processing, and remitting the funds received through the ACH process to the merchant (or in some cases, refunding money to the merchant’s customer through an ACH transaction), FinCEN would not deem [ ] a money transmitter for purposes of 31 CFR 103.11(uu)(5).

In arriving at our decision in this matter, FinCEN relied upon the accuracy and completeness of the representations made in your February 5, 2003 letter. Nothing precludes FinCEN from seeking further action should any of this information prove inaccurate or incomplete. Finally, we note that you have requested that certain information contained in your letter be held in confidence and exempt from disclosure under the Freedom of Information Act, 5 U.S.C. 552. FinCEN reserves the right to publish this letter as guidance to financial institutions with all identifying information about you, [ ], [ ], and [ ], redacted. You will have 14 days after the date of this letter to identify any other information you believe should be redacted and the legal basis for the redaction. Should you have any questions, please telephone Christine Del Toro of my staff at (703) 905-3590.

(uu) Money services business. Each agent, agency, branch, or office within the United States of any person doing business, whether or not on a regular basis or as an organized business concern, in one or more of the capacities listed in paragraphs (uu)(1) through (uu)(6) of this section. Notwithstanding the preceding sentence, the term ?money services business? shall not include a bank, nor shall it include a person registered with, and regulated or examined by, the Securities and Exchange Commission or the Commodity Futures Trading Commission.

(1) Currency dealer or exchanger. A currency dealer or exchanger (other than a person who does not exchange currency in an amount greater than $1,000 in currency or monetary or other instruments for any person on any day in one or more transactions).

(2) Check casher. A person engaged in the business of a check casher (other than a person who does not cash checks in an amount greater than $1,000 in currency or monetary or other instruments for any person on any day in one or more transactions).

(3) Issuer of traveler's checks, money orders, or stored value. An issuer of traveler's checks, money orders, or, stored value (other than a person who does not issue such checks or money orders or stored value in an amount greater than $1,000 in currency or monetary or other instruments to any person on any day in one or more transactions).

(4) Seller or redeemer of traveler's checks, money orders, or stored value. A seller or redeemer of traveler's checks, money orders, or stored value (other than a person who does not sell such checks or money orders or stored value in an amount greater than $1,000 in currency or monetary or other instruments to or redeem such instruments for an amount greater than $1,000 in currency or monetary or other instruments from, any person on any day in one or more transactions).

(5) Money transmitter?(i) In general. Money transmitter:

(A) Any person, whether or not licensed or required to be licensed, who engages as a business in accepting currency, or funds denominated in currency, and transmits the currency or funds, or the value of the currency or funds, by any means 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, or an electronic funds transfer network; or

(B) Any other person engaged as a business in the transfer of funds.

(ii) Facts and circumstances; Limitation. Whether a person ?engages as a business? in the activities described in paragraph (uu)(5)(i) of this section is a matter of facts and circumstances. Generally, the acceptance and transmission of funds as an integral part of the execution and settlement of a transaction other than the funds transmission itself (for example, in connection with a bona fide sale of securities or other property), will not cause a person to be a money transmitter within the meaning of paragraph (uu)(5)(i) of this section.

By contrast, 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.

See my emphasis. This is while not crystal clear but it is difficult to interpret any other way than as bitcoin miners are money transmitters if they sell for fiat. You can interpret it as you like, but what is important is how judges and regulators will interpret it and you can bet they will not be trying their best to bend over in favor of miners, the opposite is more likely.

However, selling for fiat on an exchange is unlikely to make the miner a "money transmitter", because "money transmitting" function is performed in this case by the exchange.

Its the exchange part that gets you, but I think the stipulation is over 1000 USD if you are not a bussiness. But really at this point no one knows.

(1) Currency dealer or exchanger. A currency dealer or exchanger (other than a person who does not exchange currency in an amount greater than $1,000 in currency or monetary or other instruments for any person on any day in one or more transactions).

Well I guess there is no loophole then lol

If I'm interpreting this correctly the definition for Centralized Virtual Currencies would apply not just to Second Life's Linden dollars, but also to WoW gold and any other video game economy?



By the preceding definition, Magic the Gathering: Online tix are a virtual currency, as they have an equivalent cash value (a dollar) and are a substitute for real currency in the game (they are used to pay event entry fees, and are a preferred medium of exchange for purchasing cards when trade partners cannot be found).

The implications of this 'guidance' appear to be pretty far reaching.

Trading bitcoin isn't "foreign exchange".

If this is relevant to your business, I would advise obtaining an up-to-date version of the regulations, and discussing it with legal counsel.

I am preparing an article about this and I have a call into Fincen for clarification.

Accepting and transmitting anything of value that substitutes for currency makes a person a money transmitter under the regulations implementing the BSA

I would argue that the protocol "creates" the coins, and USA based miners are just claiming them.

I think the actual creation occurred in 2009 when the Bitcoin Protocol was launched. I would argue that the protocol "creates" the coins, and USA based miners are just claiming them.

It's a point that a hostile regulator or judge would not likely accept.

However someone would have a legit argument if they wanted the cost and complexity of a court case.

Fincen called me back.  I asked about the definition of "Money Transmitter" and whether the definition applied to one-time or rare transactions by businesses or individuals trigger.  He said that doing even one transaction by an individual requires them to register as  "Money Transmitter"  (I had not seen the rules that requires transmitters to register, only MSB's.)  He then started to talk about travelers checks and check cashing services.

I explained I was writing an article about the new clarifications and how it relates to Bitcoin.  I explained that all kinds of questions arose about who is a Money Transmitter or Money Services Business and what rules they had to follow.  I also asked the Bitcoin mining question. 

He had no idea what Bitcoin was and he said he had to research it and call me back.   

Fincen called me back. ... He had no idea

If you get someone knowledgeable on the phone

(ff) 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. ...

(2) Check casher ...

(3) Issuer or seller of traveler's checks or money orders. ...

(4) Provider of prepaid access ...

(5) Money transmitter ...

(6) U.S. Postal Service. ...

(7) Seller of prepaid access. ...

Bitcoin is not pegged to anything.  It does not have "equivalent value" in "real" US dollar currency.  It is not a "substitute" for "real" US dollar currency.  It is not given arbitrary value by anyone and thus is not based on the transmission of force.  It is not "convertible" for anything.  It isn't even "money" technically.

Jesus, you people really don't pay attention to anything at all.

A "money services business" is someone who holds (fiat) money for someone else.

A "money transmitter" is someone who holds (fiat) money for someone else and carries it across jurisdictional boundaries.

"Money" is guaranteed future value.

None of this has anything to do with Bitcoin, although they would like you to believe it does.  It's a hoax.  It's a psy-op.  All they are doing is telling you how they will respond if you try to peg your "virtual currency" to the US dollar.  And they are telling you this because they have to give you notice in order to limit their own liability for any assumptions made regarding their defective ponzi money.  They are limiting their own liability for their practice of transmitting the use of force via scrip, in arbitrarily regulating its value by money-printing and confiscation.

Bitcoin is not pegged to anything.  It does not have "equivalent value" in "real" US dollar currency.  It is not a "substitute" for "real" US dollar currency.  It is not given arbitrary value by anyone and thus is not based on the transmission of force.  It is not "convertible" for anything.  It isn't even "money" technically.

This is 100% nonsense that only applies to perhaps a couple of businesses in the Bitcoin community that peg their vouchers to the US dollar.

If you idiots respond to this in the way in which it was designed for you to respond, and stop mining and increase the centralization of Bitcoin and voluntarily sign up for regulations that don't actually apply to you, then you might as well just flush your Bitcoins down the toilet.

All MSBs have to register and are then subject to expensive fees and regulatory practices by their states.

I wonder if they could nail every company that sells gift cards? They are virtual currency.

What about Microsoft xbox points? that's a virtual currency?

Every game online store? Blizzard, EA, all screwed.

This is a huge can of worms.

This part ("are then") is not quite correct.

The state and federal laws are disconnected, even if they are intentionally similar in many cases.  Becoming an MSB or MT at the federal level does not immediately trigger a state requirement.  A state requirement to -- for example -- undergo a background check or provide a surety bond is not triggered by becoming an MSB.  The state requirement is triggered by... your transmitting money in a regulated fashion.

A couple US states do not require money transmitter/MSB-like licenses, leaving only the federal requirements to handle.

This is bad, bad news.

First they got your attention, then they regulate, then they take over.

Then they kill it.

I think the real freedom is going to be found on the BTC-e exchange with the Russians and the Chinese. At least you know you can't trust them!
With the US making noises, the EU will copy them, and before you know it, bitcoin will be rebuilt, minus the bits that made it a threat to governments.

Oh well, lets just ride this sucker until it runs out of steam! :)

IV. CIVIL MONEY PENALTY
FinCEN may impose civil money penalties against a money transmitter, or any person who
owns or controls a money transmitter, for violations of money services business registration
requirements.14 FinCEN may assess a civil money penalty for failure to register as a money
transmitter, in an amount up to $5,000 per violation. Each day a violation continues constitutes a
separate violation. FinCEN may assess civil money penalties against a money transmitter, or any
partner, director, officer, or employee thereof, for each willful violation of anti-money laundering
program requirements. A penalty of $25,000 per day may be assessed for failure to establish and
implement an adequate written anti-money laundering program.
15 A separate violation occurs for
each day the violation continues.

I was just looking at some of the fines for failure to register

It's not too late to buy back in.......

To date, FinCEN’s analysts have explored and produced reference products for law enforcement on many traditional and emerging payment systems. These include: cross border funds transfers and correspondent accounts, money transmitters, online payment systems, prepaid cards, and mobile payments. FinCEN’s analysts then follow up this work by providing in-person analysis and training to thousands of investigators each year.

In addition to developing products to help law enforcement follow the financial trails of emerging payments methods, FinCEN also develops guidance for the financial industry to clarify their regulatory responsibilities as they relate to emerging areas.

In fact, just yesterday, FinCEN issued interpretive guidance to clarify the applicability of BSA regulations to virtual currencies. The guidance responds to questions raised by financial institutions, law enforcement, and regulators concerning the regulatory treatment of persons who use virtual currencies or make a business of exchanging, accepting, and transmitting them.

FinCEN’s rules define certain businesses or individuals as money services businesses (MSBs) depending on the nature of their financial activities. MSBs have registration requirements and a range of anti-money laundering, recordkeeping, and reporting responsibilities under FinCEN’s regulations. The guidance considers the use of virtual currencies from the perspective of several categories within FinCEN’s definition of MSBs.

The guidance explains how FinCEN’s “money transmitter” definition applies to certain exchangers and system administrators of virtual currencies depending on the facts and circumstances of that activity. Those who use virtual currencies exclusively for common personal transactions like receiving payments for services or buying goods online are not affected by this guidance. 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. Some virtual currency exchangers are already registered with FinCEN as MSBs, though not necessarily as money transmitters. The guidance clarifies definitions and expectations to ensure that businesses engaged in similar activities are aware of their regulatory responsibilities.

Apparently anyone selling any type of virtual currency on ebay or craiglist is now a money transmitter, and as such a MSB, and as such now in violation of FinCEN interpretation if they haven't registered as an MSB.

There has to be some lawyer out there who is interested in Bitcoins and who can offer their interpretation on this matter.

Excerpt from prepared remarks of

Jennifer Shasky Calvery,
Director,
Financial Crimes Enforcement Network

She gave the keynote in Miami this morning for today's session of the MoneyLaundering.com's 18th annual AML conference.

Yes, me. I wrote up a quick take for the Bitcoin Foundation here: https://bitcoinfoundation.org/blog/?p=152

2. If a person receives real money in exchange for their bitcoin they MAY have to register with FinCEN.

(2) Foreign-located money services business. Each foreign-located person doing business, whether or not on a regular basis or as an organized or licensed business concern, in the United States as a money services business shall designate the name and address of a person who resides in the United States and is authorized, and has agreed, to be an agent to accept service of legal process with respect to compliance with this chapter, and shall identify the address of the location within the United States for records pertaining to paragraph (b)(1)(iii) of this section.

I read the "guidance" as being this type of individual would have to register with FinCEN since they would be "a person engaged as a business in the exchange of virtual currency for real currency, funds, or other virtual currency.” (depending, as you say, on the definition of 'engaged as a business').

Why do you come to the alternative conclusion of MAY rather than MUST - is it just the uncertainty around the definition of 'engaged as a business'?

Will

This is good news. With clear rules the economy can really begin to prosper.

Um you guys are money transmitters and stuff, so figure out how what we expect you to do without us telling you what we expect you to do and BTW if you get it wrong or we later change our mind and decide you got it wrong well you go to jail.

(e) Nonbank financial institutions. Each agent, agency, branch, or office located within the United States of a financial institution other than a bank is subject to the requirements of this paragraph (e) with respect to a transmittal of funds in the amount of $3,000 or more:

(1) Recordkeeping requirements. (i) For each transmittal order that it accepts as a transmittor's financial institution, a financial institution shall obtain and retain either the original or a microfilm, other copy, or electronic record of the following information relating to the transmittal order:

(A) The name and address of the transmittor;

(B) The amount of the transmittal order;

(C) The execution date of the transmittal order;

(D) Any payment instructions received from the transmittor with the transmittal order;

(E) The identity of the recipient's financial institution;

(F) As many of the following items as are received with the transmittal order: 1

1  For transmittals of funds effected through the Federal Reserve's Fedwire funds transfer system by a domestic broker or dealers in securities, only one of the items is required to be retained, if received with the transmittal order, until such time as the bank that sends the order to the Federal Reserve Bank completes its conversion to the expanded Fedwire message format.

( 1 ) The name and address of the recipient;

( 2 ) The account number of the recipient; and

( 3 ) Any other specific identifier of the recipient; and

(G) Any form relating to the transmittal of funds that is completed or signed by the person placing the transmittal order.

(ii) For each transmittal order that it accepts as an intermediary financial institution, a financial institution shall retain either the original or a microfilm, other copy, or electronic record of the transmittal order.

(iii) For each transmittal order that it accepts as a recipient's financial institution, a financial institution shall retain either the original or a microfilm, other copy, or electronic record of the transmittal order.

(2) Transmittors other than established customers. In the case of a transmittal order from a transmittor that is not an established customer, in addition to obtaining and retaining the information required in paragraph (e)(1)(i) of this section:

(i) If the transmittal order is made in person, prior to acceptance the transmittor's financial institution shall verify the identity of the person placing the transmittal order. If it accepts the transmittal order, the transmittor's financial institution shall obtain and retain a record of the name and address, the type of identification reviewed, and the number of the identification document ( e.g., driver's license), as well as a record of the person's taxpayer identification number ( e.g., social security or employer identification number) or, if none, alien identification number or passport number and country of issuance, or a notation in the record of the lack thereof. If the transmittor's financial institution has knowledge that the person placing the transmittal order is not the transmittor, the transmittor's financial institution shall obtain and retain a record of the transmittor's taxpayer identification number ( e.g., social security or employer identification number) or, if none, alien identification number or passport number and country of issuance, if known by the person placing the order, or a notation in the record of the lack thereof.

(ii) If the transmittal order accepted by the transmittor's financial institution is not made in person, the transmittor's financial institution shall obtain and retain a record of the name and address of the person placing the transmittal order, as well as the person's taxpayer identification number ( e.g., social security or employer identification number) or, if none, alien identification number or passport number and country of issuance, or a notation in the record of the lack thereof, and a copy or record of the method of payment ( e.g., check or credit card transaction) for the transmittal of funds. If the transmittor's financial institution has knowledge that the person placing the transmittal order is not the transmittor, the transmittor's financial institution shall obtain and retain a record of the transmittor's taxpayer identification number ( e.g., social security or employer identification number) or, if none, alien identification number or passport number and country of issuance, if known by the person placing the order, or a notation in the record of the lack thereof.

(3) Recipients other than established customers. For each transmittal order that it accepts as a recipient's financial institution for a recipient that is not an established customer, in addition to obtaining and retaining the information required in paragraph (e)(1)(iii) of this section:

(i) If the proceeds are delivered in person to the recipient or its representative or agent, the recipient's financial institution shall verify the identity of the person receiving the proceeds and shall obtain and retain a record of the name and address, the type of identification reviewed, and the number of the identification document ( e.g., driver's license), as well as a record of the person's taxpayer identification number ( e.g., social security or employer identification number) or, if none, alien identification number or passport number and country of issuance, or a notation in the record of the lack thereof. If the recipient's financial institution has knowledge that the person receiving the proceeds is not the recipient, the recipient's financial institution shall obtain and retain a record of the recipient's name and address, as well as the recipient's taxpayer identification number ( e.g., social security or employer identification number) or, if none, alien identification number or passport number and country of issuance, if known by the person receiving the proceeds, or a notation in the record of the lack thereof.

(ii) If the proceeds are delivered other than in person, the recipient's financial institution shall retain a copy of the check or other instrument used to effect payment, or the information contained thereon, as well as the name and address of the person to which it was sent.

(4) Retrievability. The information that a transmittor's financial institution must retain under paragraphs (e)(1)(i) and (e)(2) of this section shall be retrievable by the transmittor's financial institution by reference to the name of the transmittor. If the transmittor is an established customer of the transmittor's financial institution and has an account used for transmittals of funds, then the information also shall be retrievable by account number. The information that a recipient's financial institution must retain under paragraphs (e)(1)(iii) and (e)(3) of this section shall be retrievable by the recipient's financial institution by reference to the name of the recipient. If the recipient is an established customer of the recipient's financial institution and has an account used for transmittals of funds, then the information also shall be retrievable by account number. This information need not be retained in any particular manner, so long as the financial institution is able to retrieve the information required by this paragraph, either by accessing transmittal of funds records directly or through reference to some other record maintained by the financial institution.

(5) Verification. Where verification is required under paragraphs (e)(2) and (e)(3) of this section, a financial institution shall verify a person's identity by examination of a document (other than a customer signature card), preferably one that contains the person's name, address, and photograph, that is normally acceptable by financial institutions as a means of identification when cashing checks for persons other than established customers. Verification of the identity of an individual who indicates that he or she is an alien or is not a resident of the United States may be made by passport, alien identification card, or other official document evidencing nationality or residence ( e.g., a foreign driver's license with indication of home address).

c. De-Centralized Virtual Currencies

            A final type of convertible virtual currency activity involves a de-centralized convertible virtual currency (1) that has no central repository and no single administrator, and (2) that persons may obtain by their own computing or manufacturing effort.

            A person that creates units of this convertible virtual currency and uses it to purchase real or virtual goods and services is a user of the convertible virtual currency and not subject to regulation as a money transmitter. By contrast, 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. 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.

It's probably worth pointing out that the requirement to register with US Treasury also applies to those outside the US who do business as a money transmitter in the US.

...

This provision doesn't require that you act as a money transmitter on a regular basis or that you be an organised/licensed business concern.  It has a lot of potential to be interpreted very broadly.

The bottom line to all this is that bitcoin shouldn't be thought of as a means of evading the law.

Just to clarify, is there anything in this that affects the direct exchange of bitcoins for goods and services?

Just to clarify, is there anything in this that affects the direct exchange of bitcoins for goods and services?

Everywhere else there is a distinction between virtual currency and real currency. This line just says "currency".   It is quite vaque in that it could say "if the person accepts (Bitcoin) from one person and transmits it(Bitcoin) to another person as part of the acceptance and transfer of...value (that substitutes for currency)."  Would that mean that every node on the network transferring bitcoins from one person to another is an "exchanger and a money transmitter"?

Yes, me. I wrote up a quick take for the Bitcoin Foundation here: https://bitcoinfoundation.org/blog/?p=152

No. FinCEN seems to be focusing on the exchange of virtual currency (bitcoin) for "real money". The direct exchange of bitcoin for goods and/or services was specifically excluded from FinCEN registration requirements.

Although, presumably if your earnings are purely in Bitcoin, you'd have to exchange some of them into USD to pay income tax.

Well the problem is the rules aren't clear.  The guidance simply says (simplified) virtual currency exchangers are money transmitters.  Ok well the problem is the pages and pages of documents related to money transmitters have absolutely nothing to do with buying and selling virtual currencies.

One example.  Money transmitters are required to collect and record information on money transmissions in excess of $3,000.  If I buy 100 BTC from you and pay you $5,000 by bank wire.  Who is the sender?  Who is the receiver?  In a classic money transmitter scenario (the one in all FinCEN courses, and documents) the money transmitter is the middle man.   Sender -> Money Transmitter -> Receiver.  The MT records the information both both entities.  Of course even complying with the regulation becomes impossible if as it doesn't even make sense in this case.  Is the MT both the MT AND the sender?  Are you the sender and receiver?  Who knows.  Get it wrong and you could be fined up to $250,000 for each inaccuracy.

The "guidance" is nothing of the sort.  It is more like "Um you guys are money transmitters and stuff no figure out how to be compliant or go to jail".

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.

http://www.fincen.gov/news_room/rp/rulings/pdf/fincenruling2003-9.pdf

This is interesting:

I think if it just says "currency", they are referring to the FinCEN definition of currency, which excludes "virtual currency".

Yeah, because "currency" here means US and foreign currency.  This is a limitation of 31 USC § 5312 (a)(3).  They can not just throw "virtual currency" in there.  They really deserve to get slapped for trying.

The guidance specifically states that is NOT a MSB or an activity regulated by FinCEN.

Ok, that makes things more clear.

But what is meant by "value that substitutes for currency"?

Ok, that makes things more clear.

But what is meant by "value that substitutes for currency"?

This part gets ignored but I am a bit confused by it.

Everywhere else there is a distinction between virtual currency and real currency. This line just says "currency".   It is quite vaque in that it could say "if the person accepts (Bitcoin) from one person and transmits it(Bitcoin) to another person as part of the acceptance and transfer of...value (that substitutes for currency)."  Would that mean that every node on the network transferring bitcoins from one person to another is an "exchanger and a money transmitter"?

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."

c. Bitcoin

            A final type of convertible virtual currency activity involves bitcoin, a virtual currency (1) that has no central repository and no single administrator, and (2) that persons may mine.

            A miner that uses bitcoin to purchase real or virtual goods and services is a user of the convertible virtual currency and not subject to regulation as a money transmitter. By contrast, a miner that sells bitcoins to another person for fiat is engaged in transmission to another location and is a money transmitter. In addition, a person is an exchanger and a money transmitter if the person accepts bitcoin from one person and transmits it to another person as part of the acceptance and transfer of fiat.

This practically effects:

1) Exchanges, but they already knew that.
2) Middlemen that convert bitcoin to USD, like BitPay.
3) Mining pools that directly allow you to cash out in USD.

"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."

...
Maybe everyone who has ever sold a Bitcoin for money should start sending FinCEN their registration information and asking for guidance?  ...

Excerpt from prepared remarks of

Jennifer Shasky Calvery,
Director,
Financial Crimes Enforcement Network

She gave the keynote in Miami this morning for today's session of the MoneyLaundering.com's 18th annual AML conference.


 - http://www.fincen.gov/news_room/speech/pdf/20130319.pdf
 - http://bit.ly/YpohMG  <-- PDF Viewer in Google Docs.

And you need a +$1million dollar worth money transmitter license if you want to mine and sell them for fiat  ::)

A reasonable way to test how these guidelines work in practice would be to inform FinCEN about suspected illegal activity of the "Linden Lab's currency brokerage" and monitor what happens then.
I am not sure if asking FinCEN about interpretations will bring us further. I have no idea how vague official clarifications are in US, but in Poland You get 4 different (contradictory) official opinions and none of them tells You the answer to your questions. Provoking court decisions was always a slow but more reliable alternative.

Patrick, do we also run up against the issue of people laying themselves open to sanctions if they take intermediate steps to avoid these provisions - such as purchasing something with BTC they have mined but then selling their purchases?  As the original source of the BTC isn't a "serious crime" or predicate offence (which is key in relation to how FATF defines money laundering), then it's hard to argue such a strategy is money-laundering per se and yet my instinct is that taking such steps could well be an offence in its own right (especially if done repeatedly).

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.

You can seek an administrative ruling.  Essentially it is a letter which requires FinCEN to provide specific written direction/clarification.  While it isn't the "law", if FinCEN gives you an administrative ruling stating "x" it provides some measure of protection if they later change their mind.

Dealers in Foreign Exchange

            A person must exchange the currency of two or more countries to be considered a dealer in foreign exchange.19 Virtual currency does not meet the criteria to be considered "currency" under the BSA, because it is not legal tender. Therefore, a person who accepts real currency in exchange for virtual currency, or vice versa, is not a dealer in foreign exchange under FinCEN's regulations.

Not sure if anybody has highlighted this yet.

I think we should request this administrative ruling as soon as possible to ...

Still , mtgox and others have more than 2 currencies and are thus "dealers in foreign exchange". I can perfectly exchange EUR against USD there (via BTC).

Well no you can't.  You can exchange USD for BTC and you can exchange EUR for BTC.  MtGox (and other specifically) don't have a USD:EUR market for this exact reason.

This would prevent some strange rules, like requiring every miner to register at FinCEN.

OTOH, if you don't, you're in violation of FinCEN, they can go after this key group of people if they want to.

The question is how practical it is to enforce this.

It seems that it would make most sense and lessen the regulatory burden by simply changing the definition of currency to include virtual currency. From a logical standpoint, this seems to make more sense, although apparently FinCEN cannot simply change a definition through issuing a guidance paper and would require a longer period of time and process. This definition change would almost certainly be beneficial to Bitcoin exchanges, although would like to hear the possible negative consequences in other applications.

US based pools will be probably required to collect a lot of information from miners and miners will not accept this => I worry that US based pools will be hit the hardest by the FinCEN guidelines => they will go offshore)

In addition, an entity qualifies as an MSB based on its activity within the United States, not thephysical presence of one or more of its agents, agencies, branches, or offices in the United States. This requirement arose out of the recognition that the Internet and other technological advances make it increasingly possible for persons to offer MSB services in the United States from foreign locations. FinCEN seeks to ensure that the BSA rules apply to all persons engaging in covered activities within the United States, regardless of their physical location.

So this becomes a choke point where FinCEN regulations could be used to seize equipment at a pool for sending payouts to miners in the U.S. where neither the pool nor the miner have registered as MSBs as money transmitters.  The only protection from this is for the pool to verify ID of all miners.

FinCEN has extended their reach to include MSBs serving those from the U.S. regardless of where in the world the MSB is based:

- http://www.fincen.gov/news_room/nr/pdf/20110715.pdf


I'm wondering here ... if I mine at a pool then I am getting payout not with newly mined coin but from the pool operator's wallet.    The pool would be, in that instance, the recipient of the "created" coin.  Now the pools that payout generated coin directly to the miners (e.g., Eligius), then that's different.

But this could turn into something that becomes something of a threat to Bitcoin.

If a pool wants to avoid serving those from the U.S., that means it would then need to know where the miner is from.  A pool would then be unable to serve miners who remain anonymous then, unless the pool follows the steps like online casinos follow where they block IP addresses for those trying to access the service from the U.S.   But that means no Tor access either.

So this becomes a choke point where FinCEN regulations could be used to seize equipment at a pool for sending payouts to miners in the U.S. where neither the pool nor the miner have registered as MSBs as money transmitters.  The only protection from this is for the pool to verify ID of all miners.

This may not have been their intention or it may be their tactic to prepare the battlefield.

Civil and Criminal Penalties for Operating an Unregistered Money Transmitting Business

Any person who fails to comply with any requirement of 31 U.S.C. 5330 or this section [31 CFR 103.41] shall be liable for a civil penalty of $5000 for each violation.BSA registration requirements, in an amount up to $5,000 for each day a registration violation continues.
[31 U.S.C. § 5330(e) and 31 C.F.R. § 103.41(e)]

Whoever knowingly conducts, controls, manages, supervises, directs, or owns all or part of an unlicensed money transmitting business, shall be fined in accordance with this title or imprisoned not more than 5 years, or both.
[18 U.S.C § 1960(a)]

How about if you use bitcoin to purchase bullion from coinabul and sell the bullion at your local dealer? This method legal?

Legal, perhaps. Smart? Doubtful. Bullion dealers sell over spot and buy under spot. So unless you're willing to wait for your PM of choice to go up significantly in value to eventually cash out at parity...

Theoritically speaking  all business have not applied are liable to this

http://www.fincen.gov/news_room/ea/ea.msb.html

It sounds like they're interested specifically in exchanges.

I just re-read that and am now seeing that part being missed in the various initial interpretations of FinCEN's guidance.   FinCEN's guidance only addressed transfer of virtual currency when "as part of the acceptance and transfer of currency, funds, or other value that substitutes for currency".  

But how would an EWallet provider know if I was sending from my EWallet to someone as part of a transfer of currency or if it was a gift, or perhaps I bought something and was paying with bitcoins.

From the director's remarks, it sounds like an EWallet would be an MSB (and thus need to obtain identity of the users then).   But almost no EWallets require that.     And I don't need an intermediary to transfer bitcoins anyway -- I can send right from my own client, without using an EWallet.

Or, are all peer nodes now considered "money transmitters" that must register with FinCEN as MSBs.

This isn't guidance from FinCEN, this is mis-guidance from the highest level.

Or, are all peer nodes now considered "money transmitters" that must register with FinCEN as MSBs.

This isn't guidance from FinCEN, this is mis-guidance from the highest level.

We see this type of BS "guidance" in the self-defense rights movement all the time. California Department of Justice's Bureau of Firearms loves chilling the exercise by making shit up (formally called "underground regulation"). Gotta report their shit to the Office of Administrative Law, which overrules the underground regulations. Maybe there is a similar office to OAL charged with weenie-whacking corrupt bastards in the fed gov.

All nodes that generate blocks (transmitters) must register and (I assume) to be compliant must know both parties of all transactions included in the block. This is impossible and thus the guidelines make Bitcoin illegal [in the US and wherever FinCEN thinks it has jurisdiction :-)]

I would urge the US Bitcoin community to discuss Bitcoin with FinCEN. There are positive statements:
- bitcoin is not a currency
- Users of bitcoin do not need to register.
There is good will from the other party :-)

I don't think they're looking at the way the underlying network works. I think they're talking about the infrastructure built on top of it.

I don't think they're looking at the way the underlying network works. I think they're talking about the infrastructure built on top of it.

Of course asking FinCEN or a lawyer will not solve our problems. Let's assume they posted the guidelines as a call for help :-) Let's tell them that we are willing to help :-)