Bitcoin Forum

I sell locally for cash.  I've been approached by someone who wants several thousand dollars worth all at once.  Naturally, I will meet them in my bank and deposit it immediately, but are there any legal limits I should be concerned with?  Normally I deal with a couple hundred dollars max.  USA here.

Is it your business to buy/sell bitcoins? If so, then you should be registered with FinCEN regardless of the transaction amounts. Also, in that case, for certain high-level thresholds you should be collecting ID according to their guidelines and reporting them...depending on how many "several thousand" is, it may qualify as suspicious activity..

You also should be tracking profits to report on your taxes.

I'm following all tax laws.  I sell for cash and rebuy, so it does not qualify as investment activity.  I understand this means I would need to register for large amounts, but I was under the impression that there was a threshold under which you were exempt from the regulations.  I'm trying to understand what that threshold is.  I just do this a couple times a month as a hobby to help spread bitcoin.

If you are right that there is no threshold then everybody who helps their friend buy in is in violation.  I really hope I have an option between stopping what I've been doing and registering.  Can I even register as an individual, or would I need to start a business first?

If you are doing it as a business (to make money), then there are no thresholds if your business is to exchange money for virtual currency.

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

"An exchanger is a person engaged as a business in the exchange of virtual currency for real currency, funds, or other virtual currency."

Would you describe that as what you do? I would argue that simply buying it for a friend is different than making it your business.

Among the talks with FinCEN I've been having, it was made clear to me that there are no limits before you have to register.

Also, you can be a business as an individual. It's called a sole proprietorship when you do that.

I would not classify as a business because I am not concerned with profit.  I add fees, but that is mostly for the risk of lost opportunity.  In fact, my "profit" from my selling activity is vastly negative.  In fact, this deal could potentially put a significant dent in my holdings if I can't get the USD back to an exchange quick enough.

A few thousand dollars can qualify as financial transactions without a license. Moreover, you do not know the origin of the money. This amount of cash is not typical for Americans. I think it's dirty money and you can be an accomplice in laundering money acquired by criminal means. You need this?

I don't think the government cares about you "being concerted with profit" or not. Look for precedents, first of all. And I can tell you that some people has ended up in big trouble because on the other end there was the Fed waiting for you to try to sell your coins.

If you deal small amounts you may be able to get away with it, but constantly moving amounts higher than minimum wage (for example) may put you in trouble as it would be considered an activity that needs licensing of some sort, maybe a money transmitting license. I had no idea about any of this and learning along the way.

That can be a trap set up by FED. So never ever execute a trade of several thousand dollar at once. There were incidents where people got arrested for selling huge amounts of bitcoin for cash. I have given few links below which you can read,

https://news.bitcoin.com/us-federal-authorities-arrest-man-selling-9-99-bitcoin/

https://news.bitcoin.com/24-year-old-sent-to-prison-for-selling-bitcoin-to-undercover-agents/

https://bitcoinmagazine.com/articles/bitcoiner-faces-charges-after-selling-btc-undercover-cop/

So my suggestion is to stay within your limit of few hundred dollars and ask for ID of the buying party. Just to be on the safer side.