The case of BurtW (
https://bitcointalk.org/index.php?topic=934268.0) got me thinking about how we might all be one of the many permutations of a Money Services Business (MSB). Apparently a MSB includes any person or loosely organized but unincorporated group of people that sells or redeems anything of stored value in amounts greater than $1000 per day. There is no requirement for the activity to be done for profit or as a fee for service that requires registering as an MSB.
Forgive the copy/paste from fincen.gov, but their guidance is clearer than I could otherwise summarize it.
From fincen.gov:
Money Services Business - The term "money services business" includes any
person doing business, whether or not on a regular basis or as an organized business concern, in one or more of the following capacities:
(1) Currency dealer or exchanger.
(2) Check casher.
(3) Issuer of traveler's checks, money orders or stored value.
(4) Seller or redeemer of traveler's checks, money orders or stored value.
(5) Money transmitter.
(6) U.S. Postal Service.
An activity threshold of greater than $1,000 per person per day in one or more transactions applies to the definitions of: currency dealer or exchanger; check casher; issuer of traveler's checks, money orders or stored value; and seller or redeemer of travelers' checks, money orders or stored value. The threshold applies separately to each activity -- if the threshold is not met for the specific activity, the person engaged in that activity is not an MSB on the basis of that activity.
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.
Notwithstanding the previous discussion, the term "money services business" does not include:
• A bank, as that term is defined in 31 CFR 1010.100(d) (formerly 31 CFR 103.11(c)), or
• A person registered with, and regulated or examined by, the Securities and Exchange Commission or the Commodity Futures Trading Commission.
For the complete regulatory definition of "money services business", see 31 CFR 1010.100(ff) (formerly 31 CFR 103.11(uu)).
Note: Each money services business (MSB) is a
financial institution. For the regulatory definition of "financial institution," see 31 CFR 1010.100(t) (formerly 31 CFR 103.11(n)).
Person - A "person" is an individual, a corporation, a partnership, a trust or estate, a joint stock company, an association, a syndicate, joint venture, or other unincorporated organization or group, an Indian Tribe (as that term is defined in the Indian Gaming Regulatory Act), and all entities cognizable as legal personalities.
31 CFR 1010.100(mm) (formerly 31 CFR 103.11 (z))
Financial Institution - A "financial institution" includes any
person doing business in one or more of the following capacities:
(1) bank (except bank credit card systems);
(2) broker or dealer in securities;
(3) money services business;
(4) telegraph company;
(5) casino;
(6) card club;
(7) a person subject to supervision by any state or federal bank supervisory authority.
For the regulatory definition of "financial institution," see 31 CFR 1010.100(t) (formerly 31 CFR 103.11(n)).
End copy/paste.
If you have EVER transacted more than $1000 worth of bitcoin in a single day in exchange for currency, gift cards, or any other item of stored value; you might be considered a MSB in the eyes of the authorities. Does gyft.com avoid this guidance by using BitPay and Coinbase that act as MSBs? If you want to trade bitcoin for gold and the value for either exceeds $1000; are you now the MSB if you don’t use a registered payment processor to cover your ass?
The only public document currently available relating to BurtW’s arrest stems from a grand jury indictment that states that he, “did knowingly conduct, control, manage, supervise, direct, or own all or part of an unlicensed money transmitting business affecting interstate and foreign commerce, to wit, a digital currency exchange business which (A) operated without an appropriate money transmitting license in a state where such operation is punishable as a misdemeanor or felony under state law; (B) failed to comply with the money transmitting business regulations under Section 5330 of Title 31, United States Code, and regulations prescribed thereunder; and (C) involved the transport and transmission of funds that were known to the defendant to have been derived from a criminal offense and were intended to be used to promote and support unlawful activity; all in violation of Title 18, United States Code, Section 1960."
It is probably fair to say that according to FINCEN guidance, BurtW has some legal troubles with (A) and (B) outlined in the complaint. Item (C) offers no evidence to support the claim that he was aware with any criminal activity associated with the “funds”. The arrest warrant and all details relating to arrest seem as if they are sealed in accordance with the (un)Patriot(ic) Act. The remainder of the complaint exercises the state’s right to extort the innocent (until proven guilty) of any and all real property that ever touched Burt’s bitcoin.
Classifying peer to peer trade as interstate commerce adds a layer of obscurity to the prosecution’s claims in Burt’s case. Since bitcoin is stored and transacted in a distributed manner, it is likely that the court will agree that all bitcoin transactions are a form of interstate commerce rather than local trade. It is a sad day when peer to peer trade suddenly falls under the jurisdiction of every three letter agency imaginable.
The guidance offered by FINCEN and the subsequent actions by enforcement agencies clearly target individuals rather than actual businesses. Conveniently, banks and those under the regulation of the SEC are explicitly excluded from abiding by these FINCEN guidelines. New York’s Bitlicense proposal also seeks to exempt banks like Western Union from any further regulation at the request of Western Union.
Are individuals now responsible for performing expensive and time consuming due diligence and documentation for mundane transfers of value that total more than $1000 in a 24 hour period? $1000 isn’t what it used to be. The low threshold of value that qualifies an individual as a MSB clearly targets peer to peer trade rather than interstate commerce. Might many of us unknowingly be committing crimes that are unavoidable if we choose to use bitcoin at all?
Peer to peer trade should not fall within the scope of FINCEN and law enforcement unless that trade is clearly harming or threatening harm to another individual. It is unreasonable to expect an individual who trades property and instruments of value for any reason to research the history, origin, and future use of said property or value. Selling firearms in a peer to peer manner has less legal implications and requirements than trading bitcoin in many states.
Why the fuck is bitcoin considered property for the IRS but money for the purposes of FINCEN? Guidance should be uniform and not conflict with guidance presented from agencies within the same jurisdiction.
Citizens must insist that the legislative and executive branches practice truth when titling legislation. The Patriot Act is a reverse acronym that stands for "Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001." Nowhere in the law does the legislation increase the likelihood of a citizen gaining life, liberty, happiness, or increasing ones’ love of country as a result of the legislation. It is confusing. Legislation deceives, guidance from authorities is confounding; and overzealous enforcement agencies capitalize on the situation at the expense of individual freedom and personal property.
It may come to light that BurtW was a knowing participant in an elaborate money laundering scheme that facilitated the actions of criminals. Until that happens, Burt and his family are victims of an elaborate extortion plot at the hands of those that are commissioned to uphold the Constitution of the United States. How did we get to this point?
“The essence of fascism is to make laws forbidding everything and then enforce them selectively against your enemies.”
― John Lescroart
“The form of government which communicates ease, comfort, security, or, in one word, happiness, to the greatest number of persons, and in the greatest degree, is the best.”
– John Adams, Thoughts on Government.
“Fear is the foundation of most governments.”
– John Adams
“It is more important that innocence be protected than it is that guilt be punished, for guilt and crimes are so frequent in this world that they cannot all be punished. But if innocence itself is brought to the bar and condemned, perhaps to die, then the citizen will say, “whether I do good or whether I do evil is immaterial, for innocence itself is no protection,” and if such an idea as that were to take hold in the mind of the citizen that would be the end of security whatsoever.”
– John Adams
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