Question about mining and FinCen

[dtothemt]

I've been reading about FinCen's regulations, and by the sound of it, you only have to register with them if you are making a business out of mining in exchange for USD.

So my question is: what if I want to try mining for maybe a couple months with an ASIC, and then resell the ASIC mining rig? I'm not really wanting to make a business out of it, just do it as more of a side project for a bit. If I make USD money off of it at all, is it considered a business no matter what?

[mryayo]

FinCen is really only concerned if you are a "Money Exchanger" from what I understand. If you are a money transmitter and money exchange like Coinbase and Mt. Gox you have to register with FinCen.

Here's a good article on Coinbase about FinCen

http://www.coindesk.com/fincen-boss-lays-out-bitcoin-rules/

[MSantori]

The March guidance was fairly clear that miners who convert their mined currency to fiat are money transmitters.  The guidance did not say that miners who sell their mining hardware are money transmitters.

The real problem is that the guidance was not clear as to whether one must mine as a business to be considered a money transmitter.  It actually said the opposite, that "individuals" who mine and then convert their mined coins to fiat are money transmitters.  It was a strange turn of phrase, since being a money transmitter of any other kind typically requires, as a predicate, running a business.  For more detail please see my thread in the legal subforum.

[suryc]

The March guidance was fairly clear that miners who convert their mined currency to fiat are money transmitters.  The guidance did not say that miners who sell their mining hardware are money transmitters.

The real problem is that the guidance was not clear as to whether one must mine as a business to be considered a money transmitter.  It actually said the opposite, that "individuals" who mine and then convert their mined coins to fiat are money transmitters.  It was a strange turn of phrase, since being a money transmitter of any other kind typically requires, as a predicate, running a business.  For more detail please see my thread in the legal subforum.

You're not completely correct. The guidance didn't single out miners at all. Anyone who provides a service of converting bitcoins to fiat and vice versa is considered a money transmitter. A miner or individual who converts their mined currency to fiat using an exchange or spends it for their own purposes is not a money transmitter.

This is why the big exchanges i.e. MtGox have registered as money transmitters (MSBs):
https://bitcointalk.org/index.php?topic=245987.0;topicseen
If you mine and convert bitcoin to fiat through an MSB, you're not also a MSB.

[MSantori]

The guidance didn't single out miners at all. Anyone who provides a service of converting bitcoins to fiat and vice versa is considered a money transmitter. A miner or individual who converts their mined currency to fiat using an exchange or spends it for their own purposes is not a money transmitter.

Yes, it did single out miners - or at least that is the thinking among the compliance professionals (lawyers and non-lawyer compliance experts) that I work with. The relevant language is:

"[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."

The consensus is that "persons who create units of convertible virtual currency" are miners.  Moreover, the guidance did not explicitly limit the "money transmitter" label to those miners acting as a business.  Note that it uses the term "person" not "business" when it describes what miners must register.  Personally, I believe you are right, and if you read my thread, you'll get a more in-depth explanation of why.  Nonetheless, I believe we are in the minority there.

[ProfMac]

The guidance didn't single out miners at all. Anyone who provides a service of converting bitcoins to fiat and vice versa is considered a money transmitter. A miner or individual who converts their mined currency to fiat using an exchange or spends it for their own purposes is not a money transmitter.

Yes, it did single out miners - or at least that is the thinking among the compliance professionals (lawyers and non-lawyer compliance experts) that I work with. The relevant language is:

"[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."

The consensus is that "persons who create units of convertible virtual currency" are miners.  Moreover, the guidance did not explicitly limit the "money transmitter" label to those miners acting as a business.  Note that it uses the term "person" not "business" when it describes what miners must register.  Personally, I believe you are right, and if you read my thread, you'll get a more in-depth explanation of why.  Nonetheless, I believe we are in the minority there.

Looking at the second instance of the term "person" I wonder if a miner who sells his bitcoins on an exchange, a business instead of a person, is defined as a money transmitter.
Similarly, I wonder if someone who pays a kid to do yardwork using bitcoins that he himself mined is a money transmitter.

[MSantori]

Looking at the second instance of the term "person" I wonder if a miner who sells his bitcoins on an exchange, a business instead of a person, is defined as a money transmitter.

This is unclear from the guidance, but since there are no operating, licensed exchanges that I'm aware of, my magic 8 balls tells me that yours is a distinction without a difference.

Similarly, I wonder if someone who pays a kid to do yardwork using bitcoins that he himself mined is a money transmitter.

That much is clear.  Such a person would be a mere "user" of the coins.

[ProfMac]

In order to find a FinCEN form 107 and register, I visited many pages listed in Google (fincen form 107) and ended up at http://bsaefiling.fincen.treas.gov/Enroll_Individual_Step_01.html

I filled out a 1 page form, visited a second page at a link they provided me, and then did not see any additional actions to take.  Under business structure I indicated that I was <my name>, a natural person.

I called the BSA E-Filing Help Desk at 1-866-346-9478 where a nice baritone voice seemed to indicate that I would receive a registration number in a few days.