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Author Topic: FinCEN says you must be MSB if you sell bitcoins for $  (Read 20527 times)
Malophor
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October 18, 2012, 06:36:17 PM
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I was looking at starting up a site that would sell bitcoins through credit card transactions as a US based business. Not wanting to run into immediate regulatory problems I gave FinCEN (Financial Crimes Enforcement Network) a call. It took them a couple of weeks to get back to me but the answer was yes that business would be required to register as a Money Service Business.

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October 18, 2012, 07:00:21 PM
 #2

Did they bother to quote any:
  • laws
  • statutes
  • regulations
  • even policy announcements
to buttress their claim?

Anyone with a campaign ad in their signature -- for an organization with which they are not otherwise affiliated -- is automatically deducted credibility points.
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October 18, 2012, 07:02:26 PM
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Fuck them! Bitcoins in fact are digital signatures. You sign integer and recipients public key with your private key. So Bitcoins are more like service like SSL root authority instead of money like paypal.

P.S. next time call DEA and ask them what license you need to sell drugs on Silk Road. The future of Bitcoin is illegal that might destroy current establishment and governments. Again, fuck the government, fuck any regulations and  fuck them all! You have the tool in your computer - Bitcoin!

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repentance
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October 18, 2012, 07:03:19 PM
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I was looking at starting up a site that would sell bitcoins through credit card transactions as a US based business. Not wanting to run into immediate regulatory problems I gave FinCEN (Financial Crimes Enforcement Network) a call. It took them a couple of weeks to get back to me but the answer was yes that business would be required to register as a Money Service Business.

It's what I'd expect but I'm interested in the specific regulations they quoted.  Knowing that gives an indication of whether they're currently regarding Bitcoin as a currency, a commodity or some other kind of financial product/service.  As FinCEN operates at a federal level and MSBs are regulated at state level, I'm also curious whether there are any exemptions you could seek if you operated within set limits.

You were smart to seek advice in advance.  I've worked for a cc provider and they'll shut down your account and make a suspicious activity report in a heartbeat if their algorithms think there's anything fishy about the account transaction patterns.

All I can say is that this is Bitcoin. I don't believe it until I see six confirmations.
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October 18, 2012, 07:14:36 PM
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I was looking at starting up a site that would sell bitcoins through credit card transactions as a US based business. Not wanting to run into immediate regulatory problems I gave FinCEN (Financial Crimes Enforcement Network) a call. It took them a couple of weeks to get back to me but the answer was yes that business would be required to register as a Money Service Business.

Yes, that is expected.  BitInstant is a registered MSB, AFAIK.  A couple other exchanges based in the US are registered, or in the process of registering.

According to my research (WARNING: not a lawyer, seek your own professional advice) online bitcoin exchanges in the US would need to register in ~47 of 50 states, as well as registering as an MSB with the federal government.  (or limit the users accessing the website to a select few states)

There is a multi-state surety bond and registration process, making multi-state compliance a bit easier, but it is definitely a lot of paperwork and background checks required.


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Yankee (BitInstant)
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October 18, 2012, 07:19:36 PM
 #6

I was looking at starting up a site that would sell bitcoins through credit card transactions as a US based business. Not wanting to run into immediate regulatory problems I gave FinCEN (Financial Crimes Enforcement Network) a call. It took them a couple of weeks to get back to me but the answer was yes that business would be required to register as a Money Service Business.

Yes, that is expected.  BitInstant is a register MSB, AFAIK.  A couple other exchanges based in the US are registered, or in the process of registering.

According to my research (WARNING: not a lawyer, seek your own professional advice) online bitcoin exchanges in the US would need to register in ~47 of 50 states, as well as registering as an MSB with the federal government.  (or limit the users accessing the website to a select few states)

There is a multi-state surety bond and registration process, making multi-state compliance a bit easier, but it is definitely a lot of paperwork and background checks required.



Heh, and thats the easy part!

You also need to do the following, just off the top of my head:
- Quarterly audits that you pay for
- Every 6 weeks you need a verified and updated AML Program
- Attend BSA training twice a year
- Bend over backwards and get anally raped every day....

Bitcoin pioneer. An apostle of Satoshi Nakamoto. A crusader for a new, better, tech-driven society. A dreamer.

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October 18, 2012, 07:23:59 PM
 #7

Better operate from New Shwabia, Nazi Germany. TrueCrypt once did that!

Someone told that retards are trying to recreate current financial institutions using Bitcoin. He was right!

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repentance
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October 18, 2012, 07:30:03 PM
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Heh, and thats the easy part!

You also need to do the following, just off the top of my head:
- Quarterly audits that you pay for
- Every 6 weeks you need a verified and updated AML Program
- Attend BSA training twice a year
- Bend over backwards and get anally raped every day....

Are there different classes of MBS, all with their own additional requirements?  My understanding is that the business that the OP is proposing is somewhat different to that operated by BitInstant.  Are they likely to be subject to more regulations as they'll actually be selling BTC direct to the public rather than operating as a platform for others to trade BTC (like MtGox) or a conduit for getting funds into exchanges quickly (like BitInstant)?

All I can say is that this is Bitcoin. I don't believe it until I see six confirmations.
BitcoinINV
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October 18, 2012, 07:41:48 PM
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I was looking at starting up a site that would sell bitcoins through credit card transactions as a US based business. Not wanting to run into immediate regulatory problems I gave FinCEN (Financial Crimes Enforcement Network) a call. It took them a couple of weeks to get back to me but the answer was yes that business would be required to register as a Money Service Business.

I can only see that if you buy and sell them on the same site. If you are just selling them there should be no need for that. Bitinstant is great example why. Reason being you move funds to and from your bank account.  If funds are just moving one way it should not be any problem to them as long as you pay your taxes. I recently started selling coins for credit card and that's the answer I got when I called.
I have talked to the Attorney General office and the S.E.C.
When exactly did you call them?
Did they state exactly why?
were you going sell and buy coins?


I mean credit cards are easy to monitor its bank transfers they are really worried about.

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October 18, 2012, 07:49:31 PM
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Better operate from New Shwabia, Nazi Germany. TrueCrypt once did that!


BaFin is already on the trail of Nazi German exchanges. That is no longer an option, mein Führer.
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October 18, 2012, 07:51:12 PM
 #11

Heh, and thats the easy part!

You also need to do the following, just off the top of my head:
- Quarterly audits that you pay for
- Every 6 weeks you need a verified and updated AML Program
- Attend BSA training twice a year
- Bend over backwards and get anally raped every day....

Oh, you also need at least two people, right?

IIRC, every MSB requires a compliance/risk officer, who is separate from the person(s) handling money day-to-day.


Jeff Garzik, bitcoin core dev team and BitPay engineer; opinions are my own, not my employer.
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jgarzik
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October 18, 2012, 07:54:31 PM
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Are there different classes of MBS, all with their own additional requirements?  My understanding is that the business that the OP is proposing is somewhat different to that operated by BitInstant.  Are they likely to be subject to more regulations as they'll actually be selling BTC direct to the public rather than operating as a platform for others to trade BTC (like MtGox) or a conduit for getting funds into exchanges quickly (like BitInstant)?

A Money Services Business (MSB) is a specific definition.  There are other types of businesses (depository, securities, mortgage, insurance, ...) that may register with FinCEN.

You might be able to get away with only registered in a single US state, if you are largely a brick-and-mortar business rather than an online business.  e.g. a pawn shop exchanging bitcoins might only need to register as an MSB, plus one (1) state.

(again, IANAL, seek your own professional advice)


Jeff Garzik, bitcoin core dev team and BitPay engineer; opinions are my own, not my employer.
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BitcoinINV
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October 18, 2012, 07:59:07 PM
 #13

Well see look at it this way Bitinstant is a money transfer service. You give them money they give someone else money.
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.  <<<<<<<<<<<<--------------------- That is what makes bitinstant
(6) U.S. Postal Service.


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October 18, 2012, 08:01:45 PM
 #14

I see the BitInstant Foundation For The Prevention of Competition circlejerk has arrived to dispense their usual, shitty legal advice.

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Charlie 'Van Bitcoin' Shrem


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October 18, 2012, 08:11:50 PM
 #15

Heh, and thats the easy part!

You also need to do the following, just off the top of my head:
- Quarterly audits that you pay for
- Every 6 weeks you need a verified and updated AML Program
- Attend BSA training twice a year
- Bend over backwards and get anally raped every day....

Oh, you also need at least two people, right?

IIRC, every MSB requires a compliance/risk officer, who is separate from the person(s) handling money day-to-day.


I believe this to be true, but not 100%.

FinCEN would probably reject 1-man shows though.

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:

(5) Money transmitter.  <<<<<<<<<<<<--------------------- That is what makes bitinstant


Ya, the first part of your comment is true forsure!

Money Service Business is not the same as a Money Transmitter and you can be an MSB and not an MTB

(4) Seller or redeemer of traveler's checks, money orders or stored value.  <---- This is what BitInstant is.

I see the BitInstant Foundation For The Prevention of Competition circlejerk has arrived to dispense their usual, shitty legal advice.


What? What kind of snide comment is this? I commented on this thread to help those who have questions and provide my input.

We've spent over 100k on lawyers, why shouldn't I be able to provide help and advice? If you don't want it, leave.

Every competitor of BitInstant are friends with us, and we all help each other out for a bigger pie instead of fighting over the small slices we have now.

Please don't make comments you don't know to be true, just makes you look dumb.

Bitcoin pioneer. An apostle of Satoshi Nakamoto. A crusader for a new, better, tech-driven society. A dreamer.

More about me: http://CharlieShrem.com
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October 18, 2012, 08:16:33 PM
 #16

If funds are just moving one way it should not be any problem to them as long as you pay your taxes.

I'm not sure that the one-way thing is any sort of shield.  Jewellers, for instance, are subject to AML regulations based on their volume of business even if they do not buy from the general public.  

It's also worth noting that the IRS itself carries out AML investigations and makes referrals to FinCEN - merely paying your taxes is not enough to protect you if you're required to comply with AML regulations and fail to do so.

There may be some exemptions open to you if you operate within certain limits.  It's worth seeking advice from an experienced financial services lawyer to find out in what circumstances exemptions might apply.  Operating within those limits might be more financially viable for you at this time than seeking licensing.  Obtaining an exemption is a formal process - you have to apply for it so it still costs money.


All I can say is that this is Bitcoin. I don't believe it until I see six confirmations.
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October 18, 2012, 08:21:20 PM
 #17

Fuck them! Bitcoins in fact are digital signatures. You sign integer and recipients public key with your private key. So Bitcoins are more like service like SSL root authority instead of money like paypal.

P.S. next time call DEA and ask them what license you need to sell drugs on Silk Road. The future of Bitcoin is illegal that might destroy current establishment and governments. Again, fuck the government, fuck any regulations and  fuck them all! You have the tool in your computer - Bitcoin!

This is exactly how I feel. Of course doing so you always run the risk of getting on one of their lists and since you are dealing with a violet thuggish group of psychopaths ending up on one of their lists usually doesn't end well for you.. So in your own self interest it's always a good idea to do what ever you can to mitigate that risk meaning you either bow to their extortion or you go completely underground and hide from them. Bitcoin thankfully allows for both.

My personality type: INTJ - please forgive my weaknesses (Not naturally in tune with others feelings; may be insensitive at times, tend to respond to conflict with logic and reason, tend to believe I'm always right)

If however you enjoyed my post: 15j781DjuJeVsZgYbDVt2NZsGrWKRWFHpp
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October 18, 2012, 08:24:01 PM
 #18

Actually, according to a French ruling " the nature of bitcoin [could be] irrelevant to the case at hand".

https://bitcointalk.org/index.php?topic=118947.msg1279522#msg1279522
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October 18, 2012, 08:25:06 PM
 #19

I was looking at starting up a site that would sell bitcoins through credit card transactions as a US based business. Not wanting to run into immediate regulatory problems I gave FinCEN (Financial Crimes Enforcement Network) a call. It took them a couple of weeks to get back to me but the answer was yes that business would be required to register as a Money Service Business.

Yes, that is expected.  BitInstant is a register MSB, AFAIK.  A couple other exchanges based in the US are registered, or in the process of registering.

According to my research (WARNING: not a lawyer, seek your own professional advice) online bitcoin exchanges in the US would need to register in ~47 of 50 states, as well as registering as an MSB with the federal government.  (or limit the users accessing the website to a select few states)

There is a multi-state surety bond and registration process, making multi-state compliance a bit easier, but it is definitely a lot of paperwork and background checks required.



Heh, and thats the easy part!

You also need to do the following, just off the top of my head:
- Quarterly audits that you pay for
- Every 6 weeks you need a verified and updated AML Program
- Attend BSA training twice a year
- Bend over backwards and get anally raped every day....

That should be art of the political platform for bitcoin: DESTROY all Anti-monetary liberty programs.

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October 18, 2012, 08:27:01 PM
 #20

Heh, and thats the easy part!

You also need to do the following, just off the top of my head:
- Quarterly audits that you pay for
- Every 6 weeks you need a verified and updated AML Program
- Attend BSA training twice a year
- Bend over backwards and get anally raped every day....

Oh, you also need at least two people, right?

IIRC, every MSB requires a compliance/risk officer, who is separate from the person(s) handling money day-to-day.


I believe this to be true, but not 100%.

FinCEN would probably reject 1-man shows though.

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:

(5) Money transmitter.  <<<<<<<<<<<<--------------------- That is what makes bitinstant


Ya, the first part of your comment is true forsure!

Money Service Business is not the same as a Money Transmitter and you can be an MSB and not an MTB

(4) Seller or redeemer of traveler's checks, money orders or stored value.  <---- This is what BitInstant is.

I see the BitInstant Foundation For The Prevention of Competition circlejerk has arrived to dispense their usual, shitty legal advice.


What? What kind of snide comment is this? I commented on this thread to help those who have questions and provide my input.

We've spent over 100k on lawyers, why shouldn't I be able to provide help and advice? If you don't want it, leave.

Every competitor of BitInstant are friends with us, and we all help each other out for a bigger pie instead of fighting over the small slices we have now.

Please don't make comments you don't know to be true, just makes you look dumb.

I knew it was something like that but I figured since you guys did bank to bank thats what it fell under I am sorry for the mistake.


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