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Author Topic: Is Selling Bitcoins on LocalBitcoins.com Legal?  (Read 21037 times)
bitcoinperson
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September 26, 2015, 04:39:38 PM
 #1

If someone were to sell bitcoins on localbitcoins.com in exchange for paypal my cash cards, which were then deposited into paypal. Is that legal as long as any taxable gains received in the transaction are paid? If the amount is under $500 per day and $4000 per month would there be any requirement to know the customer or comply with anti-money laundering laws?
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gentlemand
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September 27, 2015, 02:05:10 PM
 #2

I don't think the amount you're transacting matters, any time you're selling Bitcoin for profit in the US counts as Fincen's definition of an exchanger.

Registration as a money transmitter doesn't cost anything. You can do it here - http://www.fincen.gov/financial_institutions/msb/msb.registration.html

I guess it's the AML stuff that's the major grind.

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September 27, 2015, 02:54:24 PM
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Depends on if you live in New York or something like that.

I believe that they have laws on cryptocurrency.
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September 27, 2015, 03:16:07 PM
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Depends on if you live in New York or something like that.

I believe that they have laws on cryptocurrency.

The money transmitting thing is nation wide. And any jurisdiction anywhere in the US can nail you if you haven't sufficiently covered your arse.

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September 28, 2015, 05:03:43 AM
 #5

If someone were to sell bitcoins on localbitcoins.com in exchange for paypal my cash cards, which were then deposited into paypal. Is that legal as long as any taxable gains received in the transaction are paid? If the amount is under $500 per day and $4000 per month would there be any requirement to know the customer or comply with anti-money laundering laws?

It depends what country you are in and how good your lawyer is.  In the United States, technically, that fits the description of operating as a money transmitter.  There is no minimum volume for these operations.  There are local and federal laws regarding it. However, many times when charges have been pressed, the defendants have won their cases.  They don't always get the money that was seized though, and they spend a lot more defending themselves.

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September 29, 2015, 11:14:36 AM
 #6

there is still no official mention of rules on the legality
of the law of bitcoin

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September 30, 2015, 02:12:59 AM
 #7

If someone were to sell bitcoins on localbitcoins.com in exchange for paypal my cash cards, which were then deposited into paypal. Is that legal as long as any taxable gains received in the transaction are paid? If the amount is under $500 per day and $4000 per month would there be any requirement to know the customer or comply with anti-money laundering laws?

There is no clear-cut answer to this question. But based on all the information available, you should be okay since you are acting as a merchant/agent for PayPal (which is licensed in every state) and since you don't hold customer funds on account like an exchange.

The concern ...and a very valid concern, would be the risk and exposure to charge-back fraud.


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September 30, 2015, 11:14:43 PM
 #8

If someone were to sell bitcoins on localbitcoins.com in exchange for paypal my cash cards, which were then deposited into paypal. Is that legal as long as any taxable gains received in the transaction are paid? If the amount is under $500 per day and $4000 per month would there be any requirement to know the customer or comply with anti-money laundering laws?

There is no clear-cut answer to this question. But based on all the information available, you should be okay since you are acting as a merchant/agent for PayPal (which is licensed in every state) and since you don't hold customer funds on account like an exchange.

The concern ...and a very valid concern, would be the risk and exposure to charge-back fraud.



If someone were to sell bitcoins on localbitcoins.com in exchange for paypal my cash cards

Would selling btc for paypal mycash falls under the MSB?
Because these are able to be purchased without no id and without paypal involved.

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October 01, 2015, 05:31:43 AM
 #9

I don't think the amount you're transacting matters, any time you're selling Bitcoin for profit in the US counts as Fincen's definition of an exchanger.

Registration as a money transmitter doesn't cost anything. You can do it here - http://www.fincen.gov/financial_institutions/msb/msb.registration.html

I guess it's the AML stuff that's the major grind.

That's a great answer. We also gotta keep in mind that the law is way behind on this. There are almost no laws in the first world countries, definitely none in third world countries (or "developing nations"). In most of the US, you're going to have to be careful to adapt this new digital money to the laws that already exist surrounding money, debit and credit.
I highly suggest that you find a lawyer, or a law student about to graduate to talk to about it.

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October 17, 2015, 05:53:45 PM
 #10

As far as the US goes, as long as you mine your coins you are selling. You are okay and will not have FinCen coming after you.  If you involve third parties or start buying and selling then you may have issues with being an MSB.

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October 17, 2015, 08:08:43 PM
 #11

Depends on if you live in New York or something like that.

I believe that they have laws on cryptocurrency.
Laws on cryptos? It isn't regulated so I thought it is off limits until that is done.




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October 27, 2015, 03:21:31 AM
 #12

Just sell bitcoins at an exchange and transfer to your bank, problem solved.  And do not try to be a pro trader on LBC without consulting legal advice.
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October 27, 2015, 06:34:43 PM
 #13

Nothing wrong in selling in any country if you meet the person and collect the fiats in hand. Some country may track you if the money transactions involved with any bank accounts. With real person meeting up using localbitcoin is the best and safest way to deal.
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October 27, 2015, 07:06:59 PM
 #14

I don't think the amount you're transacting matters, any time you're selling Bitcoin for profit in the US counts as Fincen's definition of an exchanger.

Registration as a money transmitter doesn't cost anything. You can do it here - http://www.fincen.gov/financial_institutions/msb/msb.registration.html

I guess it's the AML stuff that's the major grind.

The Florida bust related to localbitcoins was not only for money laudering but also for violating a Florida law requiring licensing as a money transmitter. Any state licenses would be in addition to the Federal registration. Check your state laws to see if you must register.

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November 03, 2015, 04:19:26 PM
 #15

If you sell a small amount of bitcoin on licalbitcoins, it is legal. In the US, there is a certain limit. If you are above that limit, you are classified as money transmitter. You have to declare and register.
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November 12, 2015, 12:25:31 PM
 #16

Paypal will freeze your account and take your money it is against their TOS.
Other methods depend on how much you trade (same rules as fiat)

Google search the story about guys being arrested by the FBI after meeting through Localbitcoins.
..and WHY

edit:
ya the guy above me has it right LOL

FUD first & ask questions later™
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November 19, 2015, 12:48:25 AM
 #17

Paypal will freeze your account and take your money it is against their TOS.
Other methods depend on how much you trade (same rules as fiat)

Google search the story about guys being arrested by the FBI after meeting through Localbitcoins.
..and WHY

edit:
ya the guy above me has it right LOL

If you just buy or sell small amount of bitcoin in localbitcoin.com, it is fine. Do not do too much trading there. I think if you just buy bitcoin from others, you do not need a money transmitter license.
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November 19, 2015, 12:52:52 AM
 #18

No dude it is not illegal. Knock yourself out.
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November 21, 2015, 12:42:09 AM
 #19

I have to say it all depends on where you live.  In the USA, the IRS just released new laws around what BTC is considered and it seems that they consider it a possession and not a currency.  At the same time, they seem to be requiring some sort of record keeping laws when you are paying others with it or if you are giving it away.  I do not know if I read it right, but search BitCoin under the irs.gov website and this will help you a little if you are in the USA.
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November 21, 2015, 04:09:50 AM
 #20

If you live in the USA its legal,
However, some people buy Bitcoins to launder illegally made cash.
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