I am a certified Anti-Money Laundering agent. (AMLCA)

[BTCINVESTOR]

Big changes are coming to the major exchanges. I can answer any questions regarding MSB requirements, state and federal. BitPay, Coinbase, and others will be required to obtain registration as well as licensure.

[1715308599]

1715308599

[1715308599]

1715308599

[1715308599]

1715308599

[1715308599]

1715308599

[1715308599]

1715308599

[Severian]

This'll be good. Black market BTC will run circles around the "legal" and more expensive BTC on government-approved exchanges.

[BTCINVESTOR]

Probably true, although interfacing US financial institutions will require compliance. Bitcoin will be hard to buy quickly and legitimately using common US financial instruments.

[dgray9000]

I am a miner, if I use Mt. Gox to trade BTC and USD back and forth (to make more money) will I have to get a money transmitter license as long as i keep it under $1000 of trades per day?

[smith88]

Big changes are coming to the major exchanges. I can answer any questions regarding MSB requirements, state and federal. BitPay, Coinbase, and others will be required to obtain registration as well as licensure.

How quickly do you see these changes being implemented?  Only via US based exchanges?  How are international exchanges going to be handled (ei: blacklisted in US)?
I am assuming you are affiliated with some of the organizations applying these new regulations?  Were some laws passed recently?
Thanks for any info you can share, the better folks are educated the greater we'll see folks comply; as far as US customers.  I for one have been waiting for something like this to occur; I figured it was just a matter of time.

cheers.
(if you can't answer any of those questions and don't do so quickly; everybody will know what you are... cough cough... troll... cough cough)

[Severian]

Bitcoin will be hard to buy quickly and legitimately using common US financial instruments.

Not for long. The Bitcoin community has a way of developing tools that can route around interference from third parties.  On top of that, people will be more motivated to stay away from the 'legal' exchanges so as to not be tracked in their financial doings and because of the prospect of cheaper coins.

The 'legal' exchanges will have to pass their compliance costs on to their clients. Those that choose to deal off the exchanges will be able to sell coins at a much cheaper rate.

To paraphrase Yogi Berra, people will stay away from the 'legal' exchanges in droves.

[BTCINVESTOR]

Nope. FinCEN just issued a clarification statement on this today.

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

You will be the least concern of federal and state regulators my friend.

[Severian]

Some day, everyone will wake up from this terrible dream.

I keep hoping but many people seem to prefer the long nap of unknowing.

[Severian]

I'm shocked (not really) that the regulators don't realize this yet.

Regulators aren't known for being able to see too far beyond lunchtime.

[smith88]

Nope. FinCEN just issued a clarification statement on this today.

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

You will be the least concern of federal and state regulators my friend.

awesome, thanks for the heads up, mate.  good stuff.  i would send you a .000001 btc but I don't have one. lol

[Kluge]

... Like I give a shit that you run a communal laundromat.  

[Benson Samuel]

Big changes are coming to the major exchanges. I can answer any questions regarding MSB requirements, state and federal. BitPay, Coinbase, and others will be required to obtain registration as well as licensure.

Is this not good for Bitcoin?

Being recognized by a government as a MSB.

Whether Bitcoiners follow it or not is a different story.

[dgray9000]

I am a miner, if I use Mt. Gox to trade BTC and USD back and forth (to make more money) will I have to get a money transmitter license as long as i keep it under $1000 of trades per day?

No.

Thank you, was seriously worried about this.  Also if I do more than $1000 per day in trading would I have to get a license right? I think I would if I'm understanding the FinCEN document correctly

[MooC Tals]

How did that speech go?

http://www.youtube.com/watch?v=32iCWzpDpKs

I believe that sums it all up!!!

[BTCINVESTOR]

Big changes are coming to the major exchanges. I can answer any questions regarding MSB requirements, state and federal. BitPay, Coinbase, and others will be required to obtain registration as well as licensure.

How quickly do you see these changes being implemented?  Only via US based exchanges?  How are international exchanges going to be handled (ei: blacklisted in US)?
I am assuming you are affiliated with some of the organizations applying these new regulations?  Were some laws passed recently?
Thanks for any info you can share, the better folks are educated the greater we'll see folks comply; as far as US customers.  I for one have been waiting for something like this to occur; I figured it was just a matter of time.

cheers.
(if you can't answer any of those questions and don't do so quickly; everybody will know what you are... cough cough... troll... cough cough)

The changes will come soon because here is how it works:

Any bank associated with an exchange or BitCoin payments operator is affected, for example: Coinbase has a contract with US Bank, a huge institution. US Bank will be very well versed in all of the upcoming regulations including the one issued by FinCEN today. (See the link in my other post) US Bank must report to FinCEN any relationship with a "money transmitter" or "money services business (MSB)" especially if they are considered "unlicensed" (state req) or "unregistered" (fed req). This means that Coinbase is going to receive high scrutiny immediately from their partnering institution!

Any time you want to attach a bona fide US money service, which specializes in moving US dollars, doesn't matter which, and that institution is a financial institution, meaning a bank, check casher, wiring service, or money transmitter, the rules will apply. It will be a certainty that purchasing BitCoins using any of these services will now get harder (or at least slower) soon. I don't care what "black market" or alternative routes there are, you will not see US institutions readily interfacing with them. Therein lies the challenge.

[BTCINVESTOR]

I am a miner, if I use Mt. Gox to trade BTC and USD back and forth (to make more money) will I have to get a money transmitter license as long as i keep it under $1000 of trades per day?

No.

Thank you, was seriously worried about this.  Also if I do more than $1000 per day in trading would I have to get a license right? I think I would if I'm understanding the FinCEN document correctly

Very doubtful. Of course it depends on volume and some other things, but you will not hit any radars easily. ;^}

[Severian]

I don't care what "black market" or alternative routes there are, you will not see US institutions readily interfacing with them.

I don't understand why this is a problem. Bitcoin is perfectly functional without interfacing with banks.

[BTCINVESTOR]

I don't care what "black market" or alternative routes there are, you will not see US institutions readily interfacing with them.

I don't understand why this is a problem. Bitcoin is perfectly functional without interfacing with banks.

True, as long as you don't need to purchase them with actual USD. Exchanging BTC and buying products virtual or real with BTC, in my estimation is utterly unstoppable. For non-miners or investors, this applies acutely, as they will have a very hard time acquiring them using familiar monetary instruments.

[Jaw3bmasters]

I don't get this thread. What the OP is saying is accurate yet he's getting trolled.....

[BTCINVESTOR]

By the way, Dwolla is included in the above analysis. They will need to answer for their money transmission service. They will no longer be able to pretend it's just Veridian...

[Benson Samuel]

By the way, Dwolla is included in the above analysis. They will need to answer for their money transmission service. They will no longer be able to pretend it's just Veridian...

Dwolla only does domestic money transfer, which is not regulated in the US or atleast was not at the time when they started.
California was the only state where they needed an MSB and they did not provide services there.

[Severian]

True, as long as you don't need to purchase them with actual USD.

In that scenario, Bitcoin will just become like the weed market in the US. It will be worth billions, the government will say its illegal but will be powerless to stop it except to prosecute whatever hapless souls run across the radar of those practicing the prosecutorial arts.

There's a saying by Lord Acton (of "power corrupts, absolute power corrupts absolutely" fame):

"The issue which has swept down the centuries and which will have to be fought sooner or later is the people versus the banks."

I think this is that fight. The banks and the government have already lost. I hope they surrender quickly and quietly but I doubt it.

[BTCINVESTOR]

By the way, Dwolla is included in the above analysis. They will need to answer for their money transmission service. They will no longer be able to pretend it's just Veridian...

Dwolla only does domestic money transfer, which is not regulated in the US or atleast was not at the time when they started.
California was the only state where they needed an MSB and they did not provide services there.

Doesn't matter if they are only "domestic". The definition of "Money Laundering" includes "erasing" or "obscuring" paper trail. If an institution can perform this action, regulatory hounds will follow. At least eventually. But remember, Dwolla is one of the favorite mechanisms to upload USD to Mt. Gox. That is fully international.

Please understand, I am a huge fan of Bitcoin. Huge. And I own a lot of them. This affects me in a big way.

[smith88]

Big changes are coming to the major exchanges. I can answer any questions regarding MSB requirements, state and federal. BitPay, Coinbase, and others will be required to obtain registration as well as licensure.

How quickly do you see these changes being implemented?  Only via US based exchanges?  How are international exchanges going to be handled (ei: blacklisted in US)?
I am assuming you are affiliated with some of the organizations applying these new regulations?  Were some laws passed recently?
Thanks for any info you can share, the better folks are educated the greater we'll see folks comply; as far as US customers.  I for one have been waiting for something like this to occur; I figured it was just a matter of time.

cheers.
(if you can't answer any of those questions and don't do so quickly; everybody will know what you are... cough cough... troll... cough cough)

The changes will come soon because here is how it works:

Any bank associated with an exchange or BitCoin payments operator is affected, for example: Coinbase has a contract with US Bank, a huge institution. US Bank will be very well versed in all of the upcoming regulations including the one issued by FinCEN today. (See the link in my other post) US Bank must report to FinCEN any relationship with a "money transmitter" or "money services business (MSB)" especially if they are considered "unlicensed" (state req) or "unregistered" (fed req). This means that Coinbase is going to receive high scrutiny immediately from their partnering institution!

Any time you want to attach a bona fide US money service, which specializes in moving US dollars, doesn't matter which, and that institution is a financial institution, meaning a bank, check casher, wiring service, or money transmitter, the rules will apply. It will be a certainty that purchasing BitCoins using any of these services will now get harder (or at least slower) soon. I don't care what "black market" or alternative routes there are, you will not see US institutions readily interfacing with them. Therein lies the challenge.

Excellent, thank you, article helped fill in questions.  Best to ya for informing us.  Makes sense, I am glad that we're going to see opportunity for exchanges to cooperate; rather than the entire deal being regulated out of the country all together.  This is a great stimuli to the economy; both locally and abroad.  I am also a huge fan of bitcoins as well as a few other.  Let's keep this party going and machine turning.

[BTCINVESTOR]

True, as long as you don't need to purchase them with actual USD.

In that scenario, Bitcoin will just become like the weed market in the US. It will be worth billions, the government will say its illegal but will be powerless to stop it except to prosecute whatever hapless souls run across the radar of those practicing the prosecutorial arts.

There's a saying by Lord Acton (of "power corrupts, absolute power corrupts absolutely" fame):

"The issue which has swept down the centuries and which will have to be fought sooner or later is the people versus the banks."

I think this is that fight. The banks and the government have already lost. I hope they surrender quickly and quietly but I doubt it.

Believe me, I agree with you, but we all want Bitcoin to grow in popularity. We all want it to be used everywhere. For the common consumer to have some, they will either have to buy them directly, mine them, or sell something to obtain them. If you remove the ability to simply buy them with USD, it could substantially limit serious investors in the platform. We want all new interested parties to jump in. I hope the major feeders can stay in business through the regulatory scrutiny so that more Americans can "buy in". Thanks for your replies. Important insights.

[Severian]

Please understand, I am a huge fan of Bitcoin. Huge. And I own a lot of them. This affects me in a big way.

A serious question: If I sell you a trinket for $500 and give you 10 bitcoins, do any Federal regulations come into play? It would be like a Craigslist sale or a flea market transaction.

[Benson Samuel]

By the way, Dwolla is included in the above analysis. They will need to answer for their money transmission service. They will no longer be able to pretend it's just Veridian...

Dwolla only does domestic money transfer, which is not regulated in the US or atleast was not at the time when they started.
California was the only state where they needed an MSB and they did not provide services there.

Doesn't matter if they are only "domestic". The definition of "Money Laundering" includes "erasing" or "obscuring" paper trail. If an institution can perform this action, regulatory hounds will follow. At least eventually. But remember, Dwolla is one of the favorite mechanisms to upload USD to Mt. Gox. That is fully international.

Please understand, I am a huge fan of Bitcoin. Huge. And I own a lot of them. This affects me in a big way.

Good stuff on the AML insight.

I strongly believe that Bitcoin is cleaner than paper money.

If anyone is going to make bitcoin illegal, they will need to make several current legislation's/ technologies illegal before we can get to bitcoin.

There may be a targeted net against certain bands of users sometime sooner than any kind of statement or regulation on Bitcoin's general usage.

[BTCINVESTOR]

Please understand, I am a huge fan of Bitcoin. Huge. And I own a lot of them. This affects me in a big way.

A serious question: If I sell you a trinket for $500 and give you 10 bitcoins, do any Federal regulations come into play? It would be like a Craigslist sale or a flea market transaction.

Point taken. I agree.

[BTCINVESTOR]

By the way, Dwolla is included in the above analysis. They will need to answer for their money transmission service. They will no longer be able to pretend it's just Veridian...

Dwolla only does domestic money transfer, which is not regulated in the US or atleast was not at the time when they started.
California was the only state where they needed an MSB and they did not provide services there.

Doesn't matter if they are only "domestic". The definition of "Money Laundering" includes "erasing" or "obscuring" paper trail. If an institution can perform this action, regulatory hounds will follow. At least eventually. But remember, Dwolla is one of the favorite mechanisms to upload USD to Mt. Gox. That is fully international.

Please understand, I am a huge fan of Bitcoin. Huge. And I own a lot of them. This affects me in a big way.

Good stuff on the AML insight.

I strongly believe that Bitcoin is cleaner than paper money.

If anyone is going to make bitcoin illegal, they will need to make several current legislation's/ technologies illegal before we can get to bitcoin.

There may be a targeted net against certain bands of users sometime sooner than any kind of statement or regulation on Bitcoin's general usage.

I personally believe that BitCoin will be entirely resistant to regulation in-and-of itself. I am an expert in the financial and payments industry. BitCoin, in my estimation, is one of the greatest financial forces unleashed in the history of time. We will see that bear out many fold in our lifetimes. Get as many of them as you possibly can. Now.

[BTCINVESTOR]

By the way, I am able to provide consultation as an expert in the industry. I can provide my credentials to parties with serious inquiries:

1FRom5KAz716sSKGddQna5wQK4TLC7X2CN

[jgarzik]

It always made sense that US Government would monitor and regulate gateways to/from US-Dollars (bitcoin exchanges, in this case).

I am curious about purely bitcoin e-Wallets:  users of this service can (a) deposit bitcoins, (b) send bitcoins to a specified bitcoin address, or (c) send bitcoins to another user of the service.  No USD involved at all.

Where do purely bitcoin e-Wallets fall, in the regulatory realm?

[BTCINVESTOR]

It always made sense that US Government would monitor and regulate gateways to/from US-Dollars (bitcoin exchanges, in this case).

I am curious about purely bitcoin e-Wallets:  users of this service can (a) deposit bitcoins, (b) send bitcoins to a specified bitcoin address, or (c) send bitcoins to another user of the service.  No USD involved at all.

Where do purely bitcoin e-Wallets fall, in the regulatory realm?

By the way, congrats on the new ASIC (jealous) bro...

In my estimation, e-Wallets are perfectly safe right now from government prying both implicitly and explicitly. They will go after the exchanges first. Anything connected to the US dollar -- they can squeeze that with existing policing infrastructure. BTC to BTC seems impervious to me right now. There are simply no mechanisms built to police it. Time will tell though, but I believe some of the earlier commenters are right that there will always be another "alternative route" to exchanging and/or storing your BTC value.

[BTCINVESTOR]

It always made sense that US Government would monitor and regulate gateways to/from US-Dollars (bitcoin exchanges, in this case).

I am curious about purely bitcoin e-Wallets:  users of this service can (a) deposit bitcoins, (b) send bitcoins to a specified bitcoin address, or (c) send bitcoins to another user of the service.  No USD involved at all.

Where do purely bitcoin e-Wallets fall, in the regulatory realm?

By the way, congrats on the new ASIC (jealous) bro...

In my estimation, e-Wallets are perfectly safe right now from government prying both implicitly and explicitly. They will go after the exchanges first. Anything connected to the US dollar -- they can squeeze that with existing policing infrastructure. BTC to BTC seems impervious to me right now. There are simply no mechanisms built to police it. Time will tell though, but I believe some of the earlier commenters are right that there will always be another "alternative route" to exchanging and/or storing your BTC value.

BTW, Jeff...You are always welcome to any information from me free of charge on here or any other way. (And that goes for any of the other Bitcoin devs) Just happy to know you. Contact me anytime. You guys are the front lines of a very important work.

[RoboTeddy]

What would happen if someone implemented a peer to peer currency exchange, as outlined here?: http://www.youtube.com/watch?v=mD4L7xDNCmA&feature=youtu.be&t=24m57s

edit: a text description: https://en.bitcoin.it/wiki/Ripple_currency_exchange

[jasinlee]

How would policing and or controlling of fiat come into play if the exchange is based in another country, but they have a large following in the US? Would there even be a way to stop them if they were based outside the country and they used methods of payment such as moneygram, WU, Wire transfers, or even credit/debit cards?

[flavius]

.....who cares?

[BTCINVESTOR]

What would happen if someone implemented a peer to peer currency exchange, as outlined here?: http://www.youtube.com/watch?v=mD4L7xDNCmA&feature=youtu.be&t=24m57s

edit: a text description: https://en.bitcoin.it/wiki/Ripple_currency_exchange

Ripple is very cool and I am well versed in the protocol. Luv it!

I see it as very viable. Impossible to regulate at this time, much like Bitcoin.

Remember from your economics 101: The money supply is essentially REAL MONEY + DEBT (based on REAL MONEY). In the decentralized realm, Bitcoin is the REAL MONEY, Ripple (at least so far) is answering the second need and that is the DEBT based on that money. Had to come eventually. Glad to see it so soon! Great question!

[🏰 TradeFortress 🏰]

who is your favorite my little pony?

I can answer any questions regarding MSB requirements, state and federal.

I saw MLP, oops

Well, now that you mention it, this is a much more important topic. My favorite pony is Rarity in reverence to the worst troll ever.

I think you misspelt rainbow dash.

[BTCINVESTOR]

How would policing and or controlling of fiat come into play if the exchange is based in another country, but they have a large following in the US? Would there even be a way to stop them if they were based outside the country and they used methods of payment such as moneygram, WU, Wire transfers, or even credit/debit cards?

Just remember, it's always about squeezing what they control (meaning the US Feds and/or state govs):

Moneygram (US Money Transmitter, registered with FinCEN/IRS, Licensed in all 50 states) What if they were to lose the registration or any of those state licensures? They will quickly terminate any relationship, say to BitInstant, to name just one.

Western union - same as above.

Wire Transfers - Regulated by Central Banking law - Out Feds wouldn't have to try hard to shut down the foreign intermediaries that are using the protocol.

Credit/Debit Cards - If they are the major card associations, VISA/MC/AMEX/DISCOVER/Diners/etc...the list goes on....The Feds can shut those down within hours if needed. But if they are foreign branded credit or debit cards, the nation regulating the issuing body would get involved.

You see the conundrum?

[Kluge]

Who is this?

[jasinlee]

How would policing and or controlling of fiat come into play if the exchange is based in another country, but they have a large following in the US? Would there even be a way to stop them if they were based outside the country and they used methods of payment such as moneygram, WU, Wire transfers, or even credit/debit cards?

Just remember, it's always about squeezing what they control (meaning the US Feds and/or state govs):

Moneygram (US Money Transmitter, registered with FinCEN/IRS, Licensed in all 50 states) What if they were to lose the registration or any of those state licensures? They will quickly terminate any relationship, say to BitInstant, to name just one.

Western union - same as above.

Wire Transfers - Regulated by Central Banking law - Out Feds wouldn't have to try hard to shut down the foreign intermediaries that are using the protocol.

Credit/Debit Cards - If they are the major card associations, VISA/MC/AMEX/DISCOVER/Diners/etc...the list goes on....The Feds can shut those down within hours if needed. But if they are foreign branded credit or debit cards, the nation regulating the issuing body would get involved.

You see the conundrum?

And if that country allows such activities in their country in relation to the credit cards? Would that not make cards such as the prepaid ones you find all over tor virtually untouchable?

[jgarzik]

In my estimation, e-Wallets are perfectly safe right now from government prying both implicitly and explicitly. They will go after the exchanges first. Anything connected to the US dollar -- they can squeeze that with existing policing infrastructure. BTC to BTC seems impervious to me right now. There are simply no mechanisms built to police it. Time will tell though, but I believe some of the earlier commenters are right that there will always be another "alternative route" to exchanging and/or storing your BTC value.

That's very interesting, thanks.

Agreed on "seems impervious" (we hope) and that existing policing mechanisms seem scant, but may I challenge you with a highly specific question:

Consider a US-based entrepreneur and company running a purely bitcoin-based e-Wallet service on US soil.  Pick your US state, excluding New York and California.  Could the entrepreneur run this e-Wallet without contacting any regulators[1]?

One of the projects discussed on IRC was an IRC micropayment bot, which is nothing more than an IRC-based e-Wallet.  Easy to code and run, but seems like it might run afoul of regulators.  Would love to be proven wrong



[1] Besides the standard ones needed to operate a US corporation, such as the IRS and state-level tax dept., municipal business licensing, etc.

[BTCINVESTOR]

How would policing and or controlling of fiat come into play if the exchange is based in another country, but they have a large following in the US? Would there even be a way to stop them if they were based outside the country and they used methods of payment such as moneygram, WU, Wire transfers, or even credit/debit cards?

Just remember, it's always about squeezing what they control (meaning the US Feds and/or state govs):

Moneygram (US Money Transmitter, registered with FinCEN/IRS, Licensed in all 50 states) What if they were to lose the registration or any of those state licensures? They will quickly terminate any relationship, say to BitInstant, to name just one.

Western union - same as above.

Wire Transfers - Regulated by Central Banking law - Out Feds wouldn't have to try hard to shut down the foreign intermediaries that are using the protocol.

Credit/Debit Cards - If they are the major card associations, VISA/MC/AMEX/DISCOVER/Diners/etc...the list goes on....The Feds can shut those down within hours if needed. But if they are foreign branded credit or debit cards, the nation regulating the issuing body would get involved.

You see the conundrum?

And if that country allows such activities in their country in relation to the credit cards? Would that not make cards such as the prepaid ones you find all over tor virtually untouchable?

If they are issued by institutions other than "US based" issuers such as VISA/MC, then maybe, but, for example, if Interac, a Canadian based debit association, were to issue cards and those cards were to get involved in BTC commerce in a way that Canada did not like, Canada could shut down any interaction between Interac and BTC operators (if it could be proven that is). But if the payments are done in small quantities so as not to stimulate creation of a "suspicious activity report (SAR)" in the US, say with Square or PayPal, it would be pretty tough to police small P2P BTC commerce. But not impossible.

[RATM69]

This video pretty much sums up the governments explanation of the new FinCEN enforcement.

http://www.youtube.com/watch?v=QaxqUDd4fiw

[BTCINVESTOR]

In my estimation, e-Wallets are perfectly safe right now from government prying both implicitly and explicitly. They will go after the exchanges first. Anything connected to the US dollar -- they can squeeze that with existing policing infrastructure. BTC to BTC seems impervious to me right now. There are simply no mechanisms built to police it. Time will tell though, but I believe some of the earlier commenters are right that there will always be another "alternative route" to exchanging and/or storing your BTC value.

That's very interesting, thanks.

Agreed on "seems impervious" (we hope) and that existing policing mechanisms seem scant, but may I challenge you with a highly specific question:

Consider a US-based entrepreneur and company running a purely bitcoin-based e-Wallet service on US soil.  Pick your US state, excluding New York and California.  Could the entrepreneur run this e-Wallet without contacting any regulators[1]?

One of the projects discussed on IRC was an IRC micropayment bot, which is nothing more than an IRC-based e-Wallet.  Easy to code and run, but seems like it might run afoul of regulators.  Would love to be proven wrong



[1] Besides the standard ones needed to operate a US corporation, such as the IRS and state-level tax dept., municipal business licensing, etc.

Well, I have to say that based on today's announcement from FinCEN, I think the chances of that senario being scrutinized right now is extremely low, because (and this is key) as you say, it is purely Bitcoin-based. If no "real currency" (USD, EUR, RNB, etc.) can find its way into the wallet software architecture somehow, the system will likely survive for a good long time. It's always when you interface with regulated financial institutions that the US gov can actually put a squeeze on. Just make sure that anything in and out of that system is nothing but good ole BTC and it will be safe in my opinion.

In addition, you mentioned micropayments. Generally these are considered anything less than $12.00 USD. Assuming there are limits to transaction size with the IRC system, FinCEN has way bigger fish to fry. Sounds like a way cool idea actually.

[BTCINVESTOR]

The link to the FinCEN announcement in case you missed it:

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

(I guess it technically came out yesterday. It's getting late. ;^)

[BTCINVESTOR]

Who is this?

I'll send you an email...

;^)

[Severian]

In addition, you mentioned micropayments. Generally these are considered anything less than $12.00 USD.

Interesting. An idea for you to shoot down...

The legal face value of an American silver Eagle is $1. ATM, $10 in face value eagles is worth ~$300 in fiat or ~6 btc. If a dealer were to sell ~6 btc for $10 face (assuming that the buyer also agrees to the revaluing), would this would fall under micropayments?

[BTCINVESTOR]

In addition, you mentioned micropayments. Generally these are considered anything less than $12.00 USD.

Interesting. An idea for you to shoot down...

The legal face value of an American silver Eagle is $1. ATM, $10 in face value eagles is worth ~$300 in fiat or ~6 btc. If a dealer were to sell ~6 btc for $10 face (assuming that the buyer also agrees to the revaluing), would this would fall under micropayments?

According to the federal government (Disclaimer: right now). Yes, that would be a micropayment. But even if the government cared about that transaction in some way right now, there is almost nothing they could do to police it. Much like outlawing sodomy or something.

[Severian]

Yes, that would be a micropayment.

Good to know. Many thanks for the info.

[SgtSpike]

1) Aside from US-based exchanges (and international exchanges dealing in USD) having to register as Money Transmitters, what are the other real-world implications of the new FinCEN regulations?
2) How much does registering as a Money Transmitter actually cost?
3) The way I understand what is written in the FinCEN statement, miners who sell directly to other people would have to be registered Money Transmitters, but miners who sell to other people through an exchange would not (since the exchange is already acting as the Money Transmitter in that case).  Is this true?
4) How feasible would it be for the government to actually regulate direct miner-to-people trades for USD?  For example, people selling Bitcoins on localbitcoins.com?

[TomRado]

Do you believe Bitcoins will play an important role in carrying forward the http://en.wikipedia.org/wiki/Hawala System in the future? It seems to perfectly fit the purpose as long as there are exchanges on both sides.

[BTCINVESTOR]

1) Aside from US-based exchanges (and international exchanges dealing in USD) having to register as Money Transmitters, what are the other real-world implications of the new FinCEN regulations?
2) How much does registering as a Money Transmitter actually cost?
3) The way I understand what is written in the FinCEN statement, miners who sell directly to other people would have to be registered Money Transmitters, but miners who sell to other people through an exchange would not (since the exchange is already acting as the Money Transmitter in that case).  Is this true?
4) How feasible would it be for the government to actually regulate direct miner-to-people trades for USD?  For example, people selling Bitcoins on localbitcoins.com?

My thoughts:

1) In "real world" terms, it means the feds will scrutinize heavily any "legitimate and regulated US based financial institution" that has anything to do with BitCoin. They are making this crystal clear.

For example, a ton of people upload USD to Mt. Gox with Dwolla.

Dwolla is only able to operate using a partnering bank/credit union within the United States to process its ACH payments. All banks in this country are regulated by the feds in several ways, e.g. FDIC, Comptroller of Currency, Treasury, etc. Now NACHA (run by US gov), handles all check processing (a.k.a. ACH transactions) through the Federal Reserve (approx. 21 trillion in payments anually). Dwolla has no other mechanism of exchange with US citizens other than through the good graces of our lovely US govt. They will want to keep that key relationship. The new FinCEN guidelines are saying, in my opinion, that Dwolla is going to have to act as a barrier to money laundering somehow, and not just through their partnering bank (Dwolla is not wanting to admit this right about now).  Moreover, their partnering bank might catch heat in being partnered with them. Dwolla could conceivably have to consider discontinuing it's relationship with Mt. Gox, perhaps by order of their partnering bank, as a possible senario, unless they make dramatic changes to the way they screen money going in and out. Dwolla will need to invest heavily in compliance at this point to keep everyone happy. They may reduce amounts uploadable to Mt. Gox or in general as a precaution, so they don't trip the thresholds for further monitoring of customer-based transactions.

At any rate, I sure would hate to lose the ability to upload my funds using Dwolla. It is a very well conceived portal and works nicely for me when buying BTC on Mt. Gox, so a ton of people would be disappointed to see a bottleneck form there. I could go on and on about the big players emerging and how much of a burden this could place on them as fairly early startups, i.e. such as Coinbase, Coinlab, etc. They all have to take big notice of this new info right now.

2) I think it's 100 bucks or something, but that's not the challenge. A new MSB or money transmitter, once registered must institute major changes (expensive ones) to the way they do business. They must have things like independent audits, robust interdiction software protocols (usually custom made), and additional staff to manage reporting requirements.

3) You have this one backwards. The exchanges that interface with major US institutions are the only ones they can really do anything about and they know it. The miners selling directly to others will be much safer in my opinion. Much safer.

4)Practically impossible to regulate direct miner-to-people transactions...This is why we have all fallen in love with Bitcoins in the first place right? ;^)

[BTCINVESTOR]

Do you believe Bitcoins will play an important role in carrying forward the http://en.wikipedia.org/wiki/Hawala System in the future? It seems to perfectly fit the purpose as long as there are exchanges on both sides.

Yes. Ideally suited for.

Although, Hawala's "magic" can be done with pretty much anything of value. You may be surprised to know that there are some fairly large institutions out there that mimic the same concept of "motionless" money exchange to bypass currency exchange fees. It's pretty cool stuff.

[marcus_of_augustus]

I am a certified Anti-Money Laundering agent. (AMLCA)

What does this mean? Are you a policeman?

[Monster Tent]

USD = Titanic
Bitcoin=Iceberg.

[Sage]

The deep question is how do we prempt this now...

If exchanges are the Achilles heal, then lest get serious about creating a decentralized exchange BEFORE it becomes necessary.

[BTCINVESTOR]

I am a certified Anti-Money Laundering agent. (AMLCA)

What does this mean? Are you a policeman?

No. Just a certified auditor.

[Gator-hex]

I am a certified Anti-Money Laundering agent. (AMLCA)

What does this mean? Are you a policeman?

No. Just a certified auditor.

You miss the point of bitcoin, it's goal is to replace national currencies, even if there were no exchanges, only Wall Street speculators would care.

[Raoul Duke]

So now they come with laws and regulations.
There goes the small guy.
Anyone who wants to stay in business will need deep pockets to "buy compliance" <-- This is what it's all about.

[Lethn]

Please, them trying to regulate Bitcoin is going to be like them trying to regulate Bittorrent, these guys don't know a thing about computers, I'll have whatever they put up bypassed in five seconds and I have no hacking knowledge whatsoever.

[TransaDox]

I had my doubts originally, but it looks like MtGox offloading US and Canadian customers to Coinlab was a smart move.

[adamluc]

I think the new regulation will help adoption of bitcoin, and hence all users of bitcoin. By increasing regulation, it becomes more visible and more demand for bitcoin will result in higher bitcoin prices.

[TheJamesFund]

I am a certified Anti-Money Laundering agent. (AMLCA)

What does this mean? Are you a policeman?

No. Just a certified auditor.

So are you an private auditor for private sector or a federal agent? From reading all your post(s) I do believe you are well knowledge based on AML regulations, but are you really an AGENT. It seems to be a conflict of interest working as an agent and then hording BTC. Maybe I am confused but if someone says "I am a certified AML agent" it would mean to me you are like the IRS and I would run far away from you.

Anyone here can explain this better...

I send money through Dwolla and deposit in to MTGOX, so then I buy bitcoins, sell them and put money back into bank to dwolla... so now I am on the radar for money laundering?

And last question, "buy all the BTC as I can" okay, then what? If I can't sell them and make money without having a red target on my forehead, wtf am I suppose to do?

[Stephen Gornick]

The general understanding is that a merchant selling goods and services and accepting bitcoin as payment is not an exchange or money transmitter.

Is this a safe assumption because:

FIN-2013-G001

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

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

and the mechant is not engaged in the exchange so therefore isn't an exchanger?


Or, is it because:

31 CFR § 1010.100(ff)(5)(ii)(F):

The term “money transmitter” shall not include a person that only:
(F) Accepts and transmits funds only integral to the sale of goods or the provision of services, other than money transmission services, by the person who is accepting and transmitting the funds.

[RodeoX]

As these regulations roll out we (bitcoin peers) need to be vocal in shaping the law. The best way to express our will in the financial arena is with our money. Refuse to pay high fees, do not use systems that limit control of your BTC ; in short, preserve the financial freedom bitcoin can offer. It may even come to acts of civil disobedience. 

If bitcoin goes mainstream, there will be huge efforts to take it from the hands of peers and make meta money off of it. The banks are very powerful and when one sees how they run right over governments, it is easy to see that you bitcoin peers are a tiny speck of dirt to them.
Satoshi gave you a tool, but you have to do the work. The real fight for bitcoin is about to begin. Let's work with regulators or the banks will decide the future of bitcoin.   

[niko]

Doesn't matter if they are only "domestic". The definition of "Money Laundering" includes "erasing" or "obscuring" paper trail. If an institution can perform this action, regulatory hounds will follow. At least eventually. But remember, Dwolla is one of the favorite mechanisms to upload USD to Mt. Gox. That is fully international.

No. Dwolla sends USD to Mutum Sigillum, a U.S. entity. They are the ones doing the international transfer, at least until March 23 when coinlabs take over and keep it all "domestic" for U.S. clients.

[TheJamesFund]

All so confusing

[DeathAndTaxes]

So are you an private auditor for private sector or a federal agent?

Neither it is like being certified in using Microsoft word.  It is a check the box type certification so a cash handling business can say their employees were trained.  A couple hours of study (online courses available) and a multiple choice exam. 

[SgtSpike]

1) Aside from US-based exchanges (and international exchanges dealing in USD) having to register as Money Transmitters, what are the other real-world implications of the new FinCEN regulations?
2) How much does registering as a Money Transmitter actually cost?
3) The way I understand what is written in the FinCEN statement, miners who sell directly to other people would have to be registered Money Transmitters, but miners who sell to other people through an exchange would not (since the exchange is already acting as the Money Transmitter in that case).  Is this true?
4) How feasible would it be for the government to actually regulate direct miner-to-people trades for USD?  For example, people selling Bitcoins on localbitcoins.com?

My thoughts:

1) In "real world" terms, it means the feds will scrutinize heavily any "legitimate and regulated US based financial institution" that has anything to do with BitCoin. They are making this crystal clear.

For example, a ton of people upload USD to Mt. Gox with Dwolla.

Dwolla is only able to operate using a partnering bank/credit union within the United States to process its ACH payments. All banks in this country are regulated by the feds in several ways, e.g. FDIC, Comptroller of Currency, Treasury, etc. Now NACHA (run by US gov), handles all check processing (a.k.a. ACH transactions) through the Federal Reserve (approx. 21 trillion in payments anually). Dwolla has no other mechanism of exchange with US citizens other than through the good graces of our lovely US govt. They will want to keep that key relationship. The new FinCEN guidelines are saying, in my opinion, that Dwolla is going to have to act as a barrier to money laundering somehow, and not just through their partnering bank (Dwolla is not wanting to admit this right about now).  Moreover, their partnering bank might catch heat in being partnered with them. Dwolla could conceivably have to consider discontinuing it's relationship with Mt. Gox, perhaps by order of their partnering bank, as a possible senario, unless they make dramatic changes to the way they screen money going in and out. Dwolla will need to invest heavily in compliance at this point to keep everyone happy. They may reduce amounts uploadable to Mt. Gox or in general as a precaution, so they don't trip the thresholds for further monitoring of customer-based transactions.

At any rate, I sure would hate to lose the ability to upload my funds using Dwolla. It is a very well conceived portal and works nicely for me when buying BTC on Mt. Gox, so a ton of people would be disappointed to see a bottleneck form there. I could go on and on about the big players emerging and how much of a burden this could place on them as fairly early startups, i.e. such as Coinbase, Coinlab, etc. They all have to take big notice of this new info right now.

2) I think it's 100 bucks or something, but that's not the challenge. A new MSB or money transmitter, once registered must institute major changes (expensive ones) to the way they do business. They must have things like independent audits, robust interdiction software protocols (usually custom made), and additional staff to manage reporting requirements.

3) You have this one backwards. The exchanges that interface with major US institutions are the only ones they can really do anything about and they know it. The miners selling directly to others will be much safer in my opinion. Much safer.

4)Practically impossible to regulate direct miner-to-people transactions...This is why we have all fallen in love with Bitcoins in the first place right? ;^)

Thanks for taking the time to answer these in detail.  Cheers! 

[BTCINVESTOR]

I am a certified Anti-Money Laundering agent. (AMLCA)

What does this mean? Are you a policeman?

No. Just a certified auditor.

You miss the point of bitcoin, it's goal is to replace national currencies, even if there were no exchanges, only Wall Street speculators would care.

I as well as you would like to see Bitcoin rise to prominence, but people have to have an acceptable way of buying in until it stands on its own feet. It must interface with accepted currency channels in the meantime.

[BTCINVESTOR]

I think the new regulation will help adoption of bitcoin, and hence all users of bitcoin. By increasing regulation, it becomes more visible and more demand for bitcoin will result in higher bitcoin prices.

Well said.

It was inevitable that if Bitcoin were to become a serious player, it would have to play nicely (at least for a time) with some of the big money feeding mechanisms. This is a good thing in my opinion. Bitcoin is the real deal. It will always be decentralized, but a ton of legitimate folks want to get in on it and they don't want to feel that they have to buy them from some guy on the corner. Legal channels into Bitcoin can only strenthen it.

[ProfMac]

I think the new regulation will help adoption of bitcoin, and hence all users of bitcoin. By increasing regulation, it becomes more visible and more demand for bitcoin will result in higher bitcoin prices.

Well said.

It was inevitable that if Bitcoin were to become a serious player, it would have to play nicely (at least for a time) with some of the big money feeding mechanisms. This is a good thing in my opinion. Bitcoin is the real deal. It will always be decentralized, but a ton of legitimate folks want to get in on it and they don't want to feel that they have to buy them from some guy on the corner. Legal channels into Bitcoin can only strenthen it.

I agree.  Aurum and Bitfloor have my identity papers.  I am on the way to the bank to test a wire transfer.
I previously verified that an ACH will return money to my bank.

[BTCINVESTOR]

Doesn't matter if they are only "domestic". The definition of "Money Laundering" includes "erasing" or "obscuring" paper trail. If an institution can perform this action, regulatory hounds will follow. At least eventually. But remember, Dwolla is one of the favorite mechanisms to upload USD to Mt. Gox. That is fully international.

No. Dwolla sends USD to Mutum Sigillum, a U.S. entity. They are the ones doing the international transfer, at least until March 23 when coinlabs take over and keep it all "domestic" for U.S. clients.

For purposes of regulation, it doesn't matter how the money gets to Japan. It must be monitored for money laundering activities. Dwolla will not be able to continue to escape this.

[SgtSpike]

How long has FinCEN known about Bitcoin and been planning to regulate it?

[jgarzik]

For purposes of regulation, it doesn't matter how the money gets to Japan. It must be monitored for money laundering activities. Dwolla will not be able to continue to escape this.

Recently, my one-person microbiz had to AML/KYC with Dwolla, to continue transferring to/from MtGox. Based on my experience and conversation with the Dwolla employee, it sounds like this is a special procedure for MtGox, that does not apply to most other dwolla users.

[BTCINVESTOR]

How long has FinCEN known about Bitcoin and been planning to regulate it?

I don't know how long FinCEN has truly considered Bitcoin a serious player, but likely not very long knowing government bureaucracy.

But frankly, I am not seeing FinCEN going after Bitcoin itself. I'm sure they are quite dumbfounded as to how to do such a thing. But what they can do is put pressure on any legitimate entity that hooks up to it in a formal way.

[jgarzik]

But frankly, I am not seeing FinCEN going after Bitcoin itself. I'm sure they are quite dumbfounded as to how to do such a thing. But what they can do is put pressure on any legitimate entity that hooks up to it in a formal way.

Perhaps not FinCEN, but financial reporters at anti-money laundering conferences report that the FBI is "very aware" of bitcoin, as is the SEC.  The leaked FBI report on bitcoin was quite knowledgeable and matter-of-fact.

Yesterday's FinCEN guidance makes it seem more likely that LEAs would target individual criminals, rather than bitcoin network and users en masse.

[BTCINVESTOR]

For purposes of regulation, it doesn't matter how the money gets to Japan. It must be monitored for money laundering activities. Dwolla will not be able to continue to escape this.

Recently, my one-person microbiz had to AML/KYC with Dwolla, to continue transferring to/from MtGox. Based on my experience and conversation with the Dwolla employee, it sounds like this is a special procedure for MtGox, that does not apply to most other dwolla users.

They definitely are doing a nice job with AML/KYC from what I can tell, but that's not going to be enough. They are going to have to register with FinCEN and seek state licensures as well. A huge undertaking. They will be ahead of the game compared to some startups. But will their partnering bank continue to allow them to use their ACH services while unlicensed?

Hard to say what will happen, but we had to know that as Bitcoin becomes more powerful, regulatory forces will step in at a rate proportional to the amount of influence it wields.

The good news, is all of us that love to use Bitcoin as individuals and want to buy or sell using them, the sky is currently clear.

[BTCINVESTOR]

But frankly, I am not seeing FinCEN going after Bitcoin itself. I'm sure they are quite dumbfounded as to how to do such a thing. But what they can do is put pressure on any legitimate entity that hooks up to it in a formal way.

Perhaps not FinCEN, but financial reporters at anti-money laundering conferences report that the FBI is "very aware" of bitcoin, as is the SEC.  The leaked FBI report on bitcoin was quite knowledgeable and matter-of-fact.

Yesterday's FinCEN guidance makes it seem more likely that LEAs would target individual criminals, rather than bitcoin network and users en masse.

Agreed.

Anyone doing serious money in Bitcoin will be targets of investigation going forward. Casual investors and merchant activities are not in the cross hairs that I can tell.

[jasinlee]

Dont take this the wrong way, but can I see your credentials, even just in PM?

[JusticeForYou]

Have you heard of a "Yard Sale"? Millions upon millions of people have them every week end. Yard Sale at <insert coffed shop here>.

It's funny how regulations try to solve the problems from the wrong side of the equation. You try to stop criminal activities AFTER the fact, rather than try to prevent them BEFORE the fact.

[MaxCoins]

Fascinating and informative discussion. Thank you.

[marcus_of_augustus]

As we all know it is in reality Wall St. that writes these regulations ... it looks to me like Wall St. wants a piece of the action.

They already fulfill the criteria, now they have the rules in place to their liking, they can play.

[Minor Miner]

I'm shocked (not really) that the regulators don't realize this yet.

Regulators aren't known for being able to see too far beyond lunchtime.

Don't you think that someone who invested in mt gox found it in their interest to put "another barrier" to entry up for people that plan to follow?   Using your lawyers to make it more expensive and complicated for anyone to start competing?   

[kentrolla]

does this mean selling drugs on silk road is going to be illegal soon?

[Minor Miner]

Big changes are coming to the major exchanges. I can answer any questions regarding MSB requirements, state and federal. BitPay, Coinbase, and others will be required to obtain registration as well as licensure.

Are there any UNCERTIFIED anti money laundering agents?  Would those people just be hobbyists?

[Severian]

does this mean selling drugs on silk road is going to be illegal soon?

It means that the people selling on SR are in the clear as they're not classified as MSBs. I'm sure they're very relieved.

[Minor Miner]

Big changes are coming to the major exchanges. I can answer any questions regarding MSB requirements, state and federal. BitPay, Coinbase, and others will be required to obtain registration as well as licensure.

Are you Agent Dumas from the french government?

[TheJamesFund]

So are you an private auditor for private sector or a federal agent?

Neither it is like being certified in using Microsoft word.  It is a check the box type certification so a cash handling business can say their employees were trained.  A couple hours of study (online courses available) and a multiple choice exam. 

Thanks for Clarifying.

I am a Certified Broke Ass College Boy

[WiW]

How about this for a question:

Pseudonomity gives us plausible deniability, but it's really not that hard to trace money in the network that hasn't gone through a mixing service.

Can you see any way (and I'm absolutely sure that the power that be will try as hard as they can to find such a way) using sophisticated taint analysis to track who owns what and use that as a mean to regulate?

[flyhouse]

This is all BS.

Bitcoins should not be subject to regulation by anyone! Governments should prevent crime or prosecute it in its early stages, so that it doesn't use the bitcoin network as a means of transferring money.

[01BTC10]

I don't care. US is not the world. Bitcoin is not the US. Government with their centralised nature fail to understand the meaning of decentralised. Good luck regulating Bitcoin like you did with BitTorrent.

[Merralea]

... Like I give a shit that you run a communal laundromat.  

I would just like to let you know that someone other than you appreciates this.
 

On topic: this doesn't affect anyone with a functioning brain and/or spine. Launder away.

[bitcool]

... Like I give a shit that you run a communal laundromat.  

I would just like to let you know that someone other than you appreciates this.
 

On topic: this doesn't affect anyone with a functioning brain and/or spine. Launder away.

+1. Very valuable information here.

[fwho]

I feel like this could be an attempt to regulate gold farmers (e.g., WoW Gold) just as much, if not more than bitcoin. I was going to re-read the posted "new rules", but couldnt find them in a quick skim and am too lazy to look more.

Anyways, is this a possibility? Could some major player in the entertainment industry be pushing and lobbying to get their way again and this just happens to also fit the same bill for bitcoin? If so, how does this apply to game cards? For example, if I buy a League of Legends card from Walmart, that is a specific and exclusive voucher to redeem Riot Points, a virtual currency. Will Walmart have to stop selling these cards?

[ProfMac]

I feel like this could be an attempt to regulate gold farmers (e.g., WoW Gold) just as much, if not more than bitcoin. I was going to re-read the posted "new rules", but couldnt find them in a quick skim and am too lazy to look more.

Anyways, is this a possibility? Could some major player in the entertainment industry be pushing and lobbying to get their way again and this just happens to also fit the same bill for bitcoin? If so, how does this apply to game cards? For example, if I buy a League of Legends card from Walmart, that is a specific and exclusive voucher to redeem Riot Points, a virtual currency. Will Walmart have to stop selling these cards?

New Idea:  How can it be attacked?

Print little tickets like the scratch off lottery tickets that some states sell.
The scratch off goo covers the private bitcoin key.  The pay-to address is visible, both human readable and QR code, like the paper wallet.
At checkout, the Walmart cashier activates the card with the amount of cash desired.

One weak point I can see is that someone at the printing company can acquire the private key.

[pelleb]

I don't care. US is not the world. Bitcoin is not the US. Government with their centralised nature fail to understand the meaning of decentralised. Good luck regulating Bitcoin like you did with BitTorrent.

I agree 100% with you here. However US (Persons) performing bitcoin businesses interacting with the US banking system are at a very high risk and will unfortunately need to comply or eventually face jail time.

I see there as being 2 classes of bitcoin merchant processors/wallets/exchanges:

• High KYC countries - eg US and EU
• No KYC countries - where governments can't enforce KYC requirements

What is great about bitcoin is that the US can't stop people using Bitcoin in Nigeria like they can in the regular banking system. But they can stop any company dealing with the US banking system of dealing directly with Nigerian clients.

[01BTC10]

My post was a little bit extreme. I'm in Canada and US legislation is affecting us + lots of the fiat going into Bitcoin is coming from the US.

I have an account with Virtex and they are already enforcing KYC like MtGox.

[pelleb]

My post was a little bit extreme. I'm in Canada and US legislation is affecting us + lots of the fiat going into Bitcoin is coming from the US.

I have an account with Virtex and they are already enforcing KYC like MtGox.

Any exchange in an OECD country should be enforcing KYC by now or they are probably breaking pre existing laws. Some regulators are slow to put out specific rules and could attack existing exchanges for breaking the law once they discover bitcoin and have made up their mind about it.

Now FinCEN has thought about it, the other OECD countries are not far behind issuing "guidances".

I read somewhere that BitPay think's there is an exception for them as they are a payment processor. Since they do exchange I think that is wishful thinking. Mind you it won't be hard for them to implement, though they may have to restrict the countries they support.

Having been part of Financial Crypto 1.0 back in the 90's I know that most American's (in particular us libertarians) think non US jurisdictions magically don't care about KYC. Unfortunately most mid economy countries and offshore jurisdictions have been successfully bullied by the OECD FATF since the 90s to implement considerably stricter KYC rules than we have here.

I've heard people think you can just go open a bitcoin exchange in Panama or the Cayman Islands to solve the problem. The financial services commission in the respective jurisdiction would first of all not give you a license unless you implement ridiculous KYC as they don't want to risk their banking connections to the US. Panama was cut off from the SWIFT network for half a year back in the 90's for just this reason.

Sorry for the rant.

Anyway I've posted my analysis of the FinCEN guidelines here that I think provide a pretty good background.

http://payglo.be/2013/03/22/what-the-fincen-bitcoin-guidelines-actually-say/

[flavius]

It's funny because like half the point of bitcoin is to launder money while earning some interest. You can't make us pay taxes on something that isn't a government issued currency, because at it's very core it isn't money.

If you want me to pay taxes on bitcoins, I will send you the owed amount in bitcoins, not dollars. However, if the government accepts bitcoins as a tax payment then they are outright violating several laws and world goes ballistic.

There will always be ways to turn bitcoins into cash anonymously, and in large amounts. I could care less about whatever laws you pass, there are anonymous debit cards everywhere. I don't even need to mention the secondary p2p market for btc to cash because there are so many loopholes for turning it into cash through automatic websites and such.

[TheDarkBanker]

The hackers and whistleblower groups like wikileaks must really be getting to these "regulators" XDDDD

Well I guess cybercrime just got a little more annoying for the average skiddie XDDDD

[Kluge]

How long has FinCEN known about Bitcoin and been planning to regulate it?

I don't know how long FinCEN has truly considered Bitcoin a serious player, but likely not very long knowing government bureaucracy.

But frankly, I am not seeing FinCEN going after Bitcoin itself. I'm sure they are quite dumbfounded as to how to do such a thing. But what they can do is put pressure on any legitimate entity that hooks up to it in a formal way.

The government, then, is effectively ensuring all "ideals" of Bitcoin come through. Decentralization will flourish, because once you're "big," you're in their crosshairs. Regulating demanded business (especially when it affects consumers) to the point of effective de-legalization isn't going to create a couple giants, but push market-share to p2p and otherwise-decentralized (and non-compliant) solutions. Government can either back down and at least ensure they collect tax revenues from entities like Dwolla, or kill those companies giving into fear of government by boosting consumer appeal of organizations with no single point of failure. By encouraging a downward trend of compliance, they destabilize the entire country (with regards to subject/ruler relationship). - And remember, the American Revolution encouraged many others' subjects to follow suit.

Given management is on a failed path, a "National Union" might later be a solid bet against open rebellion. Timid enough for the government to reluctantly go along with, but bold enough to keep the citizens complacent. If government covertly controlled it...  they could just transfer the title of "United States" over to them. 

[IveBeenBit]

Btcinvestor - I may have missed it, but do you have an opinion on how these regulations would affect people listed on sites like localbitcoins.com?

[jgarzik]

BTW, Jeff...You are always welcome to any information from me free of charge on here or any other way. (And that goes for any of the other Bitcoin devs) Just happy to know you. Contact me anytime. You guys are the front lines of a very important work.

PM sent

[catcow]

is arbitration between bitcoin exchanges considered "money transmission"

[Zaih]

Interesting. Best of luck getting things under control!

[AnonyMint]

I am a miner, if I use Mt. Gox to trade BTC and USD back and forth (to make more money) will I have to get a money transmitter license as long as i keep it under $1000 of trades per day?

No.

1. Can he remain anonymous?

2. Does a USA citizen abroad have to comply when dealing with non-USA affiliated exchanged in foreign currencies?

3. Is law retroactive?

[AnonyMint]

I am a miner, if I use Mt. Gox to trade BTC and USD back and forth (to make more money) will I have to get a money transmitter license as long as i keep it under $1000 of trades per day?

No.

Thank you, was seriously worried about this.  Also if I do more than $1000 per day in trading would I have to get a license right? I think I would if I'm understanding the FinCEN document correctly

Very doubtful. Of course it depends on volume and some other things, but you will not hit any radars easily. ;^}

Are you sure you know what you are talking about?

You are saying that he incurs no liability if he can avoid compliance radars?

I read the FinCEN statement and I read it as saying each individual is a money transmitter and is responsible for filing.

With the shit coming with global economic collapse and rabid tax authorities in near future, I would not try to skirt the edge of the literal statements.

[AnonyMint]

I personally believe that BitCoin will be entirely resistant to regulation in-and-of itself. I am an expert in the financial and payments industry. BitCoin, in my estimation, is one of the greatest financial forces unleashed in the history of time. We will see that bear out many fold in our lifetimes. Get as many of them as you possibly can. Now.

Why not buy Litecoin, they are still much cheaper?

Buy low, sell high.

[AnonyMint]

4)Practically impossible to regulate direct miner-to-people transactions...This is why we have all fallen in love with Bitcoins in the first place right? ;^)

I don't see it as a game of cat&mouse. I see it as the govt is giving you rope to hang yourself with.

The govt is tracking everything you do over the internet, and 10 years from now they can come knocking and say "where is your paper trail for the these transactions we know you did".

The global economy is going to utterly collapse into MADMAX.

Billions unemployed means millions hired to do tax collection and audits.

Bitcoin is not anonymous there is a permanent record on the internet forever.

Use physical gold and silver if you want anonymity. Otherwise keep a paper trail for everything in your safe...

[lorax2013]

I've watched bitcoin from a distance for awhile and this was always my main concern.  If you know how the banking industry controls our government, you know they will eventually cut off the legal links between bitcoin and dollars.  It was bound to happen and this is the first step.  Basically unless you can exchange bitcoins for dollars WITHOUT giving your identification - then it is not a viable long term solution.  

BUT.... having studied financial privacy for decades, there perhaps are viable permanent solutions to exchange bitcoins for dollars without ID.  

For one, it could be done through local individual networks - much like the drug market.  This would incur risk and fees, but it would be viable.  Decades ago, when some countries regulated the exchange rate, you'd very often see "black market" money changers provide this service in large numbers and relatively efficiently in those countries.

Secondly, and more hopefully, there are still a few countries free of the international bank cartel's domination.  Places like Liechtestein, Andorra, and to a degree China.  Exchanges based in those countries could perhaps resist outside pressure of requiring or at least disclosing ID.  Perhaps if exchanges were set up in those jurisdictions, then dollars going into our out of that country would basically be entering a black hole as far as the US / EU can tell.    Yes, in the case of small tax haven countries, these transfers back to a US bank would subject you to scrutiny from tax authorities, but in the case of a country like China, there could be legitimate business reasons for large transfers.  China is now too big to get pushed around by the US.  It would be much the same as the way the US thumbs its nose at African countries which futilely complain as their wealth is pilfered and laundered through US banks.  Yes, the US authorities would be upset to see large sums popping into your US bank account from behind the Chinese wall - but the US couldn't prove the source and there would be countless legitimate possibilities.   I'm not really an expert though in the ever changing field of international banking regulations.

Well, altogether I'm still unsure of the future of bitcoin but it does seem to have one and perhaps only one true advantage over precious metal - it can be carried unobtrusively on your person.  

[AnonyMint]

lorax, don't think of P2P currencies as a gold. Use gold for shit you want to hide. Use P2P currencies when you don't want to hide and hate your credit card.

They can be better than a credit card. But for the moment Bitcoin and Litecoin are not acceptable to me because they have a diabolical design:

https://bitcointalk.org/index.php?topic=160612.0

[lorax2013]

It's funny because like half the point of bitcoin is to launder money while earning some interest. You can't make us pay taxes on something that isn't a government issued currency, because at it's very core it isn't money.

If you want me to pay taxes on bitcoins, I will send you the owed amount in bitcoins, not dollars. However, if the government accepts bitcoins as a tax payment then they are outright violating several laws and world goes ballistic.

There will always be ways to turn bitcoins into cash anonymously, and in large amounts. I could care less about whatever laws you pass, there are anonymous debit cards everywhere. I don't even need to mention the secondary p2p market for btc to cash because there are so many loopholes for turning it into cash through automatic websites and such.

Could you please elaborate?  I'm a noob and unaware of any anonymous method - other than p2p - which can convert bitcoins to cash and vice versa.  What "automatic website" or combination of methods can take my cash and send me bitcoins at a low commission?  And then when I sell back to them how do they get the cash to me anonymously?

[MikeH]

since the government works for us, we'll let you know if we want any regulations re: money laundering.

k, thanks.

[AnonyMint]

since the government works for us...

Where do you get that delusion?