2013-03-19 BitcoinFoundation.org - Today, we are all money transmitters…

[Stephen Gornick]

By Bitcoin Foundation general counsel Patrick Murck

Upon an initial reading two things struck me:
FinCEN firmly believes that virtual currency in general, and bitcoin in particular, does not fall under the pre-paid access rules.
FinCEN seems intent on recreating and expanding the pre-paid access rules for virtual currency and bitcoin under the mantle of money transmission.
[...]
Under the Administrative Procedures Act (APA), FinCEN can’t promulgate new rules without going through a notice and comment proceeding whereby the public may have their voices heard. If FinCEN would like to expand its statutory authority over “money transmitters” to include brand new categories such as 'administrators' and 'exchangers' of digital currency it must do so through proper rulemaking proceedings and not by fiat.
[...]
FinCEN’s guidance implies that every person who has ever had any virtual currency and has ever exchanged that virtual currency for real currency may now be considered a money transmitter under the Bank Secrecy Act. That is, of course, an untenable position.
[...]
This framework would wildly expand the reach of FinCEN and the BSA, and would be infeasable for many, if not most, members of the bitcoin community to comply with.  [...] The BSA was never intended to apply this broadly and reach this far into people’s everyday lives.

 - https://bitcoinfoundation.org/blog/?p=152

[1714025993]

1714025993

[1714025993]

1714025993

[BTC Books]

I am Money Transmitter!

I am Money Transmitter!

Moonnneeeeyyy Transmitter!!!!

[Quantus]

>How I read this document

blablabla  bla blablblablablabla Real currency blablablblabla Real currency blabalbablablab. Bla_blab abla blabla Real currency blablablablabla
blablablablablablablabla Real currency blablablablab ...


They still don't get it. Bitcoin is Real currency.

[Rothgar]

From the article:  "Perhaps a little more guidance is needed."

It should say less.  We don't need no stinking guidance. 

[Mike Christ]

Ew gross, I can't believe I'm a carrier of USD   I've been transmitting it this whole time and didn't even know it.  Knew I should've been tested before I spent all that money on that girl.

[Zangelbert Bingledack]

I am not a lawyer, but I'm very skeptical of Murck's interpretation that simply selling BTC for cash makes one a money transmitter. I think this is just a case of the drafters of the guidance neglecting to re-specify every single term all the way through, because although at one point it says any person who sells for cash is a money transmitter, before that it defines money transmitter as a sub-type of "exchanger" or "administrator," which are previously very clearly defined as persons operating as a business. It is my impression that, in law, definitions of terms are paramount, and what seems crystal clear here is that no one can fit the definition of "money transmitter" unless they are doing so as a business (this would also make sense).

Probably they didn't anticipate that investors in virtual currencies exist, so there's no named slot for them. However, the very fact that "exchangers" and "money transmitters" are given a label suggests quite logically that they have actual customers (buyers and sellers of virtual currencies for real ones, and vice versa). By the lack of mention of the customers of these businesses, and by common sense, it seems in my layman's view that these customers are exempt from these requirements.

Money transmitters and exchangers have to be transmitting and exchanging for someone, and presumably that someone does not himself qualify as a money transmitter or exchanger. It's disconcerting that the Bitcoin Foundation would post what looks to be an alarmist interpretation. More money for the Foundation, I guess.

[thefiniteidea]

I am not a lawyer, but I'm very skeptical of Murck's interpretation that simply selling BTC for cash makes one a money transmitter. I think this is just a case of the drafters of the guidance neglecting to re-specify every single term all the way through, because although at one point it says any person who sells for cash is a money transmitter, before that it defines money transmitter as a sub-type of "exchanger" or "administrator," which are previously very clearly defined as persons operating as a business. It is my impression that, in law, definitions of terms are paramount, and what seems clear here is that no one can fit the definition of "money transmitter" unless they are doing so as a business.

Probably they didn't anticipate that investors in virtual currencies exist, so there's no named slot for them. However, the very fact that "exchangers" and "money transmitters" are given a label suggests quite logically that they have actual customers (buyers and sellers of virtual currencies for real ones, and vice versa). By the lack of mention of the customers of these businesses, and by common sense, it seems in my layman's view that these customers are exempt from these requirements.

I too was sitting on this same thought once the blog post was released. Thanks for writing it out!

Agreed!

[Stephen Gornick]

Money transmitters and exchangers have to be transmitting and exchanging for someone, and presumably that someone does not himself qualify as a money transmitter or exchanger.

That's because they first paint with the wide brush:
 

The term “money transmission services” means the acceptance of currency, funds, or other value that substitutes for currency from one person and the transmission of currency, funds, or other value that substitutes for currency to another location or person by any means.

then they have the limitations:

31 CFR 1010.100

(ii) 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.

 - http://www.ecfr.gov/cgi-bin/text-idx?c=ecfr&SID=7c3244a442513cbcf5fbef276eee622a&rgn=div8&view=text&node=31:3.1.6.1.2.1.3.1&idno=31

[tjohej]

Both the Bitcoin Foundation and everybody else failed to quote this section:

A person that creates units of this convertible virtual currency and uses it to purchase real or virtual goods and services is a user of the convertible virtual currency and not subject to regulation as a money transmitter

So, we get everybody onto Bitcoin, and then we sell and buy stuff for Bitcoin, so we are all legal.