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Author Topic: FinCEN responds to clarification requests  (Read 8756 times)
Carlton Banks
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September 05, 2013, 10:11:21 AM
 #61

FinCEN has no authority to tax, that is the IRS.

Well, that's not true. At all. Except in the sense that the IRS attempt to intimidate people into believing they have legal authority to tax, but legally, they have no authority to tax.

Yes, i have seen those arguments before.  They are compiled at http://archive.adl.org/mwd/suss1.asp

I think that's an unhelpful mis-characterisation, they are not "arguments" they are the letter of the law. That the IRS has been routinely breaking since it's establishment.

What position will you take when the law is misconstrued to confiscate your legal property? That they're using the correct argument? This is the same argument that all thieves use: "that's not yours, it's mine, and always was, give it back"

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Carlton Banks
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September 05, 2013, 12:42:05 PM
 #62

FinCEN has no authority to tax, that is the IRS.

Well, that's not true. At all. Except in the sense that the IRS attempt to intimidate people into believing they have legal authority to tax, but legally, they have no authority to tax.

Yes, i have seen those arguments before.  They are compiled at http://archive.adl.org/mwd/suss1.asp

I think that's an unhelpful mis-characterisation, they are not "arguments" they are the letter of the law. That the IRS has been routinely breaking since it's establishment.

What position will you take when the law is misconstrued to confiscate your legal property? That they're using the correct argument? This is the same argument that all thieves use: "that's not yours, it's mine, and always was, give it back"

Ok, they are not arguments ... they are delusions

You are delusional if you really believe that multiple court rulings at various levels are figments of the imagination. There is a clear contradiction, don't get me wrong, not all cases win on constitutional law arguments. But the contradiction emanates from the fact that the US constitution plainly forbids an income tax that is charged as a percentage of income. Is the constitution delusional too? I always thought it was the basic law that no other legislation can contradict.

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TheButterZone
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September 05, 2013, 08:43:10 PM
 #63

The Constitution is null and void and prohibited by law in practice, as it doesn't have the ability to magically strike down almost the entire government, which constantly violates it with impunity.

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September 17, 2013, 04:32:44 AM
 #64

So still no one has checked with FinCEN if in there situation whether a miner is a money transmitter?
bigasic
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September 17, 2013, 05:05:21 AM
 #65

I have been spending a lot of time looking into becoming a money transmitter business. My personal conclusion is that a miner is a money transmitter. At least thats my personal opinion on how they have worded everything, I think it will need special legislation for it to change. I don't like it one bit, its a pain in the butt to get licensed in all states. My state barely has over 40 licensed money transmitters, I now know why.

Im my state.

1. You must have a net worth of at least 1 million dollars
2. own an out of state depository institution (a bank)
3. be bonded for at least 50k (statute bond, I think is the name) can cost between 5-15k
4. About 100 other regulations.

But in Nevada

1. You must have a net worth of 100k
2 bonded for 10k and 5k for each location

Each state is different. Then you have to registered with Fincen, thats the easy part.... Then, you have to have a relationship with a bank, we all know that most US banks are avoiding bitcoin like the plague.

I wonder if someone got a big business put together and thats all they did, get licensed in all 50 states as a money transmitter and then let miners use the license. the business would be held liable for any error or wrong doing by the miner, so I don't think that would work, wish it could.

Thats going to be my IPO, ill get registered a MT and let miners use my license, for a small fee of course Smiley (kidding of course)

Bottom line, Its a pain in the ass to get a license, even in one state, let alone in all 50. Thats why these Bitcoin atms are going to have such a hard time getting going, they have to be a MTL.
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September 17, 2013, 07:13:02 PM
 #66

Thanks!

What happens if you're a small-time miner (like me), and have really only mined maybe $2-3K BTC total?
bigasic
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September 17, 2013, 09:54:19 PM
 #67

I don't think that its too crucial or even necessary to register as a money transmitter right now if your a miner. The law is so vague, its up to interpretation. I would think that a pool should get licensed, but while i think that "technically" all miners are money transmitters, i wouldnt worry too much about it. I think its something that the FINcen is going to have to address sometime since there are many miners out there.

I think its more important to pay your taxes and follow the law to the best of your ability, I wouldn't think it would be come an issue unless they caught you for tax evasion when you sold your mined coins, it would be one more charge they could get you with.. So, don't raise any red flags and most of us should be okay..

I've talked to tax attorneys and most of them don't even know how to answer it..  It would be nice if Fincen would give an official stance on miners. Like I said before, getting a MTL is no easy task...

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September 17, 2013, 10:42:55 PM
 #68

I would think that a pool should get licensed.

So a pool in Kazakhstan gets licensed under the non-existent MSB laws there?

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September 18, 2013, 03:20:44 PM
 #69

I would think that a pool should get licensed.

So a pool in Kazakhstan gets licensed under the non-existent MSB laws there?

Only if the person who receives the bitcoins from the pool in Kazakhstan sells his bitcoins to someone in the US.
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September 19, 2013, 08:40:23 PM
 #70

I found a paragraph in the Fincen guidelines that I believe is talking about miners.

"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. By contrast, a person that creates units of convertible virtual currency and sells those units to another person for real currency or its equivalent is engaged in transmission to another location and is a money transmitter. In addition, a person is an exchanger and a money transmitter if the person accepts such de-centralized convertible virtual currency from one person and transmits it to another person as part of the acceptance and transfer of currency, funds, or other value that substitutes for currency."

So, if your a miner and takes the bitcoins to purchase something, be it virtual goods or a computer from a place from an online store that takes bitcoins, you don't have to be licensed as a money transmitter. But, if you exchange it for real currency, then you have to be licensed.  So, my question is this. is silver/gold, etc considered real currency or an equivalent? In some states, silver is legal tender, ie, State of Utah, so it might be considered "real currencies equivalent". Is silver a real good?

Im getting more and more convinced that if you are based in the USA and are a miner and you sell your bitcoins for cash, you are, in fact, a money transmitter. The only loophole that Im trying to figure out is if a miner purchases silver with the bitcoins, is that considered a real currency equivalent? Its pretty obvious that cashing out coins for cash is under Fincens guidelines.

The other thing that I have been thinking about is what happens to the guy that has purchased mining bonds? Well, most of these mining companies are violating the SEC law anyways, (Im just assuming that, so I could be totally wrong, but common sense tells me that all these bitcoin IPOs should be technically regulated by the SEC especially if they are based in the usa, but thats not the argument here)

IF I buy bonds of a miner, I wouldn't be considered a money transmitter as Im not mining the currency, but since the bond has a real value, the mining company that pays out the dividends, even if it is in bitocoin, should be licensed as a money transmitter.

Since I know for a fact the the US government HATES bitcoin and every alt currency, I have a feeling that big miners are going to be targeted. Obviously, if your not based in the USA, you dont have too much to worry about. The US Govt would love nothing more than to see bitcoins obliterated.

Like I said before, the small miners don't have a lot to worry about unless they get in trouble for something else and they decide to push it and throw on extra charges. Its the big miners and pool operators that should really worry.  That brings up another question. If Im a miner thats in a pool, and that miner cashes out his coins for currency but didn't actually find the block, would that miner fall under "creation"? That leads me to believe that if you are in a pool, the pool is the one creating the currency, not the miner.

Man, im getting a headache trying to figure this out..

1. Solo miners need to be licensed as money transmitters
2. Pools need to be licensed
3. miners in a pool is a grey area that I personally don't think they need to be registered as the pool is the one creating the currency. So this one is up to interpretation.

Also remember there are 3 definitions that are important. 1. User 2. Exchanger 3. Adminstrator a user doesn't have to worry about being licensed, its the other 2 that need to. here is their definitions.

 "This guidance refers to the participants in generic virtual currency arrangements, using the terms "user," "exchanger," and "administrator."6 A user is a person that obtains virtual currency to purchase goods or services.7 An exchanger is a person engaged as a business in the exchange of virtual currency for real currency, funds, or other virtual currency. An administrator is a person engaged as a business in issuing (putting into circulation) a virtual currency, and who has the authority to redeem (to withdraw from circulation) such virtual currency."

So a miner would be considered a administrator and a pool could be considered either a administrator or an exchanger. The bottom line is the Fincen has drawn the line in the sand. Granted, us miners can ignore the rules, but with any law, if caught doing something illegal, we will have to pay the price.. Like I've said before, getting licensed as a money transmitter is a pain in the ass. But, It looks like we are going to have to do it to be in compliance with the law. At least in the USA..

Thoughts?

I forgot to add that this part of their statement  "In addition, a person is an exchanger and a money transmitter if the person accepts such de-centralized convertible virtual currency from one person and transmits it to another person as part of the acceptance and transfer of currency, funds, or other value that substitutes for currency." Is for companies that dont buy bitcoins, but acts as exchanger. The one in the usa that comes to mind is campbx. So, they need to be licensed as money transmitters. This is why Its not a good idea to keep much, if any, coins at one of these places, (especially if they are based in the usa) all it takes is one raid and all of your coins and cash could be gone if they aren't abiding by the laws. I wonder if localbitcoins.com is based in the usa. It wouldnt surprise me one bit to see them shut down soon. At least, if they are .com their website could be shut down.. They are also acting as a money transmitter, at least thats how I see it...

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September 19, 2013, 09:06:31 PM
 #71

Yes, no, but definitely maybe... Huh

We still have not left the land of speculation on what it all means.  The guidance is new.  It has yet to be enforced anywhere, and the enforcement has yet to be litigated, adjudicated, appealed, heard and made into case law precedent.

We may get our first taste of it from the Bitcoin Foundation vs California, which frankly suits me much better than the Feds going after some tiny miner without the patience and perspicuity to defend a Federal case.

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September 19, 2013, 09:25:47 PM
 #72

What does the bitcoin foundation actually do? they are just an organization, like a think tank, aren't they? do they mine? do they sell bitcoins? do they trade in bitcoins? If I recall in their response to them, they said just that.. also, I believe its the State of California that sent them that letter, not the federal government.. I may be wrong.. I dont think the bitcoin foundation has too much to worry about, unless they are involved in a day to day bitcoin type of trading operation.

Also, the Fincen report doesn't mean that they are going to start targeting small guys, but the big boys better be on their toes.. I just looked up campbx, i believe they are in the state of Georgia and from what I have found, they are not licensed as a money transmitter. Granted, they might have some different llc name that has the license, but its not under bitbul or campbx, the 2 names that have appeared on money transfers from them.. Also, the internet database may not be current or have flaws, but its certainly a question ill be asking them. Im going to be making sure any USA based bitcoin exchange is licensed before I transfer any money to them. Sure, ill transfer a small amount to withdraw, but im not going to leave any coins there or cash just sitting....

This is something that we all should be looking at. Look at Mt.Gox, they put on their application at the bank that they were not a money transmitter, yet they are and the govt swooped in and took about 5 million dollars. They aren't even based here...

Looks like tradehill just stopped business at the end of August due to regulatory issues.. I bet you anything they are getting licensed as a money transmitter....
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September 19, 2013, 09:29:25 PM
 #73

This is something that we all should be looking at. Look at Mt.Gox, they put on their application at the bank that they were not a money transmitter, yet they are and the govt swooped in and took about 5 million dollars. They aren't even based here...

But Mt Gox's money was located in the US.  As the world financial hub and the issuer of the world reserve currency, The US and its regulations will carry significant weight globally.
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September 19, 2013, 09:34:24 PM
 #74

MTGox is based in Japan, but they are also incorporated in Delaware, most likely so they could open up US based bank accounts..
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September 19, 2013, 09:45:24 PM
 #75

Bunch of pussies. I support bitcoin to "starve the beast." You think a beast is gonna willfully let you starve it?


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September 19, 2013, 10:08:25 PM
 #76

Huh???
sublime5447
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September 19, 2013, 10:24:07 PM
 #77

Never heard "starve the beast"? That is a tactic promoted in the libertarian movement. It is typically referred to in regards to taxation. Liberty candidates advocate for cutting tax revenues to such a great degree that the government stops functioning and is forced to enact massive budget cuts.

I support bitcoin because every transaction that happens with it is tax revenue that the state no longer has.

My goal is to defund the governments of the world.

They are not going to willfully let it happen. I told my family when I started that at some point i would probably be labeled a financial terrorist. 

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September 19, 2013, 11:25:14 PM
 #78

This is something that we all should be looking at. Look at Mt.Gox, they put on their application at the bank that they were not a money transmitter, yet they are and the govt swooped in and took about 5 million dollars. They aren't even based here...

But Mt Gox's money was located in the US.  As the world financial hub and the issuer of the world reserve currency, The US and its regulations will carry significant weight globally.

Not for much longer ... those days are coming to an end, squandered by insane laws and stupid, venal lawmakers.

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September 20, 2013, 12:01:48 AM
 #79

Never heard "starve the beast"? That is a tactic promoted in the libertarian movement. It is typically referred to in regards to taxation. Liberty candidates advocate for cutting tax revenues to such a great degree that the government stops functioning and is forced to enact massive budget cuts.

I support bitcoin because every transaction that happens with it is tax revenue that the state no longer has.

My goal is to defund the governments of the world.

They are not going to willfully let it happen. I told my family when I started that at some point i would probably be labeled a financial terrorist.  

Interesting. I'm not a libertarian so I guess I wouldn't know. But the us government seems to be doing a good job running out of funds all by itself.  The total amount of US tax dollars collected supports less that 1/2 of the cost of all the programs the government provides.   Thus the need to continue to print USD  to the tune of $85 Billion Dollars a month.  

Soon we'll see this photo with US Dollars.
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September 20, 2013, 12:22:04 AM
 #80

Japan has had massive budget deficits for 2 decades and still has not collapsed. I am just trying to speed up the process a little.

You wont see that picture in the US. The US doesn't have the mechanisms necessary to create hyper inflation.  We will have a deflationary collapse where the dollar will become very scarce and very strong.   

http://www.youtube.com/watch?v=iquemUNNYY8   

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