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Author Topic: Bitcoin, FinCEN and Shiny Objects...  (Read 1502 times)
Trader Steve
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March 23, 2013, 06:36:54 PM
 #1

Problem:

Exchanging “real” currency for “virtual” currency may subject you to regulatory requirements (http://www.fincen.gov/statutes_regs/guidance/html/FIN-2013-G001.html).

Solution?

Consider this possible scenario:

BITCOIN WANTER: Will you sell me some bitcoin? I have cash!

BITCOIN OWNER: No, but I'll sell you my Shiny Object (wristwatch, medallion, pen) for your cash.

BITCOIN WANTER: Uh, okay. [transaction transpires]

BITCOIN OWNER: I'm starting to miss my Shiny Object...will you sell it back to me? I can pay you with bitcoin.

BITCOIN WANTER: Uh, okay. [transaction transpires].

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cypherdoc
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March 23, 2013, 06:43:33 PM
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Lol!   Nice!

You don't happen to have a few of those watches do you?
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March 23, 2013, 07:00:48 PM
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Yes...you have defined a commonly used scheme for laundering money. If someone hands you cash and asks you to drive it somewhere and drop it off, you are acting as a money transmitter...if the amount is small, you'll never be prosecuted.

Hardfork aren't that hard.
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March 23, 2013, 07:04:35 PM
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You didnt avoid anything, you owe tax on the first shiny for cash exchange.
Trader Steve
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March 23, 2013, 07:21:11 PM
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The better way is to simply trade your gold and silver bullion for bitcoin. Or, just offer your goods and services in trade for bitcoin.

Bitco
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March 23, 2013, 07:38:06 PM
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It's not entirely clear what the origin of this 'guidance' is, but the issue appears to be 31 USC 5330 (d)(1)(B), which requires money transmitting businesses to register only if they are subject to section 5313, which involves reporting transactions in US currency exceeding $10000.

Trading bitcoins for a watch does not trigger the currency reporting requirement.  Selling the watch for more than $10000 in cash might.

There are probably other ways around this though.  The law only applies to a business, and not just a one-time sale of your personal property.  A money transmitter means moving money for other people, and not your own money.  Also, a check or wire transfer would not subject you to the currency reporting requirement (although your bank may have to report it).

It would be good to get some actual clarification from FinCEN on this though.  Their recent 'guidance' really doesn't clarify anything.

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