Wait...Does the March 18th finCen legislation make it illegal to trade bitcoins?

[mjsbuddha]

While researching the whole Mt.Gox warrant thing I started reading the actual legislation that they are alleging Mt.Gox has violated. http://www.fincen.gov/news_room/nr/pdf/20130318.pdf

A final type of convertible virtual currency activity involves a de-centralized convertible virtual currency (1) that has no central repository and no single administrator, and (2) that persons may obtain by their own computing or manufacturing effort.
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.

Does that mean anyone trading Bitcoins for USD is now breaking the law if they are not registered as a Money Service Business?!

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[mjsbuddha]

I'm seriously not trying to spread any FUD here but unless I'm reading it wrong... ANYONE who sell Bitcoins or any other cryptocurrency for fiat money is now considered a 'Money Service Business' and has to register as such with finCen or be subject to the same sort of penalties as Mt.Gox, including fines and up to 5 years in prison.

For real... can anyone point out why I'm wrong on this one? I desperately want to be wrong.

[vesper39]

I'm pretty sure this deals with miners that CREATE bitcoins, thus creating currency. If you buy bitcoin with USD, you are not "creating" it, but merely trading.

[mjsbuddha]

Ok... that makes sense but still... every single miner having to register with finCen isn't much better.

[jackjack]

USA. Lol.

[tutkarz]

Ok... that makes sense but still... every single miner having to register with finCen isn't much better.

they cant check that so who cares.

[k3t3r]

ANYONE mwho sell Bitcoins or any other cryptocurrency for fiat money is now considered a 'Money Service Business' and has to register as such with finCen or be subject to the same sort of penalties as Mt.Gox, including fines and up to 5 years in prison.

For real... can anyone point out why I'm wrong on this one? I desperately want to be wrong.

Anyone = All people of all countries
FinCen etc blah blah = US of Amerika

[mjsbuddha]

still. even if it only applies to miners in the united states, isn't that a big deal? Am I the only one that thinks so? I almost fell out of my seat when I read that.

[leopard2]

And this is why scrypt coins are way safer than SHA256 coins, since the govt goons could control dedicated Asic hashers, but never GPUs.

[mjsbuddha]

And this is why scrypt coins are way safer than SHA256 coins, since the govt goons could control dedicated Asic hashers, but never GPUs.

It doesn't apply only to bitcoins. It's any currency generated by using computer power

[QuestionAuthority]

'merican are just ducks. As soon as you come in to land some government worker picks you off with their shotgun! LOL

[leopard2]

Hey read again. If you mine and sell for goods (say gold) you are fine. You just cannot mine and sell into USD directly. You could also mine and convert into LTC, for example. Then sell the LTC or the gold.

[morningtime]

The quote indeed applies to the US only.

Simply put: anyone in the US who mines Bitcoin and sells them for fiat currency is a 'money transmitter'.
Anyone who accepts Bitcoin and sells them for fiat currency is both a money transmitter and a money exchanger.

This law is clearly put in place for restricting Bitcoin. This is a hurdle for Bitcoin becoming mainstream, but also for Ripple or any other crypto-currency.

[leopard2]

And this is why scrypt coins are way safer than SHA256 coins, since the govt goons could control dedicated Asic hashers, but never GPUs.

It doesn't apply only to bitcoins. It's any currency generated by using computer power

You do not understand. Anyone who buys an asic buys it to create coins right? So they could come to your home and ask, what did you do with your coins? Sell them? Uh oh.

But if you buy a GPU it could just be for gaming. So GPU is not controllable.

[morningtime]

still. even if it only applies to miners in the united states, isn't that a big deal? Am I the only one that thinks so? I almost fell out of my seat when I read that.

It's a very big deal. It's basically the end of Bitcoin-to-USD-and-back. You will need an official -centralized- company to handle your Bitcoins from now on. My guess is that no company in the US will be able to do the paperwork for Bitcoin. So that's that: the end of Bitcoin in the US.

[jimafternoon]

It doesn't make it illegal, but you have to comply with the regulations.

[jimafternoon]

So that's that: the end of Bitcoin in the US.

lol no

[mjsbuddha]

Hey read again. If you mine and sell for goods (say gold) you are fine. You just cannot mine and sell into USD directly. You could also mine and convert into LTC, for example. Then sell the LTC or the gold.

Again, litecoin counts under this legislation just as much as bitcoin

[morningtime]

Hey read again. If you mine and sell for goods (say gold) you are fine. You just cannot mine and sell into USD directly. You could also mine and convert into LTC, for example. Then sell the LTC or the gold.

No, you cannot. If you convert BTC to LTC to USD in the US, then you are considered a 'money exchanger'. From now on, only centralized companies are allowed to handle Bitcoin exchanges. Such a company does not exist in the US. Or perhaps only CoinLab?

[morningtime]

It doesn't make it illegal, but you have to comply with the regulations.

Correct, but no individual is allowed to exchange Bitcoin in the US anymore. You have to be a registered Money Service Business. Currently there are none?

[leopard2]

Hey read again. If you mine and sell for goods (say gold) you are fine. You just cannot mine and sell into USD directly. You could also mine and convert into LTC, for example. Then sell the LTC or the gold.

No, you cannot. If you convert BTC to LTC in the US, then you are considered a 'money exchanger'. From now on, only centralized companies are allowed to handle Bitcoin exchanges. Such a company does not exist in the US. Or perhaps only CoinLab?

The exchanges converting BTC to whatever, are not in the US.

[Gabi]

Satoshi created bitcoin

Miners are just paid for their work, they do not create bitcoins 

[ihsotas]

Hey read again. If you mine and sell for goods (say gold) you are fine. You just cannot mine and sell into USD directly. You could also mine and convert into LTC, for example. Then sell the LTC or the gold.

No, you cannot. If you convert BTC to LTC to USD in the US, then you are considered a 'money exchanger'. From now on, only centralized companies are allowed to handle Bitcoin exchanges. Such a company does not exist in the US. Or perhaps only CoinLab?

No, he's right. BTC to LTC is not virtual to real, but virtual to virtual. In fact, I think the BTC-to-gold is more risky, since gold could be considered a 'real currency or equivalent' since it's a commodity with highly liquid markets to/from USD. BTC-to-USD is clearly in violation here, though.

[mjsbuddha]

Hey read again. If you mine and sell for goods (say gold) you are fine. You just cannot mine and sell into USD directly. You could also mine and convert into LTC, for example. Then sell the LTC or the gold.

No, you cannot. If you convert BTC to LTC to USD in the US, then you are considered a 'money exchanger'. From now on, only centralized companies are allowed to handle Bitcoin exchanges. Such a company does not exist in the US. Or perhaps only CoinLab?

No, he's right. BTC to LTC is not virtual to real, but virtual to virtual. In fact, I think the BTC-to-gold is more risky, since gold could be considered a 'real currency or equivalent' since it's a commodity with highly liquid markets to/from USD. BTC-to-USD is clearly in violation here, though.

but upon selling the ltc it becomes virtual to real. yeah if you just hold the ltc forever your fine but what good is that?

[Timzim103]

still. even if it only applies to miners in the united states, isn't that a big deal? Am I the only one that thinks so? I almost fell out of my seat when I read that.

You're not the only one who thinks this is a big deal. Something like this never occurred to me. Now I have homework to do.

[ihsotas]

Hey read again. If you mine and sell for goods (say gold) you are fine. You just cannot mine and sell into USD directly. You could also mine and convert into LTC, for example. Then sell the LTC or the gold.

No, you cannot. If you convert BTC to LTC to USD in the US, then you are considered a 'money exchanger'. From now on, only centralized companies are allowed to handle Bitcoin exchanges. Such a company does not exist in the US. Or perhaps only CoinLab?

No, he's right. BTC to LTC is not virtual to real, but virtual to virtual. In fact, I think the BTC-to-gold is more risky, since gold could be considered a 'real currency or equivalent' since it's a commodity with highly liquid markets to/from USD. BTC-to-USD is clearly in violation here, though.

but upon selling the ltc it becomes virtual to real. yeah if you just hold the ltc forever your fine but what good is that?

Yeah, you'd need to spend the LTC with a merchant who took it. If you exchange it, as a US citizen (even on a foreign-hosted exchange), I think you are in trouble here.

[Gabi]

Hey read again. If you mine and sell for goods (say gold) you are fine. You just cannot mine and sell into USD directly. You could also mine and convert into LTC, for example. Then sell the LTC or the gold.

No, you cannot. If you convert BTC to LTC to USD in the US, then you are considered a 'money exchanger'. From now on, only centralized companies are allowed to handle Bitcoin exchanges. Such a company does not exist in the US. Or perhaps only CoinLab?

No, he's right. BTC to LTC is not virtual to real, but virtual to virtual. In fact, I think the BTC-to-gold is more risky, since gold could be considered a 'real currency or equivalent' since it's a commodity with highly liquid markets to/from USD. BTC-to-USD is clearly in violation here, though.

Gold is not money, so it is not currency

[jackjack]

And this is why scrypt coins are way safer than SHA256 coins, since the govt goons could control dedicated Asic hashers, but never GPUs.

Please don't talk when you don't know shit about what you're saying

[crazy_rabbit]

And this is why scrypt coins are way safer than SHA256 coins, since the govt goons could control dedicated Asic hashers, but never GPUs.

yeah...um...whatever...

[mjsbuddha]

Hey read again. If you mine and sell for goods (say gold) you are fine. You just cannot mine and sell into USD directly. You could also mine and convert into LTC, for example. Then sell the LTC or the gold.

No, you cannot. If you convert BTC to LTC to USD in the US, then you are considered a 'money exchanger'. From now on, only centralized companies are allowed to handle Bitcoin exchanges. Such a company does not exist in the US. Or perhaps only CoinLab?

No, he's right. BTC to LTC is not virtual to real, but virtual to virtual. In fact, I think the BTC-to-gold is more risky, since gold could be considered a 'real currency or equivalent' since it's a commodity with highly liquid markets to/from USD. BTC-to-USD is clearly in violation here, though.

Gold is not money, so it is not currency

In this example I think gold could be considered EITHER an alternative to currency or a currency... either way you would have to register with finCen like thos 'cash for your gold' places.

[leopard2]

Splendid, in order to charge you, the government would have to admit that gold is money. Neat  

[Mastergerund]

Satoshi created bitcoin

Miners are just paid for their work, they do not create bitcoins 

It could also be argued that the persons owning the addresses that receive originated bitcoins are money transmitters. Since most miners now use pools, their addresses aren't origination addresses, but transaction addresses. If you mine with a pool, you are receiving bitcoins from the pool operator, in exchange for leased computer cycles, not originating coins.

(Some of my terminology might be not quite right. If you see errors, feel free to correct me and I will update with the correct terminology to make my intent as clear as possible.)

[QuestionAuthority]

Here's the deal - you can masturbate this subject all day and it won't change a thing - chances are govts don't give a shit about the little guy trading mined btc for a couple of bucks and if any of the political dildos in office decide they want to get in your panties they will just write up a new law that let's them do it. If not this law then the next one could get you.

[tampa3]

Here's the deal - you can masturbate this subject all day and it won't change a thing - chances are govts don't give a shit about the little guy trading mined btc for a couple of bucks and if any of the political dildos in office decide they want to get in your panties they will just write up a new law that let's them do it. If not this law then the next one could get you.

yep,  just like paying taxes.  They don't care about the small fish.

[joesmoe2012]

It doesn't make it illegal, but you have to comply with the regulations.

According to this article, mtgox spent $25 mil in first year to become financially compliant in the USA...

http://www.theverge.com/2013/4/1/4154500/mt-gox-barons-of-bitcoin

It doesn't make it illegal, but you have to comply with the regulations.

Correct, but no individual is allowed to exchange Bitcoin in the US anymore. You have to be a registered Money Service Business. Currently there are none?

According to us law you need the license even in your not a us based company but are doing transactions with people in the USA.

 

It doesn't make it illegal, but you have to comply with the regulations.

Correct, but no individual is allowed to exchange Bitcoin in the US anymore. You have to be a registered Money Service Business. Currently there are none?

Hey read again. If you mine and sell for goods (say gold) you are fine. You just cannot mine and sell into USD directly. You could also mine and convert into LTC, for example. Then sell the LTC or the gold.

Again, litecoin counts under this legislation just as much as bitcoin

Also mining isn't for everyone, and conferring fiat to ltc isn't any easier than fiat to btc.

[joesmoe2012]

And this is why scrypt coins are way safer than SHA256 coins, since the govt goons could control dedicated Asic hashers, but never GPUs.

Please don't talk when you don't know shit about what you're saying

Agreed

[ihsotas]

According to this article, mtgox spent $25 mil in first year to become financially compliant in the USA...

http://www.theverge.com/2013/4/1/4154500/mt-gox-barons-of-bitcoin

No, it says that it costs 25M to be fully compliant, and that they partnered with a compliant company in the US (that presumably paid that 25M, not MtGox). I'd read the linked press release, but it's hosted on mtgox.com which is down as usual.

[Tomatocage]

While researching the whole Mt.Gox warrant thing I started reading the actual legislation that they are alleging Mt.Gox has violated. http://www.fincen.gov/news_room/nr/pdf/20130318.pdf

A final type of convertible virtual currency activity involves a de-centralized convertible virtual currency (1) that has no central repository and no single administrator, and (2) that persons may obtain by their own computing or manufacturing effort.
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.

Does that mean anyone trading Bitcoins for USD is now breaking the law if they are not registered as a Money Service Business?!

Geez man, you should probably take a few minutes to read the warrant before making threads. Short answer: MtGox lied about being a transmitter of money on the "MSB Accounts, Identification of an MSB Customer" form.  That's the reason for the warrant.

[leopard2]

And this is why scrypt coins are way safer than SHA256 coins, since the govt goons could control dedicated Asic hashers, but never GPUs.

Please don't talk when you don't know shit about what you're saying

Agreed

Sorry if you have a truth allergy, I didn't realize.

Fact is, any US customer of BFL is a potential perpetrator and the goons could easily search their property, by just using the BFL customer list. Since Asics are not used for anything else than BTC mining, owning an Asic miner could be seen as probable cause. This threat would probably deter anyone in the US from owning Asics. If the rest of the world mines on Asic, this development would eventually put US miners out of business, if international Asic ownership is high. Even worse, the government could accumulate enough Asics for a 51% attack, if international Asic ownership is low.

With LTC or YAC, this scenario is impossible because it would be impossible to chase anyone owning a GPU or CPU. Not only are there too many GPUs and CPUs, but also these can be plausibly used for other purposes.

Generic hardware cryptos are much less vulnerable than dedicated hw cryptos.

Not sure why you react like this.

[mjsbuddha]

While researching the whole Mt.Gox warrant thing I started reading the actual legislation that they are alleging Mt.Gox has violated. http://www.fincen.gov/news_room/nr/pdf/20130318.pdf

A final type of convertible virtual currency activity involves a de-centralized convertible virtual currency (1) that has no central repository and no single administrator, and (2) that persons may obtain by their own computing or manufacturing effort.
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.

Does that mean anyone trading Bitcoins for USD is now breaking the law if they are not registered as a Money Service Business?!

Geez man, you should probably take a few minutes to read the warrant before making threads. Short answer: MtGox lied about being a transmitter of money on the "MSB Accounts, Identification of an MSB Customer" form.  That's the reason for the warrant.

I read the warrant. I'm not debating Mt.Gox at all here. Im trying to figure out exactly what portion of the bitcoin community is now legally obligated to register, like Mt.Gox tried (and apparently failed) to.

[mjsbuddha]

And this is why scrypt coins are way safer than SHA256 coins, since the govt goons could control dedicated Asic hashers, but never GPUs.

Please don't talk when you don't know shit about what you're saying

Agreed

Sorry if you have a truth allergy, I didn't realize.

Fact is, any US customer of BFL is a potential perpetrator and the goons could easily search their property, by just using the BFL customer list. Since Asics are not used for anything else than BTC mining, owning an Asic miner could be seen as probable cause. This threat would probably deter anyone in the US from owning Asics. If the rest of the world mines on Asic, this development would eventually put US miners out of business, if international Asic ownership is high. Even worse, the government could accumulate enough Asics for a 51% attack, if international Asic ownership is low.

With LTC or YAC, this scenario is impossible because it would be impossible to chase anyone owning a GPU or CPU. Not only are there too many GPUs and CPUs, but also these can be plausibly used for other purposes.

Generic hardware cryptos are much less vulnerable than dedicated hw cryptos.

Not sure why you react like this.

Were not debating the ability to ENFORCE the law. You can break any law as long as you don't get caught. Were talking about our legal obligation if we want to be a member of the general (non-shady) society, which means complying with the law.

[joesmoe2012]

While researching the whole Mt.Gox warrant thing I started reading the actual legislation that they are alleging Mt.Gox has violated. http://www.fincen.gov/news_room/nr/pdf/20130318.pdf

A final type of convertible virtual currency activity involves a de-centralized convertible virtual currency (1) that has no central repository and no single administrator, and (2) that persons may obtain by their own computing or manufacturing effort.
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.

Does that mean anyone trading Bitcoins for USD is now breaking the law if they are not registered as a Money Service Business?!

Geez man, you should probably take a few minutes to read the warrant before making threads. Short answer: MtGox lied about being a transmitter of money on the "MSB Accounts, Identification of an MSB Customer" form.  That's the reason for the warrant.

I read the warrant. I'm not debating Mt.Gox at all here. Im trying to figure out exactly what portion of the bitcoin community is now legally obligated to register, like Mt.Gox tried (and apparently failed) to.

An unenforceable large portion of the BTC community as it currently stands.

From my understanding any miner who exchanges his generated BTC into fiat currency.

[joesmoe2012]

And this is why scrypt coins are way safer than SHA256 coins, since the govt goons could control dedicated Asic hashers, but never GPUs.

Please don't talk when you don't know shit about what you're saying

Agreed

Sorry if you have a truth allergy, I didn't realize.

Fact is, any US customer of BFL is a potential perpetrator and the goons could easily search their property, by just using the BFL customer list. Since Asics are not used for anything else than BTC mining, owning an Asic miner could be seen as probable cause. This threat would probably deter anyone in the US from owning Asics. If the rest of the world mines on Asic, this development would eventually put US miners out of business, if international Asic ownership is high. Even worse, the government could accumulate enough Asics for a 51% attack, if international Asic ownership is low.

With LTC or YAC, this scenario is impossible because it would be impossible to chase anyone owning a GPU or CPU. Not only are there too many GPUs and CPUs, but also these can be plausibly used for other purposes.

Generic hardware cryptos are much less vulnerable than dedicated hw cryptos.

Not sure why you react like this.

Were not debating the ability to ENFORCE the law. You can break any law as long as you don't get caught. Were talking about our legal obligation if we want to be a member of the general (non-shady) society, which means complying with the law.

Seeing as anybody who exchanges fiat for BTC other than for the sole purpose of buying something would be required to register as an MSB, and then potentially have to register in each state....It really is going to be difficult to comply.

New, specialized regulation is needed for this multi-million dollar daily volume currency is becoming widespread.

[freedomno1]

No not illegal recognized as virtual exchange only reported when converted to must pay taxes and declare individuals are not unless they are mining

[Sitarow]

It doesn't make it illegal, but you have to comply with the regulations.

Correct, but no individual is allowed to exchange Bitcoin in the US anymore. You have to be a registered Money Service Business. Currently there are none?

there is one in canada that is working with a MSB

cavirtex.com

[Mastergerund]

And this is why scrypt coins are way safer than SHA256 coins, since the govt goons could control dedicated Asic hashers, but never GPUs.

Please don't talk when you don't know shit about what you're saying

Agreed

Sorry if you have a truth allergy, I didn't realize.

Fact is, any US customer of BFL is a potential perpetrator and the goons could easily search their property, by just using the BFL customer list. Since Asics are not used for anything else than BTC mining, owning an Asic miner could be seen as probable cause. This threat would probably deter anyone in the US from owning Asics. If the rest of the world mines on Asic, this development would eventually put US miners out of business, if international Asic ownership is high. Even worse, the government could accumulate enough Asics for a 51% attack, if international Asic ownership is low.

With LTC or YAC, this scenario is impossible because it would be impossible to chase anyone owning a GPU or CPU. Not only are there too many GPUs and CPUs, but also these can be plausibly used for other purposes.

Generic hardware cryptos are much less vulnerable than dedicated hw cryptos.

Not sure why you react like this.

Actually, I have now obtained and read the original FinCEN document. http://www.fincen.gov/statutes_regs/guidance/pdf/FIN-2013-G001.pdf

A user is a person that obtains virtual
currency to purchase goods or services.⁷

And footnote 7 says

7 How a person engages in “obtaining” a virtual currency may be described using any number of other terms, such as
“earning,” “harvesting,” ”mining,” “creating,” “auto-generating,” “manufacturing,” or “purchasing,” depending on
the details of the specific virtual currency model involved. For purposes of this guidance, the label applied to a
particular process of obtaining a virtual currency is not material to the legal characterization under the BSA of the
process or of the person engaging in the process.

The document also says:

A user who obtains convertible virtual currency and uses it to purchase real or virtual
goods or services is not an MSB under FinCEN’s regulations.

Long story short, if you buy bitcoins, mine bitcoins, etc. you are not subject to MSB regulations. Only if you trade in bitcoins, speculate in bitcoins, or make a business of buying and selling bitcoins to other users do you need to worry.

Having an ASIC does not make you culpable, and is not "probable cause" for anything illegal. Being BFL customer might be probable cause for gullibility, though.

[joesmoe2012]

if you mine the bitcoins and exchange them into fiat currency without the intent to purchase a specific thing, to me that's no longer being a user.


I thought that part was kinda vague thougth (specifically pertaining to mining).

[franky1]

simple answer. if your going to touch fiat... fincen want to know about you.

its not about bitcoin. its about the trading of a currency to fiat.

if it was purely about trading a virtual currency between each other. then all of you zynga games poker fans, world of warcraft and second life fans have more to worry about.

[leopard2]

Having an ASIC does not make you culpable, and is not "probable cause" for anything illegal. Being BFL customer might be probable cause for gullibility, though.

 

Now they just have to find a way to define what speculation is. So if a wallet contains more than 10 btc, is it for speculation? Does the owner need to prove, what he wanted to buy?

It seems as if some Fincen reps have smoked something they obtained from Silkroad, before they wrote that up  

I guess if you have the IQ of Satoshi Nakamoto you won't work for a government agency  

[mjsbuddha]

And this is why scrypt coins are way safer than SHA256 coins, since the govt goons could control dedicated Asic hashers, but never GPUs.

Please don't talk when you don't know shit about what you're saying

Agreed

Sorry if you have a truth allergy, I didn't realize.

Fact is, any US customer of BFL is a potential perpetrator and the goons could easily search their property, by just using the BFL customer list. Since Asics are not used for anything else than BTC mining, owning an Asic miner could be seen as probable cause. This threat would probably deter anyone in the US from owning Asics. If the rest of the world mines on Asic, this development would eventually put US miners out of business, if international Asic ownership is high. Even worse, the government could accumulate enough Asics for a 51% attack, if international Asic ownership is low.

With LTC or YAC, this scenario is impossible because it would be impossible to chase anyone owning a GPU or CPU. Not only are there too many GPUs and CPUs, but also these can be plausibly used for other purposes.

Generic hardware cryptos are much less vulnerable than dedicated hw cryptos.

Not sure why you react like this.

Actually, I have now obtained and read the original FinCEN document. http://www.fincen.gov/statutes_regs/guidance/pdf/FIN-2013-G001.pdf

A user is a person that obtains virtual
currency to purchase goods or services.⁷

And footnote 7 says

7 How a person engages in “obtaining” a virtual currency may be described using any number of other terms, such as
“earning,” “harvesting,” ”mining,” “creating,” “auto-generating,” “manufacturing,” or “purchasing,” depending on
the details of the specific virtual currency model involved. For purposes of this guidance, the label applied to a
particular process of obtaining a virtual currency is not material to the legal characterization under the BSA of the
process or of the person engaging in the process.

The document also says:

A user who obtains convertible virtual currency and uses it to purchase real or virtual
goods or services is not an MSB under FinCEN’s regulations.

Long story short, if you buy bitcoins, mine bitcoins, etc. you are not subject to MSB regulations. Only if you trade in bitcoins, speculate in bitcoins, or make a business of buying and selling bitcoins to other users do you need to worry.

Having an ASIC does not make you culpable, and is not "probable cause" for anything illegal. Being BFL customer might be probable cause for gullibility, though.

+1 hope you're right

[gmannn]

From what I have read, you need to sell / exchange $1000 worth of BTC per day.  Under that and you are exempt from the licensing requirements.  I doubt that many miners here fall into that category. 

[joesmoe2012]

Not generate $1000 per day, sell / exchange 1000 per day, so if you generated a bunch then sold them all at once ...

[gmannn]

Not generate $1000 per day, sell / exchange 1000 per day, so if you generated a bunch then sold them all at once ...

You are correct.  If I sold that many at once it would most likely be at an exchange which is already compliant with fincen regulations (Damnit GOX), instead of a F2F cash transaction.  They'd send off reports of the sale to the appropriate revenue service and I would report capital gains and pay my taxes. 

[chufchuf]

still. even if it only applies to miners in the united states, isn't that a big deal? Am I the only one that thinks so? I almost fell out of my seat when I read that.

It's a very big deal. It's basically the end of Bitcoin-to-USD-and-back. You will need an official -centralized- company to handle your Bitcoins from now on. My guess is that no company in the US will be able to do the paperwork for Bitcoin. So that's that: the end of Bitcoin in the US.

You made quite a few gigantic leaps in logic to reach that conclusion of a company to hold all the bitcoins forever not allowing anyone to put theirs in their own wallet.

[chufchuf]

This article says that registration is free

http://www.theverge.com/2013/3/20/4127506/bitcoin-foundation-new-us-rules-targeting-virtual-currencies-are

and that Mtgox was relying on Coinlab to be compliant in the U.S. So it must be that Coinlab wanted revenge, broke off and 5 seconds later the US govt saw their chance.

And why are some of you talking so much and then on page three of the thread we discover it's only people who exchange over 1,000 dollars a day that need to register? No wonder that's why quite a few interpreted it as being that only the exchange sites had to register.

[FloridaBear]

There is no "1,000 per day" threshhold to be considered a money transmitter:

No activity threshold applies to the definition of money transmitter. Thus, a person who engages as a business in the transfer of funds is an MSB as a money transmitter, regardless of the amount of money transmission activity.

from http://www.fincen.gov/financial_institutions/msb/definitions/msb.html

The phrase "as a business" is curious though. Does that mean as a casual miner that I do not engage "as a business?" This still seems a little vague to me. I can't believe that FinCEN gives two sh!ts about casual miners making .03 BTC per day on their 7970.

[chufchuf]

The govt using proof dating back 2 years when it just changed the rules a month ago? Perhaps that explains the legal counsel mtgox got.

And if the govt considers bitcoin a currency, how so if it's not legal tender anywhere? And to be coherent will it not tax speculator's profits?

[gmannn]

There is no "1,000 per day" threshhold to be considered a money transmitter:

No activity threshold applies to the definition of money transmitter. Thus, a person who engages as a business in the transfer of funds is an MSB as a money transmitter, regardless of the amount of money transmission activity.

from http://www.fincen.gov/financial_institutions/msb/definitions/msb.html

The phrase "as a business" is curious though. Does that mean as a casual miner that I do not engage "as a business?" This still seems a little vague to me. I can't believe that FinCEN gives two sh!ts about casual miners making .03 BTC per day on their 7970.

Honest question, does a 2 person exchange between USD and BTC count as a money transmission?  I thought transmitters were the middlemen in the business of moving money from A to B.

[chowderman]

There is no "1,000 per day" threshhold to be considered a money transmitter:

No activity threshold applies to the definition of money transmitter. Thus, a person who engages as a business in the transfer of funds is an MSB as a money transmitter, regardless of the amount of money transmission activity.

from http://www.fincen.gov/financial_institutions/msb/definitions/msb.html

The phrase "as a business" is curious though. Does that mean as a casual miner that I do not engage "as a business?" This still seems a little vague to me. I can't believe that FinCEN gives two sh!ts about casual miners making .03 BTC per day on their 7970.

Honest question, does a 2 person exchange between USD and BTC count as a money transmission?  I thought transmitters were the middlemen in the business of moving money from A to B.

The person selling BTC for USD is a money transmitter if that person mined the BTC. IF they bought, they are a user as well.

A person acting as the middleman between buyer and seller is a money transmitter and exchanger.

The person buying BTC is a user.

The $1000/day stipulation is regarding and exchanger exchanging two more or more foreign currencies up to $1000 total a day an MSB, The same definition states virtual convertible currencies are not included because they are not foreign currencies.

[gmannn]

There is no "1,000 per day" threshhold to be considered a money transmitter:

No activity threshold applies to the definition of money transmitter. Thus, a person who engages as a business in the transfer of funds is an MSB as a money transmitter, regardless of the amount of money transmission activity.

from http://www.fincen.gov/financial_institutions/msb/definitions/msb.html

The phrase "as a business" is curious though. Does that mean as a casual miner that I do not engage "as a business?" This still seems a little vague to me. I can't believe that FinCEN gives two sh!ts about casual miners making .03 BTC per day on their 7970.

Honest question, does a 2 person exchange between USD and BTC count as a money transmission?  I thought transmitters were the middlemen in the business of moving money from A to B.

The person selling BTC for USD is a money transmitter if that person mined the BTC. IF they bought, they are a user as well.

A person acting as the middleman between buyer and seller is a money transmitter and exchanger.

The person buying BTC is a user.

The $1000/day stipulation is regarding and exchanger exchanging two more or more foreign currencies up to $1000 total a day an MSB, The same definition states virtual convertible currencies are not included because they are not foreign currencies.

Thanks, this is clear now.  The 1000 limit does not apply.

[amincd]

Others in the forum have said that miners who sell their BTC through exchanges registered as MSBs are fine.

[jdbtracker]

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

so reading the guidelines. it is clear to me, that we do not have to worry.

Relax everybody, they just want to catch the people buying large quantities of World of Warcraft Gold, or Bitcoins.

They clearly made it into a regulation instead of a law, because they want casual people to use it for what it's intended for, buying stuff at your favourite merchant or buying virtual items...

they do not like people using it to launder money, from one location to another, the only way to do that is to exchange those bitcoins into cash, effectively your cash has just been cleaned, new cash new serial numbers to track.

though Bitcoin is a very bad option for that... the BlockChain ledger.

and don't forget the Guidelines apply to Fiat Currencies too... so if your exchanging money... they want to talk to you about your activities.

so your Golden, they want you to register, they want exchanges to comply, use virtual currencies freely, but please let us make sure you are legit, buy whatever you want, it's not illegal, exchange your currency, if they want to be dicks later, just don't do crazy 10,000 USD transactions.

[Operatr]

FinCEN's reach ends at fiat, there is nothing they can do if trade is done inter-system anyway, meaning one crypto to another.

If an exchange wants to convert BTC to USD, they must play by the rules or get shut down, just like any other USD exchange.


I still believe P2P exchange is a necessary move in terms of trading one coin for another, take that power away from places like Gox and leave them to handle fiat currency exchanges.

[jdbtracker]

FinCEN's reach ends at fiat, there is nothing they can do if trade is done inter-system anyway, meaning one crypto to another.

If an exchange wants to convert BTC to USD, they must play by the rules or get shut down, just like any other USD exchange.


I still believe P2P exchange is a necessary move in terms of trading one coin for another, take that power away from places like Gox and leave them to handle fiat currency exchanges.

agreed, we already have the technology to make a p2p exchange.

setup a Filezilla(ftp server) server and sell your items from home, use YaCy(p2p search engine). upload your directory to YaCy and boom your in business.

now if you need anonymity you'll need to run FreeNet and setup a page.

[chufchuf]

Also, it doesn't make it illegal to sell bitcoins, no one has actually clarified that I think.

You'd have to become an MSB if you sold dollars or pounds every time you went on holiday. There'd be a rush to buy duty free shit on the plane, from people that had foreign currency to spare.

MSB probably costs very little if anything. What probably costs a ton is, on exchanges all the official KYC documents that have to be filled out for each of your customers I don't know.

[averwind]

Here is another article about the same issue:

http://www.forbes.com/sites/robertwood/2013/05/02/irs-takes-a-bite-out-of-bitcoin/

And here is a quote from the comments:

Part of this is incorrect. I’ve called FinCEN several times and discussed if “miners” need to register as a Money Service Business. They do not.

The act of running a Miner and collecting Bitcoins is not a FinCEN concern. They want to know about the transfer between M1 and M3 types of money. Bitcoin is different than Facebook Points, Amazon dollars, or XBox points. They can be bought and sold for cash.

Anyone who uses LocalBitcoins.com must register. Anyone who runs a service like MtGox is a MSB. People who use MtGox are customers of a MSB and don’t need to register.

How will the IRS know if a profit is made using MtGox or Local Bitcoins? It’s likely that each individuals bank account will be flagged with AML alerts if there is a large ingress or egress of money. This triggers a FinCEN alert which might also go to the IRS.

[joesmoe2012]

Also, it doesn't make it illegal to sell bitcoins, no one has actually clarified that I think.

You'd have to become an MSB if you sold dollars or pounds every time you went on holiday. There'd be a rush to buy duty free shit on the plane, from people that had foreign currency to spare.

MSB probably costs very little if anything. What probably costs a ton is, on exchanges all the official KYC documents that have to be filled out for each of your customers I don't know.

It can also require being bonded in certain states.

Also its unclear if you have to register in every state your going to do business in.

This is why that think company is suing mtgox, because they aren't reg'd as MSB in CA and thus its unfair for them to be able to compete there.

[cointoss]

The person selling BTC for USD is a money transmitter if that person mined the BTC. IF they bought, they are a user as well.

"7 How a person engages in “obtaining” a virtual currency may be described using any number of other terms, such as
“earning,” “harvesting,” ”mining,” “creating,” “auto-generating,” “manufacturing,” or “purchasing,” depending on
the details of the specific virtual currency model involved. For purposes of this guidance, the label applied to a
particular process of obtaining a virtual currency is not material to the legal characterization under the BSA of the
process or of the person engaging in the process."

This would seem to indicate that it does not matter how you obtain the coins.

[johnyj]

This is very possitive IMO. So under this regislation, bitcoin will mostly be used to be hoard or buy goods/services, and that is the most important step towards bitcoin's mainstream acceptance. When you can buy essntially everything on the planet with bitcoin, there is no need for an exchange