FinCEN's definition of a Money Exchanger

[AlanX]

I was noticing that you can sell gift cards for cash.  Isn't this the same as selling Bitcoin for cash?  Is FinCen coming down on these guys like they are on Bitcoin?

http://www.dailyfinance.com/2013/02/15/unwanted-gift-cards-5-ways-cash-in/

[Philj]

The flip side of that would also be interesting: Can I buy/sell a giftcard with/for bitcoin without being a money exchanger?

[Gabi]

Is a gift card "money"?

[Bitcopia]

I was noticing that you can sell gift cards for cash.  Isn't this the same as selling Bitcoin for cash?  Is FinCen coming down on these guys like they are on Bitcoin?

http://www.dailyfinance.com/2013/02/15/unwanted-gift-cards-5-ways-cash-in/

A bitcoin is not a gift card. In fact, it's incredibly different than a gift card. I'm not sure where you're coming from here...

[buyer]

I was noticing that you can sell gift cards for cash.  Isn't this the same as selling Bitcoin for cash?  Is FinCen coming down on these guys like they are on Bitcoin?

http://www.dailyfinance.com/2013/02/15/unwanted-gift-cards-5-ways-cash-in/

yes.  in America selling "money value transfer" cards requires registration with fincen and state agencies.  This is why drug stores limit the number and amount of "gift cards" you can buy per visit.

[AliceWonder]

I was noticing that you can sell gift cards for cash.  Isn't this the same as selling Bitcoin for cash?  Is FinCen coming down on these guys like they are on Bitcoin?

http://www.dailyfinance.com/2013/02/15/unwanted-gift-cards-5-ways-cash-in/

Gift cards are not an exchange of currency.

A $25 iTunes gift card is in US denominations and how much you can buy with it relative to spending $25 USD doesn't change.

[buyer]

Gift cards are not an exchange of currency.

Gift Cards = Stored Value Cards and therefore are regulated by FinCEN

"(3) Issuer of traveler's checks, money orders, or stored value. An issuer of traveler's checks, money orders, or, stored value (other than a person who does not issue such checks or money orders or stored value in an amount greater than $1,000 in currency or monetary or other instruments to any person on any day in one or more transactions). "

[AliceWonder]

Gift cards are not an exchange of currency.

Gift Cards = Stored Value Cards and therefore are regulated by FinCEN

"(3) Issuer of traveler's checks, money orders, or stored value. An issuer of traveler's checks, money orders, or, stored value (other than a person who does not issue such checks or money orders or stored value in an amount greater than $1,000 in currency or monetary or other instruments to any person on any day in one or more transactions). "

That puts them under FinCEN, but classified as a Money Exchanger ?

Money Services Business - The term "money services business" includes any person doing business, whether or not on a regular basis or as an organized business concern, in one or more of the following capacities:

(1) Currency dealer or exchanger.
(2) Check casher.
(3) Issuer of traveler's checks, money orders or stored value.
(4) Seller or redeemer of traveler's checks, money orders or stored value.
(5) Money transmitter.
(6) U.S. Postal Service.

As I read that, bitcoin falls under 1 and not 3/4

So it is still under MSB regulations but not all those defiinitions are necessarily the same rules, as one would expect there are different regulations for a Check casher than the U.S. Postal Service.

[buyer]

That puts them under FinCEN, but classified as a Money Exchanger ?

It depends on the state you live in, I think.  In California somebody who sells brand name retail store giftcards must be registered as a money transmitter.  So they'd be a money transmitter and would declare that when they file the MSB.

(I am not a lawyer, do not take my advice as legal advice).

[TangibleCryptography]

Gift cards are not an exchange of currency.

Gift Cards = Stored Value Cards and therefore are regulated by FinCEN

"(3) Issuer of traveler's checks, money orders, or stored value. An issuer of traveler's checks, money orders, or, stored value (other than a person who does not issue such checks or money orders or stored value in an amount greater than $1,000 in currency or monetary or other instruments to any person on any day in one or more transactions). "

That puts them under FinCEN, but classified as a Money Exchanger ?

Money Services Business - The term "money services business" includes any person doing business, whether or not on a regular basis or as an organized business concern, in one or more of the following capacities:

(1) Currency dealer or exchanger.
(2) Check casher.
(3) Issuer of traveler's checks, money orders or stored value.
(4) Seller or redeemer of traveler's checks, money orders or stored value.
(5) Money transmitter.
(6) U.S. Postal Service.

As I read that, bitcoin falls under 1 and not 3/4

So it is still under MSB regulations but not all those defiinitions are necessarily the same rules, as one would expect there are different regulations for a Check casher than the U.S. Postal Service.

Bitcoin does not fall under 1 it falls under 5.  1 is out because it uses the language "currency of a foreign government".  5 is FinCEN way of forcing Bitcoin (round peg) into a MT definition (square hole).   It is the only thing which even comes close so FinCEN has used that.

Providers and Sellers of Prepaid Access

            A person's acceptance and/or transmission of convertible virtual currency cannot be characterized as providing or selling prepaid access because prepaid access is limited to real currencies. 18

Dealers in Foreign Exchange

            A person must exchange the currency of two or more countries to be considered a dealer in foreign exchange.19 Virtual currency does not meet the criteria to be considered "currency" under the BSA, because it is not legal tender. Therefore, a person who accepts real currency in exchange for virtual currency, or vice versa, is not a dealer in foreign exchange under FinCEN's regulations.

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

Also you have to remember there is the federal definition and then there are state definitions of which there are fifty and no two are the same.  

[AliceWonder]

Gift cards are not an exchange of currency.

Gift Cards = Stored Value Cards and therefore are regulated by FinCEN

"(3) Issuer of traveler's checks, money orders, or stored value. An issuer of traveler's checks, money orders, or, stored value (other than a person who does not issue such checks or money orders or stored value in an amount greater than $1,000 in currency or monetary or other instruments to any person on any day in one or more transactions). "

That puts them under FinCEN, but classified as a Money Exchanger ?

Money Services Business - The term "money services business" includes any person doing business, whether or not on a regular basis or as an organized business concern, in one or more of the following capacities:

(1) Currency dealer or exchanger.
(2) Check casher.
(3) Issuer of traveler's checks, money orders or stored value.
(4) Seller or redeemer of traveler's checks, money orders or stored value.
(5) Money transmitter.
(6) U.S. Postal Service.

As I read that, bitcoin falls under 1 and not 3/4

So it is still under MSB regulations but not all those defiinitions are necessarily the same rules, as one would expect there are different regulations for a Check casher than the U.S. Postal Service.

Bitcoin does not fall under 1 it falls under 5.  1 is out because it uses the language "currency of a foreign government".  5 is FinCEN way of forcing Bitcoin (round peg) into a MT definition (square hole).   It is the only thing which even comes close so FinCEN has used that.

Right - I was meaning in the context of the OP, selling bitcoin for cash. That's exchange.
The p2p network is 5 but I'm not sure transmitter really could apply to a p2p network since there isn't centralization of it.

[DeathAndTaxes]

Gift cards are not an exchange of currency.

Gift Cards = Stored Value Cards and therefore are regulated by FinCEN

"(3) Issuer of traveler's checks, money orders, or stored value. An issuer of traveler's checks, money orders, or, stored value (other than a person who does not issue such checks or money orders or stored value in an amount greater than $1,000 in currency or monetary or other instruments to any person on any day in one or more transactions). "

That puts them under FinCEN, but classified as a Money Exchanger ?

Money Services Business - The term "money services business" includes any person doing business, whether or not on a regular basis or as an organized business concern, in one or more of the following capacities:

(1) Currency dealer or exchanger.
(2) Check casher.
(3) Issuer of traveler's checks, money orders or stored value.
(4) Seller or redeemer of traveler's checks, money orders or stored value.
(5) Money transmitter.
(6) U.S. Postal Service.

As I read that, bitcoin falls under 1 and not 3/4

So it is still under MSB regulations but not all those defiinitions are necessarily the same rules, as one would expect there are different regulations for a Check casher than the U.S. Postal Service.

Bitcoin does not fall under 1 it falls under 5.  1 is out because it uses the language "currency of a foreign government".  5 is FinCEN way of forcing Bitcoin (round peg) into a MT definition (square hole).   It is the only thing which even comes close so FinCEN has used that.

Right - I was meaning in the context of the OP, selling bitcoin for cash. That's exchange.
The p2p network is 5 but I'm not sure transmitter really could apply to a p2p network since there isn't centralization of it.

No please don't add misinformation.

FinCEN has definitively and clearly indicated that an entity which exchanges virtual currency for real currency is NOT a "(1) Currency dealer or exchanger"; they are a "(5) Money transmitter".  All of it is laid out in the cite above.   Please don't try to apply common sense to the law.   While you may "think" it would "make sense" for an exchanger to be under category 1 you would be wrong.  It is one thing to be wrong, it is another thing to spread misinformation.  

Dealers in Foreign Exchange

            A person must exchange the currency of two or more countries to be considered a dealer in foreign exchange.19 Virtual currency does not meet the criteria to be considered "currency" under the BSA, because it is not legal tender. Therefore, a person who accepts real currency in exchange for virtual currency, or vice versa, is not a dealer in foreign exchange under FinCEN's regulations.

I mean it can't be anymore black and white then that.

" ... a person who accepts real currency in exchange for virtual currency, or vice versa, is not a dealer in foreign exchange under FinCEN's regulations."


Per FinCEN guidelines a currency dealer/exchanger ONLY involves exchanging one "real" currency for another one.  

For example:
Exchanging USD for EUR? (1) Currency dealer or exchanger
Exchanging USD for BTC? (5) Money transmitter

[AliceWonder]

Thank you.

[Bigpiggy01]

Gift cards are not an exchange of currency.

Gift Cards = Stored Value Cards and therefore are regulated by FinCEN

"(3) Issuer of traveler's checks, money orders, or stored value. An issuer of traveler's checks, money orders, or, stored value (other than a person who does not issue such checks or money orders or stored value in an amount greater than $1,000 in currency or monetary or other instruments to any person on any day in one or more transactions). "

That puts them under FinCEN, but classified as a Money Exchanger ?

Money Services Business - The term "money services business" includes any person doing business, whether or not on a regular basis or as an organized business concern, in one or more of the following capacities:

(1) Currency dealer or exchanger.
(2) Check casher.
(3) Issuer of traveler's checks, money orders or stored value.
(4) Seller or redeemer of traveler's checks, money orders or stored value.
(5) Money transmitter.
(6) U.S. Postal Service.

As I read that, bitcoin falls under 1 and not 3/4

So it is still under MSB regulations but not all those defiinitions are necessarily the same rules, as one would expect there are different regulations for a Check casher than the U.S. Postal Service.

Bitcoin does not fall under 1 it falls under 5.  1 is out because it uses the language "currency of a foreign government".  5 is FinCEN way of forcing Bitcoin (round peg) into a MT definition (square hole).   It is the only thing which even comes close so FinCEN has used that.

Right - I was meaning in the context of the OP, selling bitcoin for cash. That's exchange.
The p2p network is 5 but I'm not sure transmitter really could apply to a p2p network since there isn't centralization of it.

No please don't add misinformation.

FinCEN has definitively and clearly indicated that an entity which exchanges virtual currency for real currency is NOT a "(1) Currency dealer or exchanger"; they are a "(5) Money transmitter".  All of it is laid out in the cite above.   Please don't try to apply common sense to the law.   While you may "think" it would "make sense" for an exchanger to be under category 1 you would be wrong.  It is one thing to be wrong, it is another thing to spread misinformation.  

Dealers in Foreign Exchange

            A person must exchange the currency of two or more countries to be considered a dealer in foreign exchange.19 Virtual currency does not meet the criteria to be considered "currency" under the BSA, because it is not legal tender. Therefore, a person who accepts real currency in exchange for virtual currency, or vice versa, is not a dealer in foreign exchange under FinCEN's regulations.

I mean it can't be anymore black and white then that.

" ... a person who accepts real currency in exchange for virtual currency, or vice versa, is not a dealer in foreign exchange under FinCEN's regulations."


Per FinCEN guidelines a currency dealer/exchanger ONLY involves exchanging one "real" currency for another one.  

For example:
Exchanging USD for EUR? (1) Currency dealer or exchanger
Exchanging USD for BTC? (5) Money transmitter

+1 Great to hear from someone who bothers with looking at the overall picture.

[mr_random]

No please don't add misinformation.

FinCEN has definitively and clearly indicated that an entity which exchanges virtual currency for real currency is NOT a "(1) Currency dealer or exchanger"; they are a "(5) Money transmitter".  All of it is laid out in the cite above.   Please don't try to apply common sense to the law.   While you may "think" it would "make sense" for an exchanger to be under category 1 you would be wrong.  It is one thing to be wrong, it is another thing to spread misinformation.  

You're actually completely wrong. See the recent FinCEN guidance pdf: http://www.fincen.gov/statutes_regs/guidance/pdf/FIN-2013-G001.pdf

Note on page 2, under the heading "Definitions of User, Exchanger,and Administrator" it says: "An exchanger is a person engaged as a business in the exchange of virtual currency for real currency, funds, or other virtual currency".

[buyer]

how much work must one do, beyond the basic filing which is free and standard accounting to be an MSB?

[dwolfman]

No please don't add misinformation.

FinCEN has definitively and clearly indicated that an entity which exchanges virtual currency for real currency is NOT a "(1) Currency dealer or exchanger"; they are a "(5) Money transmitter".  All of it is laid out in the cite above.   Please don't try to apply common sense to the law.   While you may "think" it would "make sense" for an exchanger to be under category 1 you would be wrong.  It is one thing to be wrong, it is another thing to spread misinformation.  

You're actually completely wrong. See the recent FinCEN guidance pdf: http://www.fincen.gov/statutes_regs/guidance/pdf/FIN-2013-G001.pdf

Note on page 2, under the heading "Definitions of User, Exchanger,and Administrator" it says: "An exchanger is a person engaged as a business in the exchange of virtual currency for real currency, funds, or other virtual currency".

Hmm, so if you are just mining on the side, like I've been doing, no need to register?  Sounds good, but I think I'd hold off and see what the layers in here say about it.

[DeathAndTaxes]

No please don't add misinformation.

FinCEN has definitively and clearly indicated that an entity which exchanges virtual currency for real currency is NOT a "(1) Currency dealer or exchanger"; they are a "(5) Money transmitter".  All of it is laid out in the cite above.   Please don't try to apply common sense to the law.   While you may "think" it would "make sense" for an exchanger to be under category 1 you would be wrong.  It is one thing to be wrong, it is another thing to spread misinformation.  

You're actually completely wrong. See the recent FinCEN guidance pdf: http://www.fincen.gov/statutes_regs/guidance/pdf/FIN-2013-G001.pdf

Note on page 2, under the heading "Definitions of User, Exchanger,and Administrator" it says: "An exchanger is a person engaged as a business in the exchange of virtual currency for real currency, funds, or other virtual currency".

I cited that document.  Read further and you will realize why I am correct (I also included cites). "Exchanger" is not a " Currency dealer or exchanger".  Don't try to apply common sense to the law.  Laws have absolutely nothing to do with common sense.  Read further into the guidance on what type of msb a virtual currency exchanger is.  


It isn't "currency dealer or exchanger" (which is a sub type of MSB regulations).  Yes it would make logical sense than a virtual currency exchanger would fall under the sub type which has "exchanger" in its name.  Once again don't try to apply common sense to the law, you will fail.

Further in the guidance FinCEN puts it in absolute black and white.   Once again before saying "I am wrong".  This is the exact wording of the document you cited.

An administrator or exchanger that (1) accepts and transmits a convertible virtual currency or (2) buys or sells convertible virtual currency for any reason is a money transmitter under FinCEN’s regulations

AND

" ... a person who accepts real currency in exchange for virtual currency, or vice versa, is not a dealer in foreign exchange under FinCEN's regulations."

Before responding I would recommend (a recommendation which likely will fall on deaf ears) that you STOP and read the entire guidance from the first line to the last one.  Don't skim it, don't try to speed read it, don't try to look for the once sentence that you think means what you think it means.  Read it completely every word.   It is in absolute black and white.

What you say is "completely wrong" is absolutely right.  There are only 6 types of MSBs.  No more, no less.  They all have exact definitions in the eCFR.  When registering as a MSB you must select one or more of the following six types.  You can't select none, you can't write in a new type.  All MSBs must be one these six.   

(1) Currency dealer or exchanger.
(2) Check casher.
(3) Issuer of traveler's checks, money orders or stored value.
(4) Seller or redeemer of traveler's checks, money orders or stored value.
(5) Money transmitter.
(6) U.S. Postal Service.

The law doesn't allow any other type of MSB.  FinCEN can't write new law.  The guidance is there way of putting Bitcoin (a square peg) into one of the existing definitions (a round hole).  While it doesn't make common sense the only category which can even be stretched to cover exchanging virtual currency is money transmitter.  That is what the guidance says (if you read the whole thing).  You will notice there is no "exchanger" or "virtual currency exchanger" in the list.   Congress would need to pass new law for that to happen.  A virtual currency exchanger is a "(5) Money transmitter".

Exchanging virtual currency for real currency = (5) Money transmitter
Exchanging real currency for virtual currency = (5) Money transmitter
Exchanging on real currency for another real currency = (1) Currency dealer or exchanger

[mr_random]

I've got no idea why you are writing me a wall of text. The definition is quoted straight out of the definitions section of the guidance document. "An exchanger is a person engaged as a business in the exchange of virtual currency for real currency, funds, or other virtual currency".

For clarity, this is the exact part of your original post that is wrong: "FinCEN has definitively and clearly indicated that an entity which exchanges virtual currency for real currency is NOT a "(1) Currency dealer or exchanger"

[DeathAndTaxes]

I've got no idea why you are writing me a wall of text. The definition is quoted straight out of the definitions section of the guidance document. "An exchanger is a person engaged as a business in the exchange of virtual currency for real currency, funds, or other virtual currency".

For clarity, this is the exact part of your original post that is wrong: "FinCEN has definitively and clearly indicated that an entity which exchanges virtual currency for real currency is NOT a "(1) Currency dealer or exchanger"

Exchanger in the guidance doesn't refer to "(1) Currency dealer or exchanger" which is a FinCEN regulatory definition.  "Exchanger", "administrator", and "users" are just definitions within the guidance.  As I indicated you need to READ THE ENTIRE GUIDANCE.  Guidance isn't law.  Guidance merely indicates what existing law this new concept of virtual currency applies to.  Those guidance definitions lay out further in the document which MSB regulations apply to

The simple version (from your cite)

An administrator or exchanger that (1) accepts and transmits a convertible virtual currency or (2) buys or sells convertible virtual currency for any reason is a money transmitter under FinCEN’s regulations
" ... a person who accepts real currency in exchange for virtual currency, or vice versa, is not a dealer in foreign exchange under FinCEN's regulations."

Let me simplify the cite further since you hate reading.

is a money transmitter under FinCEN’s regulations
is not a dealer in foreign exchange under FinCEN's regulations

even simpler

is a money transmitter not a dealer in foreign exchange under FinCEN's regulations

If you are a virtual currency exchanger you ARE NOT a "(1) Currency dealer or exchanger"   <- Actual regulatory definition found in the eCFR
If you are a virtual currency exchanger you ARE a "(5) Money transmitter."  <- Actual regulatory definition found in the eCFR

It can't be more black and white than that. If your confused that is fine but don't spread misinformation as fact.