License for entering the business of money transmission

[franky1]

the actual interpretation is that bitcoin foundation moved fiat across state lines into california as a business to pay for the convention centre. so the large (above $1000 in a single transaction) to a Californian bank from a business created a risk flag.

Where are you guys getting this

Imaginary-land.

try reading wire transfer regulations, money transmission regulations. and then put it into context of what everyone is saying about it being linked to the hiring of the convention centre.

[1715194155]

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[1715194155]

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[1715194155]

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[DeathAndTaxes]

the actual interpretation is that bitcoin foundation moved fiat across state lines into california as a business to pay for the convention centre. so the large (above $1000 in a single transaction) to a Californian bank from a business created a risk flag.

Where are you guys getting this

Imaginary-land.

try reading wire transfer regulations, money transmission regulations. and then put it into context of what everyone is saying about it being linked to the hiring of the convention centre.

Everyone said the world was flat too.  "Everyone" is a very weak argument.  Payments are not money transfers.  Never have been.  Paying for a convetion center doesn't require a money transfer.  It requires a payment. 

Now if the Bitcoin Foundation ran a business where persons could deposit cash or other monetary value and the Foundation would make a PAYMENT ON THEIR BEHALF to a convention center .... THAT would be money transmission.

Your logical train is:
a) Bitcoin Foundation had a conference
b) Bitcoin Foundation received a C&D
ergo the conference caused the C&D.

I ate tacos.
I got a notice from the state of VA regarding money transmission
ergo eating tacos results in regulatory action.

[franky1]

the actual interpretation is that bitcoin foundation moved fiat across state lines into california as a business to pay for the convention centre. so the large (above $1000 in a single transaction) to a Californian bank from a business created a risk flag.

Where are you guys getting this

Imaginary-land.

try reading wire transfer regulations, money transmission regulations. and then put it into context of what everyone is saying about it being linked to the hiring of the convention centre.

Everyone said the world was flat too.  "Everyone" is a very weak argument.  Payments are not money transfers.  Never have been.  Paying for a convetion center doesn't require a money transfer.  It requires a payment.  

Now if the Bitcoin Foundation ran a business where persons could deposit cash or other monetary value and the Foundation would make a PAYMENT ON THEIR BEHALF to a convention center .... THAT would be money transmission.

Your logical train is:
a) Bitcoin Foundation had a conference
b) Bitcoin Foundation received a C&D
ergo the conference caused the C&D.

I ate tacos.
I got a notice from the state of VA regarding money transmission
ergo eating tacos results in regulatory action.

here we go again. spit for spat both trying to correct each other based on the limited information available to both of us. but here goes the scenario i am reading

names are used are for examples for explanation. not fact.

bitcoins moved from bitcoin foundation 'pot' (addres) to bitinstant
large amount of FIAT moves from bitinstant to a bank account owned by a BF member
large amount of FIAT moves from a BF member to californian convention centre.

receipt from convention centre shows BF as the payer.

so movement of funds from bitinstant to BF member shows up as not a product/service purchase. the money then moves again in full to another bank account..

FLAG potential risk.

banks have many triggers.
EG if you received $10k and spent it at walmart 7-11 the bank would say low risk and treat it as income.
EG if you received $10k and the same day moved the exact $10k to nother bank in another state.. FLAG - potential risk.

initial investigation would show BF does not have a licence.

[franky1]

franky1, if one can argue that Bitcoin is not only money, but also a commodity (or simply not money but a commodity), then in your scenario TBF sold a commodity to a trader and used proceeds to pay for a service.

If you sell a fuckton of carrots and use the money received to pay for something does not make you money transmitter even if some retards on the net use carrots to pay each other for virtual blowjobs.

bitcoin is neither of these.

money: is a coin or paper minted/printed with a recognised symbol of government ownership (£$), minted/printed value and is legal tender within the country which owns that recognisable symbol. (in short FIAT)
commodity: is a raw material used in the production of other products.

bitcoin however IS:
currency: is an item used as a means of trade
asset: a personal/business possession which holds value.

now that is sorted out.. from the californian banks point of view, as they are not psychic, all that see is the convention centre receive a large deposit (above the threshold which causes a flag) which on investigation came from TBF. then tracing the funds back. they obviously seen more then 1 hop (bitinstant handing TBF the funds and the bitcoin foundation MOVING the funds)

again the californian banks are not psychic to know that before bitinstant (example) bitcoins came from TBF. all they see is TBF receive a lump sum. and pass it on.

it is now for TBF to inform the californian banks/state regulators as to the actual events that occured.

and as for the carrot scenario. if you received $10,000 for carrots. and then spent $700 paying rent, 10 months in a row ($7k) and $300 a month on fast food. they would consider this fine.. no red flags.

but if they seen you receive $10k and you passed that $10k in full directly onto another person.. red flag.
they would ask you to cease and desist doing future large movements. and to explain what this strange payment was for.

which you can then explain it was a sale of carrots to pay down a $10k mortgage. .. the money would then be released.

[franky1]

bitcoin is neither of these.

money: is a coin or paper minted/printed with a recognised symbol of government ownership (£$), minted/printed value and is legal tender within the country which owns that recognisable symbol. (in short FIAT)
commodity: is a raw material used in the production of other products.

bitcoin however IS:
currency: is an item used as a means of trade
asset: a personal/business possession which holds value.

now that is sorted out..

Unfortunately, you posting a pile of false assertions, or at least not proven assertions does not make it "sorted out" and whatever you came up with based on those assertions is not worthy of quoting. I would say Bitcoin is either all of the above or nothing of the above as in Bitcoin is Bitcoin.

i am UK based and based on ACTUAL conversations with FSA/HMRC (which also is linked to european laws) that is THEIR assertion of how to class bitcoin, based on THEIR opinion at the time.

it has also been noted that americans who ACTUALLY talk to accountants and know the difference between a commodity and an asset. have came to similar conclusions related to american laws.

[DeathAndTaxes]

here we go again. spit for spat both trying to correct each other based on the limited information available to both of us. but here goes the scenario i am reading

names are used are for examples for explanation. not fact.

<snipped>

Thank you for admitting this is just a scenario constructed in your mind.   The state has indicated nothing of the sort and payments to vendors are just that payments not a money transfer business.

I never claimed to know why CA launched the C&D.  There are lots of potential reasons (including ignorance by the regulator) however whatever the reason it is clear you are simply ASSUMING this has something to do with the conference.    That is quite a leap but to pass it off as fact is just downright shady.

[franky1]

this thread has meandered off course.

my initial reply was concerning vladimirs thinking that the C&D order was related to programming an open source piece of software.
i replied by saying the INTERPRETATION was about money(FIAT) transfers into California.

i never once used the word "FACT"

My belief is that only exchanges need a license. Is this correct?

Following Californias line of thinking (interpretation of law) you need a money transmitting license if you are writing open source software, such as for example, bitcoin client, or rsync, or linux or apache web server or any other piece of software some money transmitter may use.

Technically if you fart in an elevator while a banker present you would need one too. And god forbid someone comes up with fartcoin alt...

the actual interpretation is that bitcoin foundation moved fiat across state lines into california as a business to pay for the convention centre. so the large (above $1000 in a single transaction) to a Californian bank from a business created a risk flag.

back to the matter at hand.

This is a follow-up to the discussion about the Bitcoin Foundation which receives a cease and desist order from California.

So I understand that you need a license for the business of money transmission, but I think the subject needs to be clarified. Sadly, I have more questions than answers.
each state has different rules but heres an attempt to merge all the rules into simple guidelines:
1) any bank money movement over $1,000 per other party in a day is classed as potential business transaction
1) any bank money movement over $15,000 per other party in a year is classed as potential business transaction
1) any bank money movement over $100,000 from your account in a year is classed as potential business transaction
any one of these can flag up your bank account being investigated. so if it is personal use only ensure your bank knows before hand. if you are running a business. ensure you have a licence.


My belief is that only exchanges need a license. Is this correct?
not really. again each state/country is different. but if you are moving money above the thresholds in the last question as a business purchase/task/service. then you will need a licence
and most importantly it has to be FIAT payments to be classed as money transmitters. so the whole "miners are MSB" only concerns mining pools that give out fiat direct. EG Eclipse mining pool (the only one i know that paid out fiat)


Do all states require such a license, or only California?
all states. california only sent the letter due to the spending / transmission of money for the hiring of the convention hall

Is it possible to get a nation-wide license, say maybe from Delaware? If not, it means that an exchange would need to get a license from all 50 states to do business in the whole country. What a bureaucratic nightmare!
from looking at bitinstant as a case study, there is no nation wide licence for USA.
if your website is linked to selling products only to residents (delivery address) of delaware. and your own business bank account is delaware based. then you only need a delaware licence. but if you are sending and receiving money in different states then stock up on pain killers and expect some headaches and cramped wrists. form filling x50

this is all i will say on the matter

[DeathAndTaxes]

each state has different rules but heres an attempt to merge all the rules into simple guidelines:
1) any bank money movement over $1,000 per other party in a day is classed as potential business transaction
1) any bank money movement over $15,000 per other party in a year is classed as potential business transaction
1) any bank money movement over $100,000 from your account in a year is classed as potential business transaction
any one of these can flag up your bank account being investigated. so if it is personal use only ensure your bank knows before hand. if you are running a business. ensure you have a licence.

This is false.  Money transmission is money transmission regardless of the dollar amount.  One doesn't need any kind of license to pay $50,000 or $300,000 or $50,000,0000 worth of goods of services.   One needs license if engaged in money transmission of any amount, even $1.99.

Do all states require such a license, or only California?
all states.

False.

california only sent the letter due to the spending / transmission of money for the hiring of the convention hall

This is your dubious claim you keep passing off as fact.  Then again given the non stop material innacuracies it isn't really surprising.  You do realize your false information could result in another person suffering legal harm, if they foolishly assume you are knowledgable. You should stop as you clearly lack a willingesss to say "I don't know" when you lack the facts.

if your website is linked to selling products only to residents (delivery address) of delaware. and your own business bank account is delaware based. then you only need a delaware licence. but if you are sending and receiving money in different states then stock up on pain killers and expect some headaches and cramped wrists. form filling x50

False. Selling goods and services isn't money transmission.  Money transmission is money transmission.  Payments are payments.

this is all i will say on the matter

I doubt it but pretty much all of it was incorrect, your opinion passed of as fact, or glosses over material details.

[Cablez]

banks have many triggers.
1) EG if you received $10k and spent it at walmart 7-11 the bank would say low risk and treat it as income.
2) EG if you received $10k and the same day moved the exact $10k to nother bank in another state.. FLAG - potential risk.

initial investigation would show BF does not have a licence.

I think you are correct on #1 but incorrect on #2 (or at least there may be state differences).  I have received and sent sums to different banks a few times and not heard a peep from the bank or state for that matter. For what its worth they were payments and not solely money transmission and I think that is the point. There can be no payments without money transmission, otherwise the economy would cease to be.

A business or foundation or private citizen shouldn't have to concern themselves with these regulations as they are all customers of the banks which handle these transmissions for purpose (aka payment). I think D&T has it right.

[franky1]

you are right this is not all i will say on the matter, due to death and taxes knit picking OPINIONS, INTERPRETATIONS and then crying that its posted as FACTS
death and taxes. please step back and have a coffee...

i have never said FACT!!

any business relying fully on legal advice from a forum is asking for trouble. they should take what is wrote here as a stepping stone into understanding a bit of the details of how the system works so that when they go to accountants, solicitors etc they are fully prepared and more understanding of what is being told to them.

CAblez.
please understand that the numbers i used are examples that would trigger a red flag. but would not trigger an automated freezing of your account.

its advisable to read the fincen regulations, guidelines, handbooks etc. and it shows there that banks have a duty to put in place flags of potential risk. to then without freezing accounts, investigate the level of risk and if.... only if the level of risk is high enough to require a sars report to be produced (due to a linked account being on a watchlist) only then would they freeze an account or send a cease and Desist.

this is why i say that the californian bank had IN MY OPINION sent out the C&D order as they seen the funds hop through more then one account (money transmission) and the receipt being bitcoin foundation which is unlicenced. and may IN MY OPINION be on a watch list. IN MY OPINION it has nothing to do with them programming the qt client

now back to death and taxes
when a bank see's money moving from one bank account to another. the bank is not psychic to know if it is product purchase or a movement of funds. until you have a conversation with your bank.

most banks learn what the business purpose is when they receive a business plan. and gradually adjust the potential risk flags accordingly, thus maybe never needing further communications.

but pretending that there are no hidden flags that banks use, pretending that there is no need to inform your banks about large out of the ordinary payments, pretending that FIAT is your money to do with as you please. is why so many of these bitcoin traders on OTC (not formal business exchanges) get their accounts frozen.

so the best advice is to never assume your bank is psychic to know you are buying a convention centre for the weekend, never assume the bank is psychic to know the money received from a licenced exchange is yours, and the MOVEMENT of the fund outwards away from your bank is not another money movement, but a product puchase.

especially if its over $1000 in one go.

[DeathAndTaxes]

None of that has anything to do with money transmitter or a license.  

Your are simply 100% wrong in your statement that large transfers require a money transmitter license.  You also are wrong in stating you know the reason for the C&D and you are wrong in claiming a MY license in needed in all 50 states. There is no way to fudge that.   This are false statements. 


Banks are required to file SARs and CTRs and may close accounts if they deem them high risk.  None of that has ANYTHING to do with Money Transmitter laws or licensing.  Banks routinely close non Money Transmitters for being high risk. 

especially if its over $1000 in one go.

99%+ of B2B commerce is >$1000.  Not sure what kind of childhood lemonade stands you have been running but hopefully $1000 is insufficient for weekly payroll much less inventory purchases.  Of course none of that has anything to do with Money Transmitter laws.  If you are a Money Transmitter you must be licensed to transmit even a single penny.  If you are not a Money Transmitter there is no special "I buy lots of stuff license" even when making seven figure deals.   One does not get a MT license simply because they make large purchases/payments.  One ONLY gets a Money Transmitter license if they are a Money Transmitter.  You are simply throwing stuff against the law and trying to see what sticks.

[franky1]

None of that has anything to do with money transmitter or a license.

Your are simply 100% wrong in your statement that large transfers require a money transmitter license.  You also are wrong in stating you know the reason for the C&D and you are wrong in claiming a MY license in needed in all 50 states. There is no way to fudge that.   This are false statements.  

Banks are required to file SARs and CTRs and may close accounts if they deem them high risk.  None of that has ANYTHING to do with Money Transmitter laws or licensing.  Banks routinely close non Money Transmitters for being high risk.  

banks are money transmitters themselves. and an OBLIGATION of being a money transmitter is that you set up some policies to reduce risks of funds related to crimes being allowed to pass into different peoples hands (pay for crimes)
these include having flags for out of the ordinary payments, a link to government watch lists, obtaining personal data of people dealing with amounts over $1000 daily, $15000 totalled over a year.

so that has everything to do with money transmitters. but you dont know what a money transmitter is, its obligations, its guidelines or the regulations to have seen the point i was making

especially if its over $1000 in one go.

If you are a Money Transmitter you must be licensed to transmit even a single penny.

banks, fincen, and other moneytransmitters are not psychic to know the difference between someone transmitting $2 or someone buying a product from another person for $2.
so claiming that every person that sends a penny to another account needs a licence is obsurd.
now please take a step away from the computer and have a coffee.

what the regulators have done (which can be verified by reading the fincen website, and i would plead you to read it)
is set a limit of what they call personal transactions/low risk which do not require investigations (unless a watchlist flag is triggered).
EG
amounts under $1,000 from a individual in a small time period (one day) does not require taking their identification, or requesting the purpose of the transaction.
amounts under $15,000 from a individual totalled in a year does not require taking their identification, or requesting the purpose of the transactions.

amounts over this threshold they deem as business transactions / high risk transactions which do require ID, etc to be investigated as to the purpose of the transaction. if if that transaction purpose is purely a money transmission. then part of the investigation would be to see if they are a licence holder.

never in my life have i seen a bank check that a relative sending money as a birthday gift (not product purchase) is a licence holder...

well maybe thats because during my teenage years (decades ago) i never received over $1000 (£850) in one lump sum from a relative

[DeathAndTaxes]

sending money to another account, making a payment, etc is NOT money transmission.  You seem to think that anytime money moves it is money transmission.  By that logic every consumer and business is a money transmitter.

Money transmitters move money for SOMEONE ELSE.  If you are moving your OWN MONEY by definition you are not a money transmitter.

I don't need a coffee, what I need is for you to stop making up nonsense and passing it off as fact.  You are negligently incorrect in every statement you have made in this thread.  If you want to be ignorant then go ahead but when you try to spread that ignorance I am going to correct you.

[franky1]

sending money to another account, making a payment, etc is NOT money transmission.  You seem to think that anytime money moves it is money transmission.  By that logic every consumer and business is a money transmitter.

Money transmitters move money for SOMEONE ELSE.  If you are moving your OWN MONEY by definition you are not a money transmitter.
never in my life have i seen a bank check that a relative sending money as a birthday gift (not product purchase) is a licence holder...
EG grandma PERSON1: send $20 from account 12345. to me PERSON2 account 13244. and i send $20 to person3 to pay for a blah product account 98778.

where the hell did you read that i said moving only my money??



I don't need a coffee, what I need is for you to stop making up nonsense and passing it off as fact.  You are negligently incorrect in every statement you have made in this thread.  If you want to be ignorant then go ahead but when you try to spread that ignorance I am going to correct you.

your the one saying ever penny movement needs a licence.. not me

you keep thinking that banks are psychic to know that a $20 bank transfer is a birthday gift.
and not:
that grandma is buying something off of me.. and then im then buying something using the profits.
or:
that grandma wants something online but doesnt trust the web so is using me as a money transmitter to buy it
or:
that person A is even my grandma paying me.. and not a complete stranger using me as a money transmitter.

the banks do not know the facts of the purpose of transactions under the certain thresholds. to class you as a money transmitter or not.

the banks just know that the people involved are not on an active watchlist and the amounts are below the tresholds to not deem worthy of investigating further.
now PLEASE READ the regulations. phone up fincen, or even speak to bitinstant!!!

[QuestionAuthority]

You two should get a room.

[justusranvier]

You two should get a room.

I'm glad D&T isn't quoting, so I only have to read his side of the conversation.

[QuestionAuthority]

You two should get a room.

I'm glad D&T isn't quoting, so I only have to read his side of the conversation.

You read all of it? 

[justusranvier]

You read all of it? 

Everything except franky1's posts. It actually flows pretty well when you ignore him.

[Geddi]

You two should get a room.

With no lights and a drum of canola oil

[GoldBit89]

the actual interpretation is that bitcoin foundation moved fiat across state lines into california as a business to pay for the convention centre. so the large (above $1000 in a single transaction) to a Californian bank from a business created a risk flag.

Where are you guys getting this

http://beforeitsnews.com/alternative/2013/03/realtime-bitcoin-fincen-issues-guidance-on-virtual-currencies-and-regulatory-responsibilities-2599120.html

The Financial Crimes Enforcement Network (“FinCEN”) is issuing this interpretive guidance to clarify the applicability of the regulations implementing the Bank Secrecy Act (“BSA”) to persons creating, obtaining, distributing, exchanging, accepting, or transmitting virtual currencies.1 Such persons are referred to in this guidance as “users,” “administrators,” and “exchangers,” all as defined below.2 A user of virtual currency is not an MSB under FinCEN’s regulations and therefore is not subject to MSB registration, reporting, and recordkeeping regulations. However, an administrator or exchanger is an MSB under FinCEN’s regulations, specifically, a money transmitter, unless a limitation to or exemption from the definition applies to the person. An administrator or exchanger is not a provider or seller of prepaid access, or a dealer in foreign exchange, under FinCEN’s regulations.

Currency vs. Virtual Currency

            FinCEN’s regulations define currency (also referred to as “real” currency) as “the coin and paper money of the United States or of any other country that is designated as legal tender and that [ii] circulates and [iii] is customarily used and accepted as a medium of exchange in the country of issuance.”3 In contrast to real currency, “virtual” currency is a medium of exchange that operates like a currency in some environments, but does not have all the attributes of real currency. In particular, virtual currency does not have legal tender status in any jurisdiction. This guidance addresses “convertible” virtual currency. This type of virtual currency either has an equivalent value in real currency, or acts as a substitute for real currency.

Background

            On July 21, 2011, FinCEN published a Final Rule amending definitions and other regulations relating to money services businesses (“MSBs”).4 Among other things, the MSB Rule amends the definitions of dealers in foreign exchange (formerly referred to as “currency dealers and exchangers”) and money transmitters. On July 29, 2011, FinCEN published a Final Rule on Definitions and Other Regulations Relating to Prepaid Access (the “Prepaid Access Rule”).5 This guidance explains the regulatory treatment under these definitions of persons engaged in virtual currency transactions.

Definitions of User, Exchanger, and Administrator

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.
 Users of Virtual Currency

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.8 Such activity, in and of itself, does not fit within the definition of "money transmission services" and therefore is not subject to FinCEN's registration, reporting, and recordkeeping regulations for MSBs.9

Administrators and Exchangers of Virtual Currency

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, unless a limitation to or exemption from the definition applies to the person.10 FinCEN's regulations define the term "money transmitter" as a person that provides money transmission services, or any other person engaged in the transfer of funds. 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."11

The definition of a money transmitter does not differentiate between real currencies and convertible virtual currencies. Accepting and transmitting anything of value that substitutes for currency makes a person a money transmitter under the regulations implementing the BSA.12 FinCEN has reviewed different activities involving virtual currency and has made determinations regarding the appropriate regulatory treatment of administrators and exchangers under three scenarios: brokers and dealers of e-currencies and e-precious metals; centralized convertible virtual currencies; and de-centralized convertible virtual currencies.

a. E-Currencies and E-Precious Metals

The first type of activity involves electronic trading in e-currencies or e-precious metals.13 In 2008, FinCEN issued guidance stating that as long as a broker or dealer in real currency or other commodities accepts and transmits funds solely for the purpose of effecting a bona fide purchase or sale of the real currency or other commodities for or with a customer, such person is not acting as a money transmitter under the regulations.14

However, if the broker or dealer transfers funds between a customer and a third party that is not part of the currency or commodity transaction, such transmission of funds is no longer a fundamental element of the actual transaction necessary to execute the contract for the purchase or sale of the currency or the other commodity. This scenario is, therefore, money transmission.15 Examples include, in part, (1) the transfer of funds between a customer and a third party by permitting a third party to fund a customer's account; (2) the transfer of value from a customer's currency or commodity position to the account of another customer; or (3) the closing out of a customer's currency or commodity position, with a transfer of proceeds to a third party. Since the definition of a money transmitter does not differentiate between real currencies and convertible virtual currencies, the same rules apply to brokers and dealers of e-currency and e-precious metals.

b. Centralized Virtual Currencies

The second type of activity involves a convertible virtual currency that has a centralized repository. The administrator of that repository will be a money transmitter to the extent that it allows transfers of value between persons or from one location to another. This conclusion applies, whether the value is denominated in a real currency or a convertible virtual currency. In addition, any exchanger that uses its access to the convertible virtual currency services provided by the administrator to accept and transmit the convertible virtual currency on behalf of others, including transfers intended to pay a third party for virtual goods and services, is also a money transmitter.

FinCEN understands that the exchanger's activities may take one of two forms. The first form involves an exchanger (acting as a "seller" of the convertible virtual currency) that accepts real currency or its equivalent from a user (the "purchaser") and transmits the value of that real currency to fund the user's convertible virtual currency account with the administrator. Under FinCEN's regulations, sending "value that substitutes for currency" to another person or to another location constitutes money transmission, unless a limitation to or exemption from the definition applies.16 This circumstance constitutes transmission to another location, namely from the user's account at one location (e.g., a user's real currency account at a bank) to the user's convertible virtual currency account with the administrator. It might be argued that the exchanger is entitled to the exemption from the definition of "money transmitter" for persons involved in the sale of goods or the provision of services. Under such an argument, one might assert that the exchanger is merely providing the service of connecting the user to the administrator and that the transmission of value is integral to this service. However, this exemption does not apply when the only services being provided are money transmission services.17

The second form involves a de facto sale of convertible virtual currency that is not completely transparent. The exchanger accepts currency or its equivalent from a user and privately credits the user with an appropriate portion of the exchanger's own convertible virtual currency held with the administrator of the repository. The exchanger then transmits that internally credited value to third parties at the user's direction. This constitutes transmission to another person, namely each third party to which transmissions are made at the user's direction. To the extent that the convertible virtual currency is generally understood as a substitute for real currencies, transmitting the convertible virtual currency at the direction and for the benefit of the user constitutes money transmission on the part of the exchanger.

c. De-Centralized Virtual Currencies

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.

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://beforeitsnews.com/alternative/2013/03/realtime-bitcoin-fincen-issues-guidance-on-virtual-currencies-and-regulatory-responsibilities-2599120.html