How to legally challenge US attempts at regulation

[CompNsci]

I've been wondering lately what might be the best way to legally challenge regulation of BTC exchanges in the US. Clearly, a large operating business can ill afford to be shut down, and so those have been scrambling to figure out how to stay roughly in compliance with FinCEN guidance.

One idea seems like it could be setting up an exchange which will plan on presenting a challenge by only obeying what the law appears to be as written, interpreted in the most favorable light for the exchange. This process would seem to have a few implications.

1. It may need to be only a cash<->BTC exchange. Any interface with the banking system will likely collapse under the slightest regulatory pressure, unless an organization like the IAFCU would be willing to serve as the bank.

2. Legal venue seems like it should be in a state where either there is no MSB regulation, or alternately, where BTC would not be subject to such regulation based on the definition of currency and money used in that state.

3. It should have sufficient assets isolated from any seizable deposit accounts to be able to make any transactions whole in the event of a legal attack.

4. It should plan on a legal fight and having sufficient funds for such a fight as well as good legal representation.

5. It should be operated as a corporation to provide limited liability to the operators.

What are people's thoughts on the feasibility and method of setting up such an exchange.

[Viceroy]

It would be incredibly expensive to reproduce mt gox... on the order of millions of dollars.  Then you need to register and adhere to the MSB program, because that what the Department of Treasury said must be done.  Then you need to register as a money transmitter in each state and set up an office in that state.  This will cost millions.

Mt Gox 2.0?
https://bitcointalk.org/index.php?topic=179147.0

. It should plan on a legal fight and having sufficient funds for such a fight as well as good legal representation.

No person with many millions to spent would invest in this unless they had a reason to believe the government would NOT shut them down.  Only a foolish billionaire could afford to gamble as you propose.  Only an insane person would start a business with the intent to sue the federal or state governments.

[CompNsci]

No person with many millions to spent would invest in this unless they had a reason to believe the government would NOT shut them down.  Only a foolish billionaire could afford to gamble as you propose.  Only an insane person would start a business with the intent to sue the federal or state governments.

I think the point would be to start a small exchange cheaply. You are correct, one can't spend a lot on this, because it likely will end up in court, and the legal bills will be bad enough.

Only an insane person would start a business with the intent to sue the federal or state governments.

The business wouldn't sue anyone. The federal or state government would have to come after it.

I think the idea would be to get support from the community for doing precisely this as a challenge.

[Viceroy]

start a small exchange cheaply

You cannot start a legal exchange that deals with Americans that is cheap.  The technology and the registrations are all very very expensive.

I think the idea would be to get support from the community for doing precisely this as a challenge.

Read through the post and you will see some of the challenges the community identified.

Mt Gox 2.0?
https://bitcointalk.org/index.php?topic=179147.0