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Author Topic: So are bitcoin and alternate currency miners money transmitters?  (Read 2076 times)
achillez
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August 18, 2013, 03:50:06 AM
 #1

I've seen different information on this. It seems to be all but very ambiguous. Some have said you are in the money transmit business, others say no.

Perhaps if we break this down to case examples it will help>>

Case1 (simple):
Miner uses home PCs to generate coins at night in a non-pool. They generate X coins and sell this through MTGox (or other exchange), then take the $ funds to their home bank.

Case2:
Miner purchases ASIC(s) and likewise generates coins 24hrs/day via a pool. The pool delivers X coins, and it is sold similar to Case1

Case3:
Miner wires $ to an exchange (say MTGox). Purchases X coins. Sells X coins for $, and wires this back to their bank.

Alternative (a) for all the cases above; the miner trades the coins directly through a 3rd party. Either for a service, product (e.g., bitcoinstore), or direct for $.
Alternative (b) for all the cases above; the miner generates the coins first as an alternate currency. Trades for bitcoins then proceeds with selling as mentioned.


So based on the cases above which would fall under the "money transmitter" category? If so, likely a number of people are in this category. What should they do?









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August 18, 2013, 01:33:11 PM
 #2

I don't know, but these definitions may help:

FinCen defines money transmitter in this letter : http://www.fincen.gov/news_room/rp/rulings/html/fincenruling2003-8.html

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The definition of money transmitter for purposes of BSA regulations found at 31 CFR 103.11(uu)(5) includes:

(A) [a]ny person, whether or not licensed or required to be licensed, who engages as a business in accepting currency, or funds denominated in currency, and transmits the currency or funds, or the value of the currency or funds, by any means through a financial agency or institution, a Federal Reserve Bank or other facility of one or more Federal Reserve Banks, the Board of Governors of the Federal Reserve System, or both, or an electronic funds transfer network; or

(B) [a]ny other person engaged as a business in the transfer of funds.

Here is the FinCen definition of Money Services Business: http://www.fincen.gov/financial_institutions/msb/definitions/msb.html
achillez
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August 18, 2013, 07:57:49 PM
 #3

That helps a bit. If someone who speaks "lawyer talk" can translate that would be great, but my interpretation is someone who servers as a 3rd party agent for transfers is not a MT (maybe someone that does Escrow's?). With all the miners out there

I'm surprised no one has figured out whether "miners" are MTs or not. My take is it should be no, and it's only the exchanges that are MTs, but then again I'm not a lawyer  Wink
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August 18, 2013, 08:44:09 PM
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As has been said the last ∞ times this has been asked, "it is a highly fact-based, factor-weighing inquiry" - in other words, pay a lawyer.

achillez
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August 18, 2013, 08:52:01 PM
 #5

As has been said the last ∞ times this has been asked, "it is a highly fact-based, factor-weighing inquiry" - in other words, pay a lawyer.

Interesting - the scenarios I gave above are quite basic. So we don't have an answer for even the simplest case 1?? I don't see why a lawyer is needed for this.
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August 18, 2013, 08:56:10 PM
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As has been said the last ∞ times this has been asked, "it is a highly fact-based, factor-weighing inquiry" - in other words, pay a lawyer.

Interesting - the scenarios I gave above are quite basic. So we don't have an answer for even the simplest case 1?? I don't see why a lawyer is needed for this.

Yes, we don't. What is "simple" to laymen is harder than calculating pi to the ten-thousandth decimal place by hand with a non-genius IQ, in the legal sense.

Any answer would be pulled out of ass. FinCEN's "guidance" (non-judicial interpretation of federal statutes) may or may not be enforceable, and a lawyer will not defend you against possible or actual enforcement based on any legal interpretation... without being paid.

achillez
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August 18, 2013, 09:15:39 PM
 #7

Understood. In this case the request is for "advisement" not for defense since no violation (as far as we know) have occurred. Btw, my understanding of Bitcoin is that is was developed to provide an easy, and pretty much free means to share resources and knowledge. I hope the people with the "knowledge" understand that and continue to share what they know.
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August 18, 2013, 10:00:55 PM
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And any lawyer who doesn't want to be disbarred will preface any advisement pulled from ass with "this is not to be construed as legal advice" or something to that effect. So really there is no knowledge sharing that will be sufficient. Free=your guess is as good as the next guy's.

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August 19, 2013, 06:58:24 PM
 #9

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

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.

It seems that a miner who uses the virtual currency they mine to purchase goods or services is not a money transmitter.

http://www.coindesk.com/bitcoin-law-what-us-businesses-need-to-know/
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Individual bitcoin miners who convert their “created” coins to fiat are money transmitters, even though they never act “as a business,” nor accept value from one person to transfer it to a third person.

Exchanging their mined currency to fiat apparently makes a miner a money transmitter (although you would think that if the miner is going through an exchange, that it should be the exchange that is the money transmitter.)

I'm wondering about mining pools.  If the pool earns the coins, then later distributes them to miners, they would be money transmitters.  If they simply facilitate building a transaction where the newly generated coins are distributed direclty to the miners without going through the pool (no inputs) then it seems they wouldn't be 'transmitting' to miners, but are just managing the pool sharing and providing a service.
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August 20, 2013, 02:44:13 PM
 #10

Some comments from the horse's mouth (FinCEN)...

http://www.paymentssource.com/news/should-regulations-treat-bitcoin-miners-as-money-transmitters-3015149-1.html?zkPrintable=1&nopagination=1

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A miner is an MSB “if a person is making a business mining bitcoins for sale for real currency,” says Steve Hudak, a spokesman for FinCEN. If they trade it for goods and services they are not, he adds.

“If [miners] are wondering if they’re a money services business they should ask,” Hudak says. “And depending on the facts and circumstances…Fincen will make a ruling.”

FinCEN is always open to new information regarding digital currency, but the guidelines are less than six months old, says Hudak. But he wouldn’t speculate on the timing of updates or clarification.

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achillez
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August 20, 2013, 03:37:30 PM
 #11

Some comments from the horse's mouth (FinCEN)...

http://www.paymentssource.com/news/should-regulations-treat-bitcoin-miners-as-money-transmitters-3015149-1.html?zkPrintable=1&nopagination=1

Quote
A miner is an MSB “if a person is making a business mining bitcoins for sale for real currency,” says Steve Hudak, a spokesman for FinCEN. If they trade it for goods and services they are not, he adds.

“If [miners] are wondering if they’re a money services business they should ask,” Hudak says. “And depending on the facts and circumstances…Fincen will make a ruling.”

FinCEN is always open to new information regarding digital currency, but the guidelines are less than six months old, says Hudak. But he wouldn’t speculate on the timing of updates or clarification.

How do they suggest we "ask"?  Just send them an email?
adub
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August 20, 2013, 05:20:26 PM
 #12

Some comments from the horse's mouth (FinCEN)...

http://www.paymentssource.com/news/should-regulations-treat-bitcoin-miners-as-money-transmitters-3015149-1.html?zkPrintable=1&nopagination=1

Quote
A miner is an MSB “if a person is making a business mining bitcoins for sale for real currency,” says Steve Hudak, a spokesman for FinCEN. If they trade it for goods and services they are not, he adds.

“If [miners] are wondering if they’re a money services business they should ask,” Hudak says. “And depending on the facts and circumstances…Fincen will make a ruling.”

FinCEN is always open to new information regarding digital currency, but the guidelines are less than six months old, says Hudak. But he wouldn’t speculate on the timing of updates or clarification.

How do they suggest we "ask"?  Just send them an email?

Yep, check the first post of this thread.

blog.atlantabitcoin.com || www.linkedin.com/in/atlantabitcoin
Ask me about how to legally operate Bitcoin ATM/Kiosks in the US!
Curious about how the various Bitcoin ATMs measure up? Check out bitcoinatmsales.com.
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