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Author Topic: Tip bot legality in USA  (Read 32 times)
joelly
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January 28, 2018, 06:33:21 PM
Merited by chaoscoinz (2), HeRetiK (1)
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Is running a crypto tip bot considered a Money Transmitter business?  With the bot, you're facilitating the transfer of funds from one person to another.

Does holding the private key make a difference?  For example, all of the current tip bots have a bot creator that has access to the wallets, though funds are technically the users.

If no fiat is involved, is a tipbot company required to register as a Money Transmitter?  If so, does this mean anyone that has created tip bots (tippr, iota, etc.) is in danger of a felony in US?
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BenOnceAgain
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January 28, 2018, 07:06:44 PM
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Is running a crypto tip bot considered a Money Transmitter business?  With the bot, you're facilitating the transfer of funds from one person to another.

Does holding the private key make a difference?  For example, all of the current tip bots have a bot creator that has access to the wallets, though funds are technically the users.

If no fiat is involved, is a tipbot company required to register as a Money Transmitter?  If so, does this mean anyone that has created tip bots (tippr, iota, etc.) is in danger of a felony in US?


It's murky to be honest.  If you have custodial control over the "funds" of another person, either by holding private keys or maintaining some sort of balance in accounts controlled by you, then some would say that constitutes a regulated activity.

Other people believe that "money transmission" only happens if there is conversion to/from fiat.  If you are dealing purely in BTC or other crypto and do not exchange fiat currency for cryptocurrency (or crypto for fiat), then you'd be good by that standard.

The real problem is that the rules on money transmission (i.e. is cryptocurrency legally considered "money") vary greatly from state to state and the U.S. government views cryptocurrency differently across different agencies (SEC, CFTC, OCC, FinCEN, IRS, etc.).

I expect this to be clarified as the field is more regulated, but I really do not want the industry to be overregulated.  That would be damaging to the U.S. marketplace.

My organization is looking to both be part of the regulatory process as well as developing best-practices frameworks that businesses can use to comply with the regulations.

Feel free to reach out if you need more information.  (I am not an attorney so none of this is legal advice.)

Best regards,
Ben

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