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Author Topic: Current Status of OTC Trading and FinCEN  (Read 827 times)
lolbitcoins
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November 26, 2013, 10:54:59 AM
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It seems there is a lot of misinformation about this with a lot of SEO bloggers and e-lawyers spewing all kind of contradictory stuff.  Even the statements issued by FinCEN are contradictory with each other.  I hope to clear this up for me and others who trade Bitcoin OTC.  Responses from attorneys or those who work in AML compliance would be great.

I would like to start trading with others through localbitcoins.  If I do will I have to register with FinCEN?  Registration is too capital intensive for me since I hear you need $100k liquid and $1,000 registration fee.  I am going to be very small time and would simply like to help foster local adoption and make a little coin.  I do not want to go to jail or pay $50,000 for a lawyer to save me.  I have read the following:

* You do have to register if you are doing this "regularly"
* You do not have to register if you do it regularly but stay under $999 per day.
* You do not have to register if you keep a single transaction under $10,000.
* You do have to register no matter what if you are making a currency exchange of any kind outside of a registered exchange.

I found this (http://bitcoin.stackexchange.com/questions/12559/legal-issues-banking-issues-selling-bitcoins-to-people-otc) but I am not sure how much I trust their advice.  I also am unsure of the definition of "single person".  Does that mean you can only trade $999 with a single person, or are you the seller the person?

Does FinCEN even make "laws" that are prosecutable in court or are these just "guidelines".  I don't think I want to piss off FinCEN.
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lolbitcoins
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November 26, 2013, 11:17:15 AM
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Whatever the law, when you stay under the radar (so don't become huge) it's unlikely they'll come after you.

I'm will not be held accountable for the above advice though as I have nothing to gain from doing so.

Yes, but it's not that hard to become "huge".  Lets say someone sold 5% over spot.  That means you would be running $10,000 from your bank account to exchanges (or coinnbase) and more so if you are accepting bank deposits as payment to make $500.  I would hardly call this "huge" but I would think that type of activity would throw a SAR.  I've seen a thread here where some guy got AML flagged for wiring < $1,000 to GOX.  With bitcoins there is a lot of moving money around.

I also would hate to be that low hanging fruit that gets harvested if they decide to target OTC forums such as LB.

I'd prefer to stay within the parameters of legal OTC trading if it is possible.
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November 27, 2013, 08:05:00 AM
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What would be required to run a brick and mortar bitcoin brokerage?
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