There are several things going on here it seems. I'll see how many I can address.
1. Federal Money Transmitter License - There is actually no such thing at a federal level. The only thing the Fed's require is that you register and file SAR reports when deemed necessary. They also want us to check to ensure we aren't doing business with anybody on the OFAC list. We are registered and the list checking and reporting is fairly easy to do, but detecting suspicious activity is a very subjective thing. It's certainly easier to determine suspicious activity when dealing with USD. Before launching USD, we will have the necessary items in place.
2. State Level Licenses - The states aren't going to come and shut you down, but they may fine you and tell you not to deal with people in their state until you get licensed there. We are in the process of getting state licenses. Some are harder than others. This is another thing we are waiting on before doing USD. Many of the states who we previously thought would require a license have stated that we probably do not need one. Many states have laws which were written before the internet. Some state requirements are a little overboard.
3. SR stuff. Just because some coins passed through a service that ended up at SR doesn't mean that it would be covered under any laws which would result in forfeitures. Only if we were willfully and knowingly performing such actions, which we are not. We may be subpoenaed for information in such cases where funds pass through here, which of course we would comply with.
BigVern
BigVern, Thanks for your thoughts. There are still some important issues. Again I am not an attorney, this is just my understanding of existing law and regulation.
1. On July 21st FinCEN issued a Final Rule on "Definitions and Other Regulations Relating to Money Services Businesses" (RIN 1506–AA97) that includes the following:
***
The regulatory definition of ‘‘money transmission services’’ includes the phrase ‘‘or
other value that substitutes for currency’’ to state that businesses that accept stored value or
currency equivalents as a funding source and transmit that value are providing money transmission services. FinCEN has modified the final rule so that both references to ‘‘value’’ in the regulation are expressed as ‘‘value that substitutes for currency’’ to maintain consistency in the rule’s language.
***
This essentially included all virtual currencies within the scope of the Bank Secrecy Act. So according to FinCEN it does not matter if you are not transferring or converting from USD. Transferring and converting virtual currency is also money transmission under these Federal Regulations.
2. No the states aren't going to shut you down but operating a "unlicensed money transmitter" if a federal offence under U.S.C. 1960 (b)(1)(a):
***
is operated without an appropriate money transmitting license
in a State where such operation is punishable as a misdemeanor or a felony under State law, whether or not the defendant knew that the operation was required to be licensed or that the operation was so punishable;
***
U.S.C. 1960 (a) states:
***
Whoever knowingly conducts, controls, manages, supervises, directs, or owns all or part of an unlicensed money transmitting business, shall be fined in accordance with this title or imprisoned not more than 5 years, or both.
***
So no the states will not come after you but if you are serving customers in US State where a money transmission laws apply, you could be as risk for violating these statues.
Unfortunately laws don't always mean what we "think" they mean. They mean what regulators and law enforcement want them to mean unless proven otherwise in a court of law.
3. I think TechSare addressed the very broad implication of civil asset forfeiture.
Again, I'm not an attorney nor a legal expert, however we have seen these statues used with tremendous impact in the digital currency space in recent months. There are serious implications and we as a community of businesses and users need to understand the implications as best we can.
Unfortunately the legal gray area is currently very broad which possesses significant risk for all involved until we see greater legislative and regulatory clarity in the digital currency space.
Again I don't assume to know Cryptsy.com's business model or safe guards to prevent this type of action. I'm just trying to point out that these are currently risks we are all assuming by operating and transacting in this space.
Poll
