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Author Topic: 2013-12-12 Wired - U.S. Government Nastygram Shuts Down One-Man Bitcoin Mint  (Read 6092 times)
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December 12, 2013, 03:44:29 PM
 #1

Nooooooooooo!

http://www.wired.com/wiredenterprise/2013/12/casascius/

Quote
Mike Caldwell spent years turning digital currency into physical coins. That may sound like a paradox. But it’s true. He takes bitcoins — the world’s most popular digital currency — and then he mints them here in the physical world. If you added up all the bitcoins Caldwell has minted on behalf his customers, they would be worth about $82 million.

...

Just before Thanksgiving, he says, he received a letter from the Financial Crimes Enforcement Network, or FINCEN, the arm of the Treasury Department that dictates how the nation’s anti-money-laundering and financial crime regulations are interpreted. According to FINCEN, Caldwell needs to rethink his business. “They considered my activity to be money transmitting,” Caldwell says. And if you want to transmit money, you must first jump through a lot of state and federal regulatory hoops Caldwell hasn’t jumped through.

...

Mike: what a pain.


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December 12, 2013, 03:50:45 PM
 #2

So sad.  Cry
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December 12, 2013, 04:16:28 PM
 #3

Sorry for Mike Sad.   That said, he did not seem overly upset when last he spoke about this.   

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December 12, 2013, 04:17:11 PM
 #4

If they can construe Mike Caldwell's business as unlicensed money transmitting, then all bitcoin miners and users can by an extension of the same logic be considered to be the more guilty parties (and possibly businesses that post any precious metals in coin form). Users and miners are doing the deed directly, without any regulation or license :O Casascius is very much the lesser infringer, as they use the postal service to send people wallet access that is protected by a hologram housed in a coin.

So FinCEN have basically gone after an easy target because of the unique nature of his business, and what's more is that it's a business whose activity least resembles the transgression that they have charged Casascius with. Sending someone cash or a cheque in the post should also be considered money transmitting in this case. Hell, why not just simply giving people bank notes? Money is transmitted, no?

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December 12, 2013, 04:49:22 PM
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If they can construe Mike Caldwell's business as unlicensed money transmitting, then all bitcoin miners and users can by an extension of the same logic be considered to be the more guilty parties (and possibly businesses that post any precious metals in coin form). Users and miners are doing the deed directly, without any regulation or license :O Casascius is very much the lesser infringer, as they use the postal service to send people wallet access that is protected by a hologram housed in a coin.

So FinCEN have basically gone after an easy target because of the unique nature of his business, and what's more is that it's a business whose activity least resembles the transgression that they have charged Casascius with. Sending someone cash or a cheque in the post should also be considered money transmitting in this case. Hell, why not just simply giving people bank notes? Money is transmitted, no?

The physical thing always seems get cracked down on.     It might be fun to have a 3D printer implementation of Mike's coins.   I bet he would not mind giving out some designs.   This way anyone can print them at a whim Smiley.

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December 12, 2013, 06:44:24 PM
 #6

Mike did a fantastic job of getting Bitcoin into the mainstream. The photos of his physical coins are everywhere and much more advanced-looking than any ordinary coin.

Eventually, I expect the Smithsonian will be wanting one to put on display.

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December 12, 2013, 07:09:09 PM
 #7

This is why we need bitcoin.

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December 12, 2013, 07:16:58 PM
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Mike did a fantastic job of getting Bitcoin into the mainstream. The photos of his physical coins are everywhere and much more advanced-looking than any ordinary coin.

Eventually, I expect the Smithsonian will be wanting one to put on display.


Criminalising the business of a person who's played a historic role, that will be cited in articles and exhibitions for perhaps many years to come? I guess that is what this amounts to, yeah. A Casascius coin is already featured in a display at the British Museum. This is pretty poor behaviour from FinCEN.

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December 12, 2013, 07:20:17 PM
 #9

This is disgusting.

Get out of the USA as fast as you can Mike.

They do not deserve you.
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December 12, 2013, 07:31:12 PM
 #10

So now if i make a physical wow gold coin i am a money transmitter?

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December 12, 2013, 07:34:16 PM
 #11

It's a pity, the coins of Casascius are a true bitcoin icon  Undecided

I don't know american law but maybe the problem could be that he sell gold and silver coin too?

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December 12, 2013, 07:39:53 PM
 #12

A few people have forwarded this to me and asked for a comment, so here it is. (Sorry for being away from the forums lately, by the way)

FinCEN is a regulator, so they are going to try to regulate whatever they can.  They sent Mike a letter to say, "we think we'd like to regulate you."  He has the option to say, "No thanks" and let them pursue legal action against him.  In my opinion, Mike could probably win a court case defending his non-MSB status, but it would be a landmark ruling and a huge expense to undertake.  

For Titan Mint, We registered as an MSB because we want to accept dollars and make it convenient for everyday people to buy and get into bitcoin.  We planned to comply with FinCEN's AML/KYC policies from the beginning.  If bitcoin is a "currency", these types of situations are going to keep appearing as the legacy regulatory systems catch up to the constant influx of innovative business that build on the bitcoin protocol.  

Money laundering is real, and it's a real problem.  While this type of thing is a huge pain for the innovators in the bitcoin space, there is a kernel of "good" in FinCEN's mission statement.  It's definitely not for everyone, but some of us are willing to stick it out and work with the regulators in order to bring them up to speed on the future of money.  I completely respect the separatists in bitcoin who want to distance bitcoin from the existing systems.  There's a place for everyone in this community and we'll all add value in our own ways.  The work that is being done to make inroads with the existing financial establishment can serve to make bitcoin and its digital offspring much stronger.  If it doesn't though, we can always just move to a different blockchain.

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December 12, 2013, 08:15:39 PM
 #13

The work that is being done to make inroads with the existing financial establishment can serve to make bitcoin and its digital offspring much stronger.  If it doesn't though, we can always just move to a different blockchain.

Good luck with that chain, it's not the one the rest of the world will be using. And the genuinely freedom oriented coins will trade at a higher premium too, you guys will be stuck with the inferior money.

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December 12, 2013, 08:35:49 PM
 #14

Setup a shop and sell it from Canada.
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December 12, 2013, 08:43:47 PM
 #15

That's sad to hear. I saw some pictues of 1000BTC physical coin by Casascius that goat auctioned.

So, what is this supposed to do to the value of existing Casascius coins, will their value increase or decrease.

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December 12, 2013, 08:55:58 PM
 #16

So now if i make a physical wow gold coin i am a money transmitter?
If you start selling them , yes.
Also , another requirement is that you have to live in good old USA.
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December 12, 2013, 11:09:03 PM
 #17

So now if I make a physical cookie dough coin I am a money transmitter?

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December 12, 2013, 11:13:17 PM
 #18

If this is the 'light regulation" then USA is fucked as place to do bitcoin business ... watch what they do not what they say.

Edit: btw Mike you are great entrepreneur, I suggest a move to Switzerland might be a good option for you.

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December 12, 2013, 11:27:47 PM
 #19

well, this is unexpected after the Senate hearing, I thought US was going to facilitate bitcoin related businesses up to a certain level.
casascius is well recognized from the community and I believe he is not part of any money laundering action.
he should move to another country and continue minting really, maybe canada is the best choice

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December 13, 2013, 01:06:09 AM
 #20

If no, then Casascius may be able to sell the coins unloaded, for fiat or bitcoin.  I would pay for an unloaded coin and then just load it myself.

Good point, what's stopping him just selling unloaded coins?
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December 13, 2013, 03:48:39 PM
 #21

That's so bad to hear.  I've been championing Mike's stuff whenever I hear people ask about "how you get a physical coin" or something equivalent to that.  I don't happen to be an owner of any but it's been so incredibly tempting.  To hear of this is heartbreaking and I hope either he can find a way to continue or at least pass the hurdles before him. 

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December 13, 2013, 05:59:32 PM
 #22

I am wondering if that is legal or not.

Some months ago the bitcoin foundation received a letter saying that they were money transmitters and had to get the licenses or cease 'money transmitting'. Of course that was epic bullshit.
What if this case is the same? Just a bullshit letter without any sense? What is the 'bitcoin foundation' opinion about that? Are they doing something about that?

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December 13, 2013, 10:03:30 PM
 #23

FinCEN is a regulator, so they are going to try to regulate whatever they can.  They sent Mike a letter to say, "we think we'd like to regulate you."  He has the option to say, "No thanks" and let them pursue legal action against him.  
Next comes FBI action. The main problem with all US based bitcoin businesses is that they don't want to share their profits and finance legal center to improve the situation.
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December 13, 2013, 10:19:17 PM
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FinCEN is a regulator, so they are going to try to regulate whatever they can.  They sent Mike a letter to say, "we think we'd like to regulate you."  He has the option to say, "No thanks" and let them pursue legal action against him.  
Next comes FBI action. The main problem with all US based bitcoin businesses is that they don't want to share their profits and finance legal center to improve the situation.

yes looks like the racketeers are moving into action ... despite all the protestations and appeals to 'working' with them, light regulations, etc. Same as it ever was ... next you'll be lining up to pay for BitLicenses that can be pulled magically out of their 2BitAsses.

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December 13, 2013, 10:24:51 PM
 #25

It might make sense for the physical wallet makers to get together on this issue.  We will all face it sooner or later.

Lots of ways to do it, shared legal costs, a joint-venture marketing LLC that holds the MSB registrations for each brand, etc.
No need to duplicate costs and fees paid unless absolutely necessary.

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December 13, 2013, 10:33:22 PM
Last edit: December 13, 2013, 10:53:46 PM by DeathAndTaxes
 #26

FinCEN is a regulator, so they are going to try to regulate whatever they can.  They sent Mike a letter to say, "we think we'd like to regulate you."  He has the option to say, "No thanks" and let them pursue legal action against him.  In my opinion, Mike could probably win a court case defending his non-MSB status, but it would be a landmark ruling and a huge expense to undertake.  

The issue is that the deck is stacked and the consequences are disproportionate to each side.  If FinCEN loses they say "hmm well now we know" and there is absolute no consequence.  Even the cost of the trial was simply paid for by taxpayers (including Mike indirectly). If Mike loses the "justice" system could take everything he owns, include his freedom for the next thirty years.  Not really worth it.

Imagine we played a game of poker and if you win I have to say "I was wrong" in public, if I win you get executed.  Now you are 80% sure you can beat me in poker, everyone says you have a very sold game.  Would you play?  How about if you were 99.9% sure?
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December 13, 2013, 10:51:08 PM
 #27

If FinCEN loses they say "hmm well now we know" and there is absolute no consequence.  Even the cost of the trial was simply paid for by taxpayers (including Mike indirectly). If Mike loses they judicial system could take everything he owns, include his freedom for the next thirty years.  Not really worth it.

Imagine we played a game of poker and if you win I have to say "I was wrong" in public, if I win you get executed.  Now you are 80% sure you can beat me in poker, everyone says you have a very sold game.  Would you play?  How about if you were 99.9% sure?
Everybody thought I was exaggerating. "It's no problem - we'll talk to the regulators and do what it takes to become compliant like a good citizens and everything will be fine," they said.

Future Bitcoin services need to be run as if they are illegal enterprises, like Silk Road, even if what they are doing is apparently legal.

Why:
  • Laws change.
  • Regulations are vague and open-ended, and it's probably impossible to operate a business without accidentally violating one.
  • Even if you do manage to operate without violating any rule law enforcement agencies do not always limit themselves to the letter of the law when deciding to begin an enforcement action.
  • Governments are not the only threats to a successful business. Non-governmental organized crime is almost equally capable of extortion.

The solution is to run all services in the darknet, not tied to any physical location or legal jurisdiction, and without any explicit connection to a real-life identity.
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December 15, 2013, 01:43:07 AM
 #28

Hope Mike was prepared to go Snowden...

Saying that you don't trust someone because of their behavior is completely valid.
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December 15, 2013, 02:08:12 AM
 #29

FinCEN is a regulator, so they are going to try to regulate whatever they can.  They sent Mike a letter to say, "we think we'd like to regulate you."  He has the option to say, "No thanks" and let them pursue legal action against him.  
Next comes FBI action. The main problem with all US based bitcoin businesses is that they don't want to share their profits and finance legal center to improve the situation.

Spent how?

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December 15, 2013, 03:11:16 AM
 #30


So does Mike have the option to just quit producing casascius coins without further legal trouble from FinCEN, or is he going to need lawyers looking over his shoulder for the rest of his life?

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December 15, 2013, 03:30:27 AM
 #31


So does Mike have the option to just quit producing casascius coins without further legal trouble from FinCEN, or is he going to need lawyers looking over his shoulder for the rest of his life?

I fear it is the second case. He probably will have to produce the list of all his buyers as well. Should have moved to Germany or Switzerland a long back.

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December 15, 2013, 03:40:52 AM
Last edit: December 15, 2013, 04:09:25 AM by other_side
 #32

Spent how?
1) Lawsuit against FINCEN to reclassify bitcoin as commodity/virtual goods.
2) Maintaining database of lawyers who are ready to specialize in bitcoin related cases.
EFF is a good example of similar organization.
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December 15, 2013, 03:44:07 AM
 #33

1) Lawsuit against FINCEN to reclassify bitcoin as commodity/virtual goods.
2) Maintaining database of lawyers who will specialize in bitcoin related cases.
EFF is a good example of similar organization.
It's a waste of money that could be better used to relocate to a less-hostile country.
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December 15, 2013, 05:28:35 AM
 #34

1) Lawsuit against FINCEN to reclassify bitcoin as commodity/virtual goods.
2) Maintaining database of lawyers who will specialize in bitcoin related cases.
EFF is a good example of similar organization.
It's a waste of money that could be better used to relocate to a less-hostile country.

Both are simultaneously possible, and its not that expensive or hard to get started.  My last move was more than US$5K and it was only across town.

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December 15, 2013, 05:49:29 AM
 #35

I haven't made a big deal out of this, but I too have registered as an MSB with FinCEN.

It's actually not that big of a deal.  You can do it online yourself at http://bsaefiling.fincen.treas.gov in 15 minutes, even registering yourself as an individual if you felt like it.  Making an account on BSA seemed easier than making a gmail account, and then filling out RMSB (Register Money Services Bureau) was only painful to just get the form working (uses some weird PDF-related plugin and seems to only work in IE7-10) but even still, after having filled out the second form, it was still far easier than applying for Obamacare.

As I understand it, it's the states that impose the licensing requirements, as though FinCEN just wants you to sign up and proactively give them a good feed of data as to who's moving money where and then they're happy (which comes chained to a due diligence burden of KYC since you can't really give "good" data without it).  My sense is that if FinCEN says I'm a money transmitter, the states need to either say in their eyes no I'm not, or let me license, before they declare "you knew you were a money transmitter, the feds even told you so, and you still didn't comply"... and there's 50 individual states.


Companies claiming they got hacked and lost your coins sounds like fraud so perfect it could be called fashionable.  I never believe them.  If I ever experience the misfortune of a real intrusion, I declare I have been honest about the way I have managed the keys in Casascius Coins.  I maintain no ability to recover or reproduce the keys, not even under limitless duress or total intrusion.  Remember that trusting strangers with your coins without any recourse is, as a matter of principle, not a best practice.  Don't keep coins online. Use paper or hardware wallets instead.
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December 15, 2013, 06:12:34 AM
 #36

I haven't made a big deal out of this, but I too have registered as an MSB with FinCEN.

It's actually not that big of a deal.  You can do it online yourself at http://bsaefiling.fincen.treas.gov in 15 minutes, even registering yourself as an individual if you felt like it.  Making an account on BSA seemed easier than making a gmail account, and then filling out RMSB (Register Money Services Bureau) was only painful to just get the form working (uses some weird PDF-related plugin and seems to only work in IE7-10) but even still, after having filled out the second form, it was still far easier than applying for Obamacare.

As I understand it, it's the states that impose the licensing requirements, as though FinCEN just wants you to sign up and proactively give them a good feed of data as to who's moving money where and then they're happy (which comes chained to a due diligence burden of KYC since you can't really give "good" data without it).  My sense is that if FinCEN says I'm a money transmitter, the states need to either say in their eyes no I'm not, or let me license, before they declare "you knew you were a money transmitter, the feds even told you so, and you still didn't comply"... and there's 50 individual states.



Am not aware of what you might be doing that ought to trigger this MSB requirement, were they specific?  

Which is it according to them (if you don't mind sharing)?

(1) Currency dealer or exchanger.
(2) Check casher.
(3) Issuer of traveler's checks, money orders or stored value.
(4) Seller or redeemer of traveler's checks, money orders or stored value.
(5) Money transmitter.
(6) U.S. Postal Service.

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December 15, 2013, 06:21:42 AM
 #37

Money transmitter

They were not specific as to my activity other than it was clear they recognized me as involved in virtual currency.

Companies claiming they got hacked and lost your coins sounds like fraud so perfect it could be called fashionable.  I never believe them.  If I ever experience the misfortune of a real intrusion, I declare I have been honest about the way I have managed the keys in Casascius Coins.  I maintain no ability to recover or reproduce the keys, not even under limitless duress or total intrusion.  Remember that trusting strangers with your coins without any recourse is, as a matter of principle, not a best practice.  Don't keep coins online. Use paper or hardware wallets instead.
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December 16, 2013, 02:17:24 AM
 #38

So now if I make a physical cookie dough coin I am a money transmitter?

if it has a private key that gives access to virtual currency in  or on it perhaps using chocolate chips for encoding then yes you are a money transmitter.
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December 16, 2013, 02:25:20 AM
 #39

1) Lawsuit against FINCEN to reclassify bitcoin as commodity/virtual goods.
2) Maintaining database of lawyers who will specialize in bitcoin related cases.
EFF is a good example of similar organization.
It's a waste of money that could be better used to relocate to a less-hostile country.

Both are simultaneously possible, and its not that expensive or hard to get started.  My last move was more than US$5K and it was only across town.

when was the last time you all read a copy of the latest amended constitution...

if a bunch of dry folks can get alcohol banned via a constitutional amendment way before the internet and telephones existed why are you people afraid to do the same for something a lot more meaningful than not having a mickey of whiskey after church Wink

this isn't rocket science ...  the tools to do fundraising and collecting signatures to get amendments passed at the state level are right there for you to use...
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December 16, 2013, 02:36:22 AM
 #40

Would be interesting to "transmit" money through the mail using colored Legos.  The Legos themselves wouldn't be the money, just the colors as they are stacked.

Companies claiming they got hacked and lost your coins sounds like fraud so perfect it could be called fashionable.  I never believe them.  If I ever experience the misfortune of a real intrusion, I declare I have been honest about the way I have managed the keys in Casascius Coins.  I maintain no ability to recover or reproduce the keys, not even under limitless duress or total intrusion.  Remember that trusting strangers with your coins without any recourse is, as a matter of principle, not a best practice.  Don't keep coins online. Use paper or hardware wallets instead.
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December 16, 2013, 03:15:52 AM
 #41

So now if I make a physical cookie dough coin I am a money transmitter?

if it has a private key that gives access to virtual currency in  or on it perhaps using chocolate chips for encoding then yes you are a money transmitter.

How do you know?
The definitions seem vague and ill defined and without effective rationale.

I get that we don't want to be helping criminals, but most people aren't criminals and I'm not a policeman, just normal business in low volume and personal level.  Just what level of business needs all taxpayers to pay for monitoring and stored in the central database to prevent the purported threats?

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December 16, 2013, 03:17:16 AM
 #42

Would be interesting to "transmit" money through the mail using colored Legos.  The Legos themselves wouldn't be the money, just the colors as they are stacked.

I am so going to send a lego private key for the holidays.

Maybe an embroidered one, on a pillow, using alpaca yarn.

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December 16, 2013, 10:29:03 PM
 #43

Please report every single shop that sells gold or other precious metals and has a facility to post them to customers. And every shop that allows you to send them gold in exchange for cash.

Seriously. They are all money transmitters and if not regulated, they are breaking the law. File an online report to FinCen, its your duty to help protect the US of A.
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December 16, 2013, 10:32:49 PM
 #44

Please report every single shop that sells gold or other precious metals and has a facility to post them to customers. And every shop that allows you to send them gold in exchange for cash.

Seriously. They are all money transmitters and if not regulated, they are breaking the law. File an online report to FinCen, its your duty to help protect the US of A.

Is this really the case? Wasn't gold demonetized in the US? The Bernank calls it an "asset".


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December 17, 2013, 01:07:52 AM
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Would be interesting to "transmit" money through the mail using colored Legos.  The Legos themselves wouldn't be the money, just the colors as they are stacked.

I'm personally looking forward to the days when any person on the street can be arbitrarily arrested for money transmission.

"I didn't do it, I swear!"

"I caught you thinking about it, I know that look"


I wonder whether customs officials are gonna start inspecting non-uniform patterns in peoples shoe-hole lacing for codified private keys? Shuffling your deck of cards with you hooked up to a ECG?  Cheesy

Vires in numeris
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December 17, 2013, 03:32:18 AM
 #46

Please report every single shop that sells gold or other precious metals and has a facility to post them to customers. And every shop that allows you to send them gold in exchange for cash.

Seriously. They are all money transmitters and if not regulated, they are breaking the law. File an online report to FinCen, its your duty to help protect the US of A.

Is this really the case? Wasn't gold demonetized in the US? The Bernank calls it an "asset".


If your idea is to break the system through over-compliance, that would not result in anything better than the way things are.

More reasonable is Mike's method of doing the perfunctory compliance requested, and then challenging the justification for it.
He's not a money transmitter if you are selling to purchasers.
Money transmitters send money to those other than from whom they received them, and there isn't any evidence that Mike is doing that.
FinCEN is concerned that with the volume of money, there might be some folks making use of Mike's good will efforts to engage in their own money transfers by buying things for others without Mike knowing and probably think he should be making sure the folks paying for something are the folks receiving it, which takes a bit of KYC.

Alternatively if he sent the stuff signature-required, that would also probably cover himself too.  FinCEN is really barking up the wrong tree here.  Mike's simply a merchant selling a product.

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December 17, 2013, 03:35:42 AM
 #47

Please report every single shop that sells gold or other precious metals and has a facility to post them to customers. And every shop that allows you to send them gold in exchange for cash.

Seriously. They are all money transmitters and if not regulated, they are breaking the law. File an online report to FinCen, its your duty to help protect the US of A.

Is this really the case? Wasn't gold demonetized in the US? The Bernank calls it an "asset".

It isn't the case, and it also wouldn't matter if gold were "money".  It still isn't money transmission in the sense of a regulated activity for simple merchants.  This isn't money laundering.

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December 17, 2013, 03:32:46 PM
 #48

Would be interesting to "transmit" money through the mail using colored Legos.  The Legos themselves wouldn't be the money, just the colors as they are stacked.

I'm personally looking forward to the days when any person on the street can be arbitrarily arrested for money transmission.

"I didn't do it, I swear!"

"I caught you thinking about it, I know that look"


I wonder whether customs officials are gonna start inspecting non-uniform patterns in peoples shoe-hole lacing for codified private keys? Shuffling your deck of cards with you hooked up to a ECG?  Cheesy


You guys make me laugh on a very deep and philosphical level.


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December 17, 2013, 04:24:28 PM
 #49

Please report every single shop that sells gold or other precious metals and has a facility to post them to customers. And every shop that allows you to send them gold in exchange for cash.

Seriously. They are all money transmitters and if not regulated, they are breaking the law. File an online report to FinCen, its your duty to help protect the US of A.

Is this really the case? Wasn't gold demonetized in the US? The Bernank calls it an "asset".


If your idea is to break the system through over-compliance, that would not result in anything better than the way things are.

More reasonable is Mike's method of doing the perfunctory compliance requested, and then challenging the justification for it.
He's not a money transmitter if you are selling to purchasers.
Money transmitters send money to those other than from whom they received them, and there isn't any evidence that Mike is doing that.
FinCEN is concerned that with the volume of money, there might be some folks making use of Mike's good will efforts to engage in their own money transfers by buying things for others without Mike knowing and probably think he should be making sure the folks paying for something are the folks receiving it, which takes a bit of KYC.

Alternatively if he sent the stuff signature-required, that would also probably cover himself too.  FinCEN is really barking up the wrong tree here.  Mike's simply a merchant selling a product.

I agree completely that FinCEN is barking up the wrong tree.  The ONLY issue they have to stand on is the KYC issue. 

From what I understand, (and maybe you could clarify the justification here, Mike) because the bitcoin address Mike's receiving payment from isn't attached to an identity explicitly, he doesn't necessarily know that he is collecting money from the same person that he is sending money to.

Isn't that the crux of the issue?


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December 17, 2013, 04:33:38 PM
 #50

Please report every single shop that sells gold or other precious metals and has a facility to post them to customers. And every shop that allows you to send them gold in exchange for cash.

Seriously. They are all money transmitters and if not regulated, they are breaking the law. File an online report to FinCen, its your duty to help protect the US of A.

Is this really the case? Wasn't gold demonetized in the US? The Bernank calls it an "asset".



Gold has its own set of rules.  Dealers still have to report on purchases or sales over a certain amount, but its mainly to prevent gold being used as a tax shelter, from what I've been told. 

It also depends on whether it's bars of gold bullion or coins being sold, as the requirements for reporting sales / purchases of coins is less stringent.

Mike, you may want to look into the laws for selling your Silver coins specifically, because there are specific rules regarding precious metals that might serve as a loophole under which you can clearly operate without doing KYC/AML.

 

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December 17, 2013, 05:55:48 PM
 #51

Please report every single shop that sells gold or other precious metals and has a facility to post them to customers. And every shop that allows you to send them gold in exchange for cash.

Seriously. They are all money transmitters and if not regulated, they are breaking the law. File an online report to FinCen, its your duty to help protect the US of A.

Is this really the case? Wasn't gold demonetized in the US? The Bernank calls it an "asset".



Gold has its own set of rules.  Dealers still have to report on purchases or sales over a certain amount, but its mainly to prevent gold being used as a tax shelter, from what I've been told.  

It also depends on whether it's bars of gold bullion or coins being sold, as the requirements for reporting sales / purchases of coins is less stringent.

Mike, you may want to look into the laws for selling your Silver coins specifically, because there are specific rules regarding precious metals that might serve as a loophole under which you can clearly operate without doing KYC/AML.

There's not so much a loophole, as an entirely separate reporting regime for taxation purposes, though both IRS, and FinCEN are branches of the treasury dept, CFTC which governs reporting requirements for coins/bullion is an independent agency.  Its more the case that if Mike were putting stickers on American Eagles, he could run afoul of another reporting problem.
http://www.coinworld.com/articles/what-coins-are-reportable
FinCEN isn't a "revenue" (taxing) authority, it is the white collar crime enforcement branch of the treasury dept.  There is a lot of regulatory authority in the US for this stuff, but the FinCEN involvement is a bit weird, out of place.  It is hard to see where they have any reasonable interest worthy of such concerns.

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December 17, 2013, 09:51:11 PM
 #52

i thought about this more... the guy is selling a piece of metal with a code on it that stores money from the purchaser... it's like going to Cartier and buying a nice leather wallet and putting your credit cards and cash into it before completing the purchase of the wallet.

Did Cartier engage in money transmission?

Basically now EVERY COMMERCE TRANSACTION is money transmission?

I'm guilty I guess, I transmitted some money to the local coffee shop for some coffee.  Please arrest me.

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December 17, 2013, 09:58:38 PM
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The real problem that the govs have with bitcoin, is that it's no good for accepting bribes. Because, the bribery transaction would be on the blockchain, if not, then their bitcoin would be worthless.

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December 17, 2013, 10:34:16 PM
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More reasonable is Mike's method of doing the perfunctory compliance requested, and then challenging the justification for it.
The person who challenges FINCEN could be anyone, just by showing intention to start similar business and filing complaint that FINCEN regulation is a significant burden.
The cost to file (Federal court) is $350.
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December 17, 2013, 10:36:40 PM
 #55

i thought about this more... the guy is selling a piece of metal with a code on it that stores money from the purchaser... it's like going to Cartier and buying a nice leather wallet and putting your credit cards and cash into it before completing the purchase of the wallet.

Did Cartier engage in money transmission?

Basically now EVERY COMMERCE TRANSACTION is money transmission?

I'm guilty I guess, I transmitted some money to the local coffee shop for some coffee.  Please arrest me.



This is very apt.
Casascius pieces are wallets.  Part of the payment goes in the wallet.
If the invoices were itemized as such, then it would be about the same as you describe.

I can't see how this is money transfer unless the wallets are going directly to persons other than the purchasers.
It is a product sale.

This registration requirement ought be challenged, even if you are also complying for simplicity's sake.

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December 18, 2013, 01:45:25 AM
 #56


Mike did a fantastic job of getting Bitcoin into the mainstream. The photos of his physical coins are everywhere and much more advanced-looking than any ordinary coin.

Eventually, I expect the Smithsonian will be wanting one to put on display.


One is already on display in some European (I believe England) museum.

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December 20, 2013, 04:39:54 AM
 #57

i thought about this more... the guy is selling a piece of metal with a code on it that stores money from the purchaser... it's like going to Cartier and buying a nice leather wallet and putting your credit cards and cash into it before completing the purchase of the wallet.

Did Cartier engage in money transmission?

Basically now EVERY COMMERCE TRANSACTION is money transmission?

I'm guilty I guess, I transmitted some money to the local coffee shop for some coffee.  Please arrest me.



This is very apt.
Casascius pieces are wallets.  Part of the payment goes in the wallet.
If the invoices were itemized as such, then it would be about the same as you describe.

I can't see how this is money transfer unless the wallets are going directly to persons other than the purchasers.
It is a product sale.

This registration requirement ought be challenged, even if you are also complying for simplicity's sake.

It is more like buying a leather wallet online that happens to come with 10 crisp $100 bills in it, and paying $1000 + the price of the wallet.

I can see where it presents issues, but i can also see that there must be room for more clarity

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December 20, 2013, 05:08:44 AM
 #58

Would be interesting to "transmit" money through the mail using colored Legos.  The Legos themselves wouldn't be the money, just the colors as they are stacked.
Perhaps one can paint a QR code and sell it as art.  Can you still do it by selling just the coins with no XBT value on them at all?

hello, world!
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December 20, 2013, 01:42:18 PM
 #59

So now if I make a physical cookie dough coin I am a money transmitter?

if it has a private key that gives access to virtual currency in  or on it perhaps using chocolate chips for encoding then yes you are a money transmitter.

How do you know?
The definitions seem vague and ill defined and without effective rationale.

I get that we don't want to be helping criminals, but most people aren't criminals and I'm not a policeman, just normal business in low volume and personal level.  Just what level of business needs all taxpayers to pay for monitoring and stored in the central database to prevent the purported threats?

please get a sense of humor...

Cookies cant be laundering money, they are crumby at it.
and besides, I spent all my dough when the chips were down.

(see, my humor isn't really better than taking it seriously)

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December 20, 2013, 02:08:40 PM
 #60

So how mutch coins he wasted ? Wtf what happend to the coins ?
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December 20, 2013, 05:08:20 PM
 #61

Perhaps one can paint a QR code and sell it as art.  Can you still do it by selling just the coins with no XBT value on them at all?
Key definition is following:
Quote
The term “money transmitting service” includes accepting currency or funds denominated in the currency of any country and transmitting 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 the Board of Governors of the Federal Reserve System, or an electronic funds transfer network.
Laws that are important for compliance are:
31 USC § 5330 -  Registration of money transmitting businesses.
18 USC § 1960 -  Prohibition of unlicensed money transmitting businesses.
They are short and easy to read.
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December 20, 2013, 05:25:21 PM
 #62

Quote
Laws that are important for compliance are:
31 USC § 5330 -  Registration of money transmitting businesses.
18 USC § 1960 -  Prohibition of unlicensed money transmitting businesses.
They are short and easy to read.

Yet somehow vague, easily misinterpreted and arbitrarily enforced and applied.

These are the kinds of totalitarian laws that will ruin a financial system and bring a nation to its knees economically. We've seen these movies before, it is known as the death of a fiat system.

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