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Author Topic: Money Service Business license to trade on exhanges?  (Read 1253 times)
chaoscoinz
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May 13, 2014, 06:50:46 PM
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I've been holding on to a few Bitcoins I've bought from coinbase for a couple months now, and wanted to invest in other crypto coins by using coin exchanges.
Do I need to be registered with my state and FinCen to use exchanges like Cryptsy and similar services. I want to pay taxes and follow the legal procedures.

The FinCen Law is confusing, Im just an investor, I don't do any mining or anything of that nature.
Just a little speculating with bitcoin but would like to trade in other alt coins legally.

Can any one provide some help?   Huh

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LostDutchman
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May 13, 2014, 06:52:34 PM
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I've been holding on to a few Bitcoins I've bought from coinbase for a couple months now, and wanted to invest in other crypto coins by using coin exchanges.
Do I need to be registered with my state and FinCen to use exchanges like Cryptsy and similar services. I want to pay taxes and follow the legal procedures.

The FinCen Law is confusing, Im just an investor, I don't do any mining or anything of that nature.
Just a little speculating with bitcoin but would like to trade in other alt coins legally.

Can any one provide some help?   Huh



As long as you only trade for yourself, your business or your corporation, you do not need to register as an MSB because you do not meet the requirement.

If you trade feor others, you'd better have a few million $ handy to complete the licencing, registrations and meet the boding requirements of the individual states.

Corporations For Crypto
Protect Your Assets and Reduce Your Tax Liability With A Kansas Corporation!
We Demand Justice From BFL
chaoscoinz
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May 13, 2014, 06:57:10 PM
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Thanks Dutch  Cool

I have a few PDF files of the regulations, but couldn't quite figure it all out thoroughly.
LostDutchman
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May 13, 2014, 07:34:50 PM
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Thanks Dutch  Cool

I have a few PDF files of the regulations, but couldn't quite figure it all out thoroughly.


Hey, no porlbem at all, man!

I researched the new laws and rulings very carefully and that research led to me closing my public mining operations, withdrawing offers and going solo.

No way to win in that gace without tons and tons of money in one form or another.

In near future I'm sure you will see any number of "mining companies" closing for similar reasons.

Corporations For Crypto
Protect Your Assets and Reduce Your Tax Liability With A Kansas Corporation!
We Demand Justice From BFL
rjcesq
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May 14, 2014, 09:44:26 PM
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^  What he said. For your own speculation purposes, no. Doing it for others, yes.
LostDutchman
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May 14, 2014, 10:13:28 PM
 #6

Thank you all for your kind replies.

When faced with a question to which I know the answer, I will tell you.

If I don't know the answer I will always provide you with my best answer based on research.

Corporations For Crypto
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chaoscoinz
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May 16, 2014, 03:04:31 PM
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I just want to be sure before I sign up for Cryptsy or another American Exchange to trade Bitcoins for alt coins.
I understand that capitol gains appllies for every trade transaction from fiat to bitcoin, from bitcoin to fiat, or from Bitcoin to alt coin etc.
Also, do I need to own a LLC to be considered a speculative investor.

FIN-2014-R002


It would seem, their classified terms for virtual currency users are as follows....
There are users, exchangers, and administrators.

"For purposes of the guidance, FinCEN refers to the participants in generic virtual currency arrangements, using the terms “exchanger,” “administrator,” and “user.” An exchanger is a person engaged as a business in the exchange of virtual currency for real currency, funds, or other virtual currency. An administrator is a person engaged as a business in issuing (putting into circulation) a virtual currency, and who has the authority to redeem (to withdraw from circulation) such virtual currency. A user is a person that obtains virtual currency to purchase goods or services on the user’s own behalf."


"The guidance makes clear that an administrator or exchanger of convertible virtual currencies that (1) accepts and transmits a convertible virtual currency or (2) buys or sells convertible virtual currency in exchange for currency of legal tender or another convertible virtual currency for any reason (including when intermediating between a user and a seller of goods or services the user is purchasing on the user’s behalf) is a money transmitter under FinCEN's regulations, unless a limitation to or exemption from the definition applies to the person.8 The guidance also makes clear that “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.”

Does the above mean that I become a exchanger as soon as I engage in any conversion of bitcoin into fiat or or bitcoin into alt coins?

"How a user 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. The label applied to a particular process of obtaining a virtual currency is not material to the legal characterization under the BSA of the process or of the person engaging in the process to send that virtual currency or its equivalent value to any other person or place. What is material to the conclusion that a person is not an MSB is not the mechanism by which person obtains the convertible virtual currency, but what the person uses the convertible virtual currency for, and for whose benefit. Activities that, in and of themselves, do not constitute accepting and transmitting currency, funds or the value of funds do not fit within the definition of “money transmission services” and therefore are not subject to FinCEN’s registration, reporting, and recordkeeping regulations for MSBs."




This is a little confusing. The last part which I haven't posted yet seems to be FinCen talking directly to the situation with the Company which holds an LLC.
Exchanges require personal identifiable information, it seems like without clarity, it would be entrapment to put ones self at risk of a Bitcoin exchange with such broad regulation specifics.
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May 18, 2014, 02:34:32 PM
 #8

It's always on your own personal behalf though. If you're trading for yourself only and no one else then the company you trade with isn't a factor here I wouldn't think.
LostDutchman
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May 19, 2014, 12:57:24 AM
 #9

As long as you trade ONLY for yourslef, your buiness or your corporation you need no specil registartions.

The moment you trade for someone else that is a horse of a different colour and the registrations being to be required.

Corporations For Crypto
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We Demand Justice From BFL
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