US Government Mistakes Digital Currency for Pacific Island!

[MicroGuy]

The Financial Crimes Enforcement Network (FinCEN) today issued two administrative rulings regarding digital currency. And the government has apparently decided to go with the nuclear option.

The first ruling published today relates to the application of FinCEN regulations to a virtual currency trading platform, while the second ruling discusses the application of FinCEN regulations to a virtual currency payment system.

In ruling FIN-2014-R011, FinCEN states that any and all cryptocurrency exchanges must become licensed as a money transmitter including crypto-only exchanges:

"As explained in the Guidance, a person is an exchanger and a money transmitter if the person accepts convertible virtual currency from one person and transmits it to another person as part of the acceptance and transfer of currency, funds, or other value that substitutes for currency."

In ruling FIN-2014-R012, the agency confirms that any and all payment processors are obliged to register as money transmitters, significantly increasing the cost of entry in becoming a digital payments provider.

"As described above, the Company is an exchanger under the Guidance because it engages as a business in accepting and converting the customer’s real currency into virtual currency for transmission to the merchant. The fact that the Company uses its cache of Bitcoin to pay the merchant is not relevant to whether it fits within the definition of money transmitter."

Once labeled a money transmitter, a business wishing to continue operating must pay hundreds of thousands of dollars to become licensed in each of the 50 states. And that’s only the beginning of the regulatory costs and legal hoop jumping.

In addition, companies are required to register with FinCEN, conduct a comprehensive risk assessment of its exposure to money laundering, implement an Anti-Money Laundering Program based on such risk assessment, and comply with various record keeping, reporting and transaction monitoring obligations, in addition to meeting several other requirements.

It is interesting to note that the government classifies Bitcoin as a digital “property” for taxation purposes, but as a digital “money” for regulatory and licensing purposes.

Full Story: http://altcoinpress.com/2014/10/fincen-ruling-us-government-ramps-up-war-on-cryptocurrency/

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[MicroGuy]

According to these new rulings, there is the possibility that a business paying its employees in cryptocurrency (under certain circumstances) would be subject to the money transmitter requirements.

I suspect it will take a few days for the gravity of this new development to be fully appreciated and understood.

[brekyrself]

Basically this makes it so exchanges will not be based in the USA?  If that is the case, nice job pushing away businesses yet again.

[Palmdetroit]

Fallout is tough to calculate on this.  

One one hand we may need some more regulation but does this goes too far?

edit some exchanges already comply?

[Come-In-Behind]

So? Information in OP has already been known since..Bitcoin was first made(2009) and has been around for decades. It's just being collectively "enforced". Lol

Nothing new.

[HELP.org]

This is either the road to legitimacy or the end of crypto's as we know it. Place your bets on the table folks

It is not that important.  All they did was apply their existing rules.  This was discussed in some of the early let's Talk Bitcoin episodes back in early 2013 when they interviewed the Monet Transfer Association a couple times. 

[arteleis]

Where can we find the definition.  Of digital or crypto currency trading platform?

   Does this include p2p transactions if available to public? Any coin with an exchange feature considered trading platform?

  In which case vaguely would identities including known aliases be attached to this licensing?  Decentralized mamarketplaces would be by definition perhaps trading platform reasonably by vague law if it's written so..

    Please post if this legislation in detail has a link.

[MicroGuy]

It is not that important.  All they did was apply their existing rules.  This was discussed in some of the early let's Talk Bitcoin episodes back in early 2013 when they interviewed the Monet Transfer Association a couple times.  

The rulings from today will actually affect merchants in new and much broader ways. For example, in many cases, a company will no longer be allowed to pay wages in Bitcoin without registering as a money transmitter.

[UnicornFarts]

This might be relevant too.

https://www.cryptocoinsnews.com/sec-sends-inquiry-letters-hundreds-bitcoin-companies-unregistered-securities/

If Poloniex is involved with the BlockNET IPO somebody might want to contact the owner.  Might help save him some headache

[HELP.org]

It is not that important.  All they did was apply their existing rules.  This was discussed in some of the early let's Talk Bitcoin episodes back in early 2013 when they interviewed the Monet Transfer Association a couple times.  

The rulings from today will actually affect merchants in new and much broader ways. For example, in many cases, a company will no longer be allowed to pay wages in Bitcoin without registering as a money transmitter.

How do you come up with that?  That is not part of providing services unless it is some kind of scheme to transfer money under the guise of salaries or something.  The ruling is in the context of http://www.law.cornell.edu/cfr/text/31/1010.100 (31 CFR 1010.100) like it says in the footnotes.

Also see the ruling I got last year about mining.
http://cointext.com/fincen-issues-bitcoin-friendly-ruling-for-miners/

[bee7]

hmmm, any node that relays tx to another node or includes tx into block becomes a money transmitter as it does this on behalf of someone else. Am I correct?

[UnicornFarts]

[jwinterm]

Anyone care to speculate on how this impacts poloniex or bittrex (both based in USA but I'm assuming not registered as money transmitters)?

[2dogs]

Anyone care to speculate on how this impacts poloniex or bittrex (both based in USA but I'm assuming not registered as money transmitters)?

Better to close Cryptsy and CryptoStocks, too?

[Spoetnik]

I seen this at coindesk today and was talking about it on Poloniex's chat.. others guys were saying this would kill our traditional exchanges
a few guys went on to say P2P decentralized exchanges would solve that.. in other words they can't regulate it !
so..
Then i responded by saying..

Spoetnik: amoebatron, p2p exchanges means this place is long gone and dead then right ?
amoebatron: Spoetnik, Well I didn't mean it quite like that.
Spoetnik: maqa71, they did and sold them via the Marshals and tehy seize GOX money held on us soil
freedomsr40: guys...bitcoin is NOT mainstream enough YET to have its own regulation written
maqa71: Spoetnik, well thats because they got theire hands on the server with all private keys yeah
Spoetnik: amoebatron, ya but that is what will happen i think eh.. no offense Polo
Spoetnik: maqa71, exactly and the Gox bank accounts etc etc
LordzS: morning
OldManKidd: Spoetnik, lets not start with wild speculations now
Spoetnik: OldManKidd, uhh what is a wild speculation buddy ?
OldManKidd: LordzS, morning
Spoetnik: and you notice everyoen esle talking about hte sam ething word fo rword ?
freedomsr40: OldManKidd, throw out the "trading tip" or "pro tip" or whatever its called..about FUD and do your own research
LordzS: Hey OldManKidd, my pool hitits first LTC block like 15 minutes ago a
OldManKidd: Spoetnik, implying we are going to be seized is wild speculation
LordzS: OldManKidd, and were hitting DRK regulary about 2 blocks an hour
Spoetnik: ohhhh coem on where the heeeeeeeeeel did i say that
Spoetnik: you know this is logged right ?
LordzS: OldManKidd, Spoetnik, has been banned from all forums he needs somewhere to troll lol
OldManKidd: Spoetnik, just reading into the comments and the no offense polo ... you prompted a response and got one
OldManKidd: no offense
Spoetnik: excuse me ?
maqa71: its oke guy's, we're all going to jail
OldManKidd: maqa71, lol
Spoetnik: i said word for word whatteh OTHER gusy said .
freedomsr40: OldManKidd, about time to drop the ban hamma
presstab: Spoetnik, hey how are you
amoebatron: Spoetnik, lol you shouldn't be so senstive dude.
Spoetnik: your trying to start with me to boot me simpale sas that and its funny you insult all our intelligence doing it so waekly i might add .
Spoetnik: amoebatron, di YOU get a warning ?
Spoetnik: it was ONLY me
amoebatron: Spoetnik, I just mentioned the benefits of p2p exchanges - i didn't say the sky was gonna fall.
OldManKidd: Spoetnik, sorry? if i wanted to just boot you i would.. i am asking you not to imply the we are doing something wrong.
leatherfce: we shoot at my house
freedomsr40: time to stop talking about regs and stuff and talk about HYP
presstab: Spoetnik, everything ok man?
amoebatron has awarded Spoetnik 50 marks (chill bro)
Spoetnik: OldManKidd, then go warn the other guys why me ?
OldManKidd: presstab, always
maqa71: Spoetnik, chill out mate
Spoetnik: 5 guys siad teh same thing and you dive on me hard
Spoetnik: maqa71, you seen it right ?
freedomsr40: presstab, hows it going man?
Spoetnik: wow
presstab: freedomsr40, I am great! Thanks
OldManKidd: Spoetnik, its not a debate... you implied polo was doing something wrong by saying ... sorry polo... so end of issue.. move along please
Spoetnik: buddy i lost ALL respect for you today
LordzS: maqa71, im already in jail lol 3rd marriage , you would think i would learn
maqa71: Spoetnik, dont take it too personal, everyone could had that warning
Spoetnik: maqa71, everyoen SHOULD have
presstab: freedomsr40, maybe you will get HyperLoan v2
freedomsr40: Spoetnik, i got a warning the other day..i dropped it and moved on
Spoetnik: singlin me out is bs
maqa71: LordzS, dude u managed to escape twice lol, I am busted for life with the first
presstab: Spoetnik, hey does that shakeluza still have a bct profile i could not find it
leatherfce: I don't know for sure but I doubt pissing off Oldman is a good idea
LordzS: ok to make him happy WARN ME!!
amoebatron: lol
Spoetnik: how am i suppose to move ionb whaen thsi singling me out stuff is a common problem ?
OldManKidd: Spoetnik, i dont think you had any respect for any mod here as it is.. or many of the traders. but that is my opinion
Spoetnik: i have to tip toe on ice or else..
leatherfce: i got respect for you
presstab: OldManKidd, you so mean!!!!!!
Spoetnik: OldManKidd, plenty of them say Geez or Ilovu
OldManKidd: presstab, lol
freedomsr40: presstab, thatd be great man !!! my PC is staking 24/7 and im ready! i just convinced my gf to get into HYP
LordzS: I respect BUNDERBERG RUM ONLY!!
Spoetnik: i haev had NO problem with other mods man except Shrek
presstab: OldManKidd, i think your posts are rude because your blue name offends me!!
OldManKidd: presstab,
Spoetnik: presstab, ask me on BCt not here and no prob ok
LordzS: hey hey dont be messing with my aussie bro SHREK!!
presstab: freedomsr40, lol nice!! have you had some stakes come in yet
presstab: Spoetnik, i dont post on that thread anymore Thanks for the offer though man
freedomsr40: presstab, Yup...first stake came in in under 10 days
Spoetnik: presstab, i meant just pmme so i dont; get banne dhere for drama or soemthing
Spoetnik: i said sorry and got a warning LOL
presstab: Spoetnik, oh last time I pmd you you said I was spamming you so i dont want to get banned lol
OldManKidd: Spoetnik, just dont imply we are doing something wrong .. if you cant leave it go i dont know what else to tell you buddy
Spoetnik: ya ya..

be careful guys
i guess "wild speculations" and saying "sorry" is ban worthy at Poloniex  

edit:
is it not obvious i meant EVERY traditional exchange ?

[arteleis]

Anyone care to speculate on how this impacts poloniex or bittrex (both based in USA but I'm assuming not registered as money transmitters)?

Better to close Cryptsy and CryptoStocks, too?

 Cryptsy already paid the massive fee.  Think they're good. 

  And seems the issue is.. exchange fees? As long as no fees are charged, then these rules don't apply?

[Come-In-Behind]

Anyone care to speculate on how this impacts poloniex or bittrex (both based in USA but I'm assuming not registered as money transmitters)?

Better to close Cryptsy and CryptoStocks, too?

 Cryptsy already paid the massive fee.  Think they're good.  

  And seems the issue is.. exchange fees? As long as no fees are charged, then these rules don't apply?

Oh I'd forgotten that Cryptsy became a licensed money transmitter(Hence there USD Markets). I guess Cryptsy is the (only?) american exchange to use now.

[Spoetnik]

Anyone care to speculate on how this impacts poloniex or bittrex (both based in USA but I'm assuming not registered as money transmitters)?

in case people are curious i posted my long chat box quote because of what this guy said..

and yeah Cryptsy hmm interesting LOL

[arteleis]

Ohhh. ...  This is about ipos and corporate cryptos..  everyone saying they are running a business..  pretending their corporations are backing their crypto currency...  then issuing public shares based on their corporate holdings!

   Which ia really is a lie.. there is nothing actually legally bound to a token or a coin from a corporation. . No ipo account holder would be listed as creditors in the event of insolvency. .

   So is then this regulation going to destroy ipos, ShitCoin exchanges, and maybe take a bite out of shit coins and scammers?

   Sure are  a lot of ipos held on exchanges that turn out to be scams lately...

  Am I reading this wrong.. or will this force decentralization further?

   Would corporate crypto die? Maybe that would be amazing. .

[UnicornFarts]

You got it buddie.  Blue skies and ocean breezes on its way to altcoinland.

Just hope poloniex doesn't croak too soon