Topic: Did Instawallet need a Money Transfer License? (Read 1236 times)

I am aware that companies like Blockchain.info aren't MSBs because they are 'users' under FinCen's definition. However, what seems like a potential grey area is something like Instawallet that functions like Blockchain.info, but actually holds your funds. Also there is Blockchain.info's Coin Mixer, and inputs.io.


"a person that creates units of convertible virtual currency and sells those units to another person for real currency or its equivalent is engaged in transmission to another location and is a money transmitter."

This is already sort of dubious as implies that all miners that "cash out" are exchangers and need to be licensed, which I can't believe to possibly be true. But there is also this:

"The second form involves a de facto sale of convertible virtual currency that is not completely transparent. The exchanger accepts currency or its equivalent from a user and privately credits the user with an appropriate portion of the exchanger's own convertible virtual currency held with the administrator of the repository. The exchanger then transmits that internally credited value to third parties at the user's direction. This constitutes transmission to another person, namely each third party to which transmissions are made at the user's direction. To the extent that the convertible virtual currency is generally understood as a substitute for real currencies, transmitting the convertible virtual currency at the direction and for the benefit of the user constitutes money transmission on the part of the exchanger."

The 'exchanger' (i.e, potentially, Instawallet or Blockchain.info) is receiving currency (Bitcoin) from a user and privately credits the user with an appropriate portion of the exchanger's own convertible virtual currency (money inside instawallet, or, the promise by Blockchain.info to give you your coins after mixing) held with the administrator of the repository (i.e, instawallets wallet.dat file). The exchanger then transmits that internally credited value to third parties at the user's discresion (you use your instawallet to pay somebody).

It seems sort of dumb and nonsensical that Blockchain.info wouldn't be regulated and something like inputs.io would considering they serve basically the exact same purpose (an online Bitcoin wallet). Do you think that Fincen would really want to enforce this rule in such a way, or is it just another one of those bad wordings such as the one that implies miners are exchangers?