Topic: Everyone Panic. There's a lawyer among us. [FinCEN Walkthrough on p2] - page 2. (Read 15227 times)

Unfortunately, that is what legal scholars would call an "interesting question" and spend upwards of six figures arguing about, should it ever come to a court case.

My personal opinion is no, but the opinions of the kind of idiots who would prosecute a case like this seems to be leaning the other direction.  And by idiot, I don't mean stupid people, that's just my term for people with whom I disagree.

so I assume we still haven't answered whether bitcoin miners are money transmitters (even small-time miners) ??

We can enable or disable transfers for each wallet type, or for each state/country. I think while the area is still fuzzy, we can leave those features in for Crypto, but still haven't decided to push the envelope and allow for USD as well.

Even though we are clearly an MSB and licensed with Fincen, it will be some time before we go through the creation of licenses in every state. If a state wants to come after us, they are welcome to come to the Philippines and take it up in the court system here... We are not planning on allowing anything illegal, ie: gambling or criminal use of funds, via our platform so I don't think they will issue a takedown notice for the domain name, but one can never be sure. If a state issues a cease and desist then we just turn off use of the wallet system for users in that state, until we get the license. It is going to be a fun ride, but i don't want to be hamstrung by the USA when in startup phase. Once we are growing and bigger we can tackle the issues of licensing.

I see you are involved with the BTC Global, Moneero - if you want to talk further about working together on the exchange side, let me know..:-)

Hi Tagbond. Thanks for reaching out.  Unfortunately, most money transmitters are still in a holding pattern for Bitcoin businesses.  As you noted, Meracord, one of the larger licensees, is not currently considering Bitcoin agents.  The problem is not a legal one.  There's no legal reason why an existing licensee couldn't grant a certified agency to a bitcoin business.  A Bitcoin business can implement the licensee's AML policies just as well as any non-Bitcoin business.  The problem is one of perception.  Many existing money transmitters are unwilling to risk alienating their already-existing agency base by getting involved with Bitcoin, which has heretofore been known as a currency for criminals.  With the shutdown of Silk Road, the tide is turning in the media from "Bitcoin the drug money" to "Bitcoin the Future".  As that picks up steam, we will start to see a better, more accurate, public perception develop.

Edit: I should add that there are some money transmitters willing to work with certain Bitcoin businesses, depending upon the model.  I shan't go into detail, but they are out there.

Been reading your posts for a while now, all very interesting and informative. Quick question for you:

I have a startup operating outside of the USA (in Philippines), with all banking done here as well. The business units include a crypto exchange, digital wallets, and a rewards system. It deals with both crypto and fiat and definitely falls under the MSB licensing rules. We are registered with Fincen as MSB, but not with the individual states. I could just switch off the service to anyone in the USA, which seems a shame - we reached out to Meracord, who charge a minimum of $250,000 just to get started with them, but they said a flat no to us when we said our business involved Bitcoin. Do you know of a list of MTL operators with licenses in all states that would deal with startups like ours?.

One thought that had occurred to me was to approach various MTL entities in each state and offer to pay them a fee to work through their license...but I am pretty sure their surety bonds suppliers may not be too happy with it. We don't have the finance or the time to go through every state to get a license, although in Philippines we are going the process of becoming an EMI, which requires $2.5m in paid up capital, and we will probably do the same in Europe which requires about $500k in paid in capital. No major licensing fees in either case. In the US, I have read it would cost in the region of about $7m to go through all the states, and in the region of $250,000 a year in fees. At this stage, definitely cheaper to go through another licensed entity. Just have to find the best option, and wondered if you know of companies providing this service.

From a business perspective, not a regulatory one (for once), I think that this is a great write up:

http://daslee.me/10-things-i-think-i-think-on-bitcoin

Back from D.C.

What a trip!  De-briefing here:

https://bitcointalksearch.org/topic/report-on-the-bitcoin-foundations-trip-to-washington-dc-282631

A busy start of the week for you. 
Looking forward to some words, when you get a chance to take a breath.

Please allow myself to promote... myself:

http://www.coindesk.com/bitcoin-law-what-us-businesses-need-to-know/

For the non-lawyers among us, this means there isn't a single "bright line" you cross to become a business, so it is possible to fall into this category inadvertently.

An example of another fact-based, factor-weighing inquiry is the fairly common case of adjudicating whether a person is a contractor or an employee, which often arises when a construction project goes awry and a plaintiff is suing both the person or company who actually screwed up as well as whoever hired them.  If the person whose hammer slipped is an employee, employer liability is almost automatic, whereas it becomes rather more difficult if the person is merely a contractor whose activities are not directly controlled by the person who hired him.  The issue also becomes very important in tax or unemployment compensation cases.

I chose this example because it's fairly common and you can find multi-factor analyses actually used by professionals.  For example, this is a 20 factor checklist which is or resembles the 20 factors often used by the IRS in making such determinations.

Just because factors like this are listed does not mean they are exhaustive.  Courts can (unless prohibited by statute or binding precedent) use their own tests, ignore or give little weight to some factors, or even consider factors not listed in the "standard" test, especially in unusual cases.

Bitcoin may tend to create situations where additional factors may need to be considered, or where the traditional weighting of factors is not applicable.  It may shake out that Bitcoin situations are actually pretty similar to other already adjudicated cases, but I wouldn't bet on it.

This is a popular topic.  Speaking only to the FinCEN guidance, the threshold question in determining whether you are a Money Services Business is whether you are a businesses.  Sporadic and infrequent exchanging, under the regs, will weigh against being construed as a business. However, it is a highly fact-based, factor-weighing inquiry.

what's your interpretation of the buttonwood in-person exchanges?  Clearly, if you just show up and buy that's ok.  But what if you are willing to buy/sell a spread?  Not as a primary source of income, etc... but just to help disseminate the currency?

Great to see you at the conference. It's definitely nice to have an attorney so active in the community. There aren't enough of you. I'm looking forward to seeing you speak in December!

Thank you to everyone who came up to me at the conference and introduced yourselves.  I was really overwhelmed by the outpouring of support and kindness.  Someone actually came up and said "you're Marco Santori?  Like, the Marco Santori from Bitcointalk?! I've learned a lot from your posts."  I was completely floored. Thank you all so much. I'm happy to do what I can to help out here.

I hope to see you all at the next Inside Bitcoins conference on December 11 in Las Vegas.  I believe I'll be one of the speakers this time around, giving a 30-45 minute talk.

Just a quick note: I will be at the Inside Bitcoins conference here in NYC tomorrow.  If you see me, please tap me on the shoulder and say hello!

Am I reading this right, or does that mean if you transfer BTC solely via the BTC network, it really isn't transfer?

edit: lol wishful thinking

Seems like a stretch.

The IRS reporting requirements of precious metals varies with both the type of metal, quantity, and it's form according to the commodity futures trading commission (CFTC).
Oddly enough, if your precious metals purchases is something traded on an ETF, you probably have an IRS reporting requirement.

http://www.coinworld.com/Articles/ViewArticle/what-coins-are-reportable

There is no ETF for New Liberty Dollars, so all my customers are safe here.
Some but not all of Amagi's are also not IRS reportable depending on quantity.

Another gotcha: If you have had US$10K of "value" in a foreign account which you control (even if it is only Bitcoin).  There is a very serious reporting requirement, for which failure to report could cost you the whole account, or even more depending on how long you fail to report.
http://bitcoinmagazine.com/real-compliance-getting-your-way-by-giving-in/

"Control" of the account is measured by whether you can get the value out of the account while on foreign soil without going through a US financial entity.  This is a weird and not very well known requirement.  It is likely to be the single strongest weapon the IRS has to take bitcoins from US taxpayers who remain unaware of it.

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The foregoing is not to be construed as legal or tax advice.  Do your own research, and hire your own advisers upon which you may rely.

This guidance is only relevant for determining if you qualify as a MSB, this doesn't have anything to do with the IRS and what they consider a taxable event. Apples and Oranges.

“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. Such activity, in and of itself, does not fit within the definition of “money transmission services” and therefore is not subject to FinCEN’s registration, reporting, and recordkeeping regulations for MSBs”