Why do you think it might be illegal?
Liability? Federal reserve notes are frightening.
Paranoia. Needing perspective check.
Mabye its obviously illegal in tons of ways I cant tell.
How might one make it out to be illegal?
Topic: Everyone Panic. There's a lawyer among us. [FinCEN Walkthrough on p2] - page 6. (Read 15227 times)
June 02, 2013, 11:12:51 PM
Federal reserve notes are frightening.
Paranoia. Needing perspective check.
Mabye its obviously illegal in tons of ways I cant tell.
How might one make it out to be illegal?
June 02, 2013, 11:06:10 PM
Why do you think it might be illegal?
June 02, 2013, 11:03:35 PM
How illegal could this possibly be? Any comment appreciated.
https://bitcointalksearch.org/topic/m.2354682
https://bitcointalksearch.org/topic/m.2354682
http://peopleslibrary.wordpress.com/2013/04/09/media-round-up-ows-v-bloomberg-settlement/
I'm beginning to work on obtaining consensus from folks involved in the Occupy Wall Street People's Free Library about converting the USD won from the recent settlement into BTC in a shared wallet.
If you have a BTC offer for what may turn out to be a lump sum of around $47,000, please post ITT.
The BTC is likely to be donated to organizations of the librarians' choosing.
If you have advice about how to go about doing any of this, please share. I for one, am new to this.
I will post updates as the internal conversation develops.
I'm beginning to work on obtaining consensus from folks involved in the Occupy Wall Street People's Free Library about converting the USD won from the recent settlement into BTC in a shared wallet.
If you have a BTC offer for what may turn out to be a lump sum of around $47,000, please post ITT.
The BTC is likely to be donated to organizations of the librarians' choosing.
If you have advice about how to go about doing any of this, please share. I for one, am new to this.
I will post updates as the internal conversation develops.
To be clear, I do not officialy represent the opinions and decisions of the OWSL and I will not be handling the exchange or providing escrow. The purpose of this thread is to network, gather information about the process, gauge the enthusiasm of potential buyers, and inform the btc community about the possibility of this move. I am acting on my own accord to facilitate communication.
Anyone interested in how the OWSL won this money, or other related subjects should ask away
Anyone interested in how the OWSL won this money, or other related subjects should ask away
June 02, 2013, 10:15:01 PM
It really depends on what you're planning to do, and the exact wording of the laws.
Bingo, Bitco.
June 02, 2013, 10:06:22 PM
Is that how.... say Paypal... operates?
Yeah, pretty much. See https://www.paypal-media.com/state_licenses.cfm
PS: Would you mind to mention some of the states that do not demand a license? The one you mentioned under "small rollout"...
AFAIK, Montana and South Carolina do not require licenses for money transmitters.Some other states (eg New Mexico, Pennsylvania) only regulate negotiable instruments such as money orders, and not electronic transfers.
Other states have broader laws, but still only apply to a third-party business holding the money, so sending bitcoins between two parties isn't regulated.
It really depends on what you're planning to do, and the exact wording of the laws.
June 02, 2013, 04:43:42 PM
....But for a non US business as MtGox - they would have to apply for licenses in all 50 states?...
PS: Great to have you here!
Many state regulators have explicitly stated that a transmitter is subject to their laws if the transmitter solicits or services their residents. The location of the bank account isn't relevant. Other states are expected to follow suit.PS: Great to have you here!
I looked through some of the states rules and procedures to obtain licenses - all I saw demand bonds and presence in the state. So this means that any MtGox would have to set up 50 local branches, one in each state and have them obtain a license?
Is that how.... say Paypal... operates?
-SM
PS: Would you mind to mention some of the states that do not demand a license? The one you mentioned under "small rollout"...
June 02, 2013, 03:20:19 PM
JonSnow, are you talking about CryptoCurrent? If all you did was exchange BTC for USD, I'm surprised you didn't look into a "safe state" rollout.
June 02, 2013, 03:14:31 PM
What MSantori has posted is pretty much in line with what my attorney has said as well. Since I can't afford the MT licensing, I've had no choice but to dissolve my bitcoin-selling business, in spite of being fully registered with FinCEN. Sad times. 
Are you sure that your business actually requires licensing under the relevant state laws? One of the services I can provide (Spam Alert!) is analyzing your business closely under any or all of the states and determining whether you really do require licensing. Your business (whatever it is) likely does not require licensing in every state.
One of the ways that a new business can find success is doing a "rollout" by offering services to customers in foreign countries and ten or fifteen "safe states" in which it would not require a license. It develops an operating history, revenue, cachet, etc in those states, and then rolls out into the next group of states when it can afford the license for those states. Also, by then, many states will probably have given more guidance on BTC businesses.
Entrepreneurs can make money because they think big. But if there's one thing I've learned representing them over the years, it's that the ones who actually do make money don't forget how to think small, too.
In my opinion, that's the path to profit.
June 02, 2013, 03:05:00 PM
What MSantori has posted is pretty much in line with what my attorney has said as well. Since I can't afford the MT licensing, I've had no choice but to dissolve my bitcoin-selling business, in spite of being fully registered with FinCEN. Sad times.
June 02, 2013, 02:41:10 PM
Hi,
I am a bit confused about the "all 50 states" assumption. I understand that this is state law and that a US business might or might not need to register in all 50 states. But for a non US business as MtGox - they would have to apply for licenses in all 50 states? What if they have a bank account in one state and clients from all 50 states ACH or wire money to the account. Is accepting payments from the other 49 states considered "doing business" there?
PS: Great to have you here!
I am a bit confused about the "all 50 states" assumption. I understand that this is state law and that a US business might or might not need to register in all 50 states. But for a non US business as MtGox - they would have to apply for licenses in all 50 states? What if they have a bank account in one state and clients from all 50 states ACH or wire money to the account. Is accepting payments from the other 49 states considered "doing business" there?
PS: Great to have you here!
Thanks!
Many state regulators have explicitly stated that a transmitter is subject to their laws if the transmitter solicits or services their residents. The location of the bank account isn't determinative. Other states are expected to follow suit.
June 02, 2013, 01:47:33 PM
Hi,
I am a bit confused about the "all 50 states" assumption. I understand that this is state law and that a US business might or might not need to register in all 50 states. But for a non US business as MtGox - they would have to apply for licenses in all 50 states? What if they have a bank account in one state and clients from all 50 states ACH or wire money to the account. Is accepting payments from the other 49 states considered "doing business" there?
PS: Great to have you here!
I am a bit confused about the "all 50 states" assumption. I understand that this is state law and that a US business might or might not need to register in all 50 states. But for a non US business as MtGox - they would have to apply for licenses in all 50 states? What if they have a bank account in one state and clients from all 50 states ACH or wire money to the account. Is accepting payments from the other 49 states considered "doing business" there?
PS: Great to have you here!
May 31, 2013, 06:00:24 AM
There is at least one major difference: consignment shops require the transfer of goods. BTC is not goods, but currency, from this particular FinCEN perspective. Still, you raise a good point. This is an example of regulatory line-drawing. They have to draw the line somewhere. But when drug dealers and terrorists start funneling their money through consignment shops, and then get caught doing it, you can be they'll move the line.
I personally don't see much difference between goods and currencies, from this point of view.
I know that various types of brokerages have to follow the same KYC laws as banks. Does anyone know if they have to register as money transmitters too? They perform the same function (money arrives in one pocket, magic happens, money leaves in a different pocket). Seems a bit silly if they do, Perhaps the answer to that question may point to a more sensible regulatory scheme for exchanges.
May 31, 2013, 12:13:59 AM
The problem is that this is fundamentally no different from a consignment shop. And yet, I've never heard of a general requirement that all such black boxes be required to register. In a world with justice, that similarity, and the resulting selectivity of enforcement, would be important, perhaps even crucial. In practice, maybe not so much.
MSantori: Am I wrong about that? Are physical consignment shops required to register as money transmitters? Why don't internet consignment shops exist? Bitcoin exchanges appear to be the only example of such a thing that I can think of. They accept merchandise (BTC) on account of customer A, and cash on account of customer B, then facilitate the sale of A's BTC for B's cash while pocketing a commission. Ebay/paypal comes to mind as another example, but they operate at arm's length.
MSantori: Am I wrong about that? Are physical consignment shops required to register as money transmitters? Why don't internet consignment shops exist? Bitcoin exchanges appear to be the only example of such a thing that I can think of. They accept merchandise (BTC) on account of customer A, and cash on account of customer B, then facilitate the sale of A's BTC for B's cash while pocketing a commission. Ebay/paypal comes to mind as another example, but they operate at arm's length.
There is at least one major difference: consignment shops require the transfer of goods. BTC is not goods, but currency, from this particular FinCEN perspective. Still, you raise a good point. This is an example of regulatory line-drawing. They have to draw the line somewhere. But when drug dealers and terrorists start funneling their money through consignment shops, and then get caught doing it, you can be they'll move the line.
May 30, 2013, 10:57:47 PM
In regards to the gox thing, at the conference, in the legal/regulatory track, it was mentioned several times that the AML/KYC type laws typically are concerned with changes of ownership. This is an odd way to look at "money transmission", but one that at least makes a little sense.
They don't care about the armored car that hauls entity A's money from place B to place C. Nor do they care about the bank that "transmits" the same money electronically from branch D to branch E. What they do care about is the service that collects funds from entity F, and transfers ownership of those funds to entity G.
In this view, it clicks a bit better. A bitcoin exchange is a place where funds come in under one person's name, and then leave under a different person's name. They view it as a black box because they don't have visibility inside. They can just see that money has been transmitted (using their newspeak version of "transmitted").
They don't care about the armored car that hauls entity A's money from place B to place C. Nor do they care about the bank that "transmits" the same money electronically from branch D to branch E. What they do care about is the service that collects funds from entity F, and transfers ownership of those funds to entity G.
In this view, it clicks a bit better. A bitcoin exchange is a place where funds come in under one person's name, and then leave under a different person's name. They view it as a black box because they don't have visibility inside. They can just see that money has been transmitted (using their newspeak version of "transmitted").
This is an excellent explanation.
The problem is that this is fundamentally no different from a consignment shop. And yet, I've never heard of a general requirement that all such black boxes be required to register. In a world with justice, that similarity, and the resulting selectivity of enforcement, would be important, perhaps even crucial. In practice, maybe not so much.
MSantori: Am I wrong about that? Are physical consignment shops required to register as money transmitters? Why don't internet consignment shops exist? Bitcoin exchanges appear to be the only example of such a thing that I can think of. They accept merchandise (BTC) on account of customer A, and cash on account of customer B, then facilitate the sale of A's BTC for B's cash while pocketing a commission. Ebay/paypal comes to mind as another example, but they operate at arm's length.
MSantori: Am I wrong about that? Are physical consignment shops required to register as money transmitters? Why don't internet consignment shops exist? Bitcoin exchanges appear to be the only example of such a thing that I can think of. They accept merchandise (BTC) on account of customer A, and cash on account of customer B, then facilitate the sale of A's BTC for B's cash while pocketing a commission. Ebay/paypal comes to mind as another example, but they operate at arm's length.
There is at least one major difference: consignment shops require the transfer of goods. BTC is not goods, but currency, from this particular FinCEN perspective. Still, you raise a good point. This is an example of regulatory line-drawing. They have to draw the line somewhere. But when drug dealers and terrorists start funneling their money through consignment shops, and then get caught doing it, you can be they'll move the line.
May 30, 2013, 10:43:13 PM
May 30, 2013, 10:30:17 PM
In regards to the gox thing, at the conference, in the legal/regulatory track, it was mentioned several times that the AML/KYC type laws typically are concerned with changes of ownership. This is an odd way to look at "money transmission", but one that at least makes a little sense.
They don't care about the armored car that hauls entity A's money from place B to place C. Nor do they care about the bank that "transmits" the same money electronically from branch D to branch E. What they do care about is the service that collects funds from entity F, and transfers ownership of those funds to entity G.
In this view, it clicks a bit better. A bitcoin exchange is a place where funds come in under one person's name, and then leave under a different person's name. They view it as a black box because they don't have visibility inside. They can just see that money has been transmitted (using their newspeak version of "transmitted").
The problem is that this is fundamentally no different from a consignment shop. And yet, I've never heard of a general requirement that all such black boxes be required to register. In a world with justice, that similarity, and the resulting selectivity of enforcement, would be important, perhaps even crucial. In practice, maybe not so much.
MSantori: Am I wrong about that? Are physical consignment shops required to register as money transmitters? Why don't internet consignment shops exist? Bitcoin exchanges appear to be the only example of such a thing that I can think of. They accept merchandise (BTC) on account of customer A, and cash on account of customer B, then facilitate the sale of A's BTC for B's cash while pocketing a commission. Ebay/paypal comes to mind as another example, but they operate at arm's length.
They don't care about the armored car that hauls entity A's money from place B to place C. Nor do they care about the bank that "transmits" the same money electronically from branch D to branch E. What they do care about is the service that collects funds from entity F, and transfers ownership of those funds to entity G.
In this view, it clicks a bit better. A bitcoin exchange is a place where funds come in under one person's name, and then leave under a different person's name. They view it as a black box because they don't have visibility inside. They can just see that money has been transmitted (using their newspeak version of "transmitted").
The problem is that this is fundamentally no different from a consignment shop. And yet, I've never heard of a general requirement that all such black boxes be required to register. In a world with justice, that similarity, and the resulting selectivity of enforcement, would be important, perhaps even crucial. In practice, maybe not so much.
MSantori: Am I wrong about that? Are physical consignment shops required to register as money transmitters? Why don't internet consignment shops exist? Bitcoin exchanges appear to be the only example of such a thing that I can think of. They accept merchandise (BTC) on account of customer A, and cash on account of customer B, then facilitate the sale of A's BTC for B's cash while pocketing a commission. Ebay/paypal comes to mind as another example, but they operate at arm's length.
May 29, 2013, 08:35:18 AM
I am curious why it is required to get the license in all the states that require them. Why does it not require a nexus like sales tax currently does as the Quill case decided?
This was meant as a real question. Is your skipping it a way of saying it was too dumb to merit and answer, or that you don't know the answer?
Sorry twobits! I didn't mean to skip you at all. You are correct to question why a license is required in all states. In fact, a nexus is required. Many state regulators, like in New York, have already published guidance that they believe doing business with their citizens is a sufficient nexus. From a legal perspective, this does seem to pass constitutional muster, and other states are expected to follow suit. So, speaking generally, an MSB falls under a state's regulatory jurisdiction if it actually performs money services for that state's residents, regardless of where the business is physically located. Obviously, to determine whether your business in particular needs to register in any state, I'd need to know more about your business and then take a close look at the state's regulations to apply the latter to the former.
Hope that helps.
May 29, 2013, 04:45:55 AM
I am curious why it is required to get the license in all the states that require them. Why does it not require a nexus like sales tax currently does as the Quill case decided?
This was meant as a real question. Is your skipping it a way of saying it was too dumb to merit and answer, or that you don't know the answer?
May 29, 2013, 12:58:19 AM
Glad that we have a lawyer here, a couple more will even be better, cheers 
The LR fiasco really concern or worries some of us here ..
The LR fiasco really concern or worries some of us here ..
May 28, 2013, 08:29:23 AM
All of this leaves me wondering just what it is that Mutum Sigillum allegedly did wrong. Clear as mud, eh?
Clear as mud indeed. You identified one of the "additional definitions" that I hinted at in my post. I'm not sure that the definition of "funds transfer" is the same as "transfer of funds." Taking a literal approach, the defined term "funds transfer" does not appear in the definition of "money services" business, so it doesn't apply to it. It likely pops up somewhere else in this chapter, but I am in no mood to go digging. Nonetheless, you are right that it could be relevant. I'm still sticking to my interpretation, that FinCEN got the interpretation (my interpretation) right. I can't wait to see how they defend their actions, and just how far down the regulatory rabbit hole they will go.
It's badly written, but it would be hard to argue that "transfer of funds" means something else. Moreover, the exclusion is not arbitrary. Recall that the statutory basis for the money transmitting regulations is 31 USC § 5313, which relates to reports on domestic coins and currency transactions. Since ACH transfers aren't coins and currency, it makes sense to exclude this from the "funds transfer" definition.
I would also be very interested to see how the feds defend their action against Mutum Sigillum. It's not clear that we'll get to, as there's more going on in that case than the DHS action. An open question is why MS still had a Dwolla account as of May 14, since they had announced the outsourcing of their US operations to CoinLab. We know that didn't occur as planned, but the facts are still unclear. If Mt.Gox really does want to get out of the US market, they'll be inclined to settle the case rather than take it to trial.
Jump to: