Here's a great article I found thanks to Stephen Gornick's comment about FinCEN.
http://bitcoinmagazine.com/fincen-bitcoin-users-not-regulated-exchanges-are/
That makes it clear they are viewing exchanges from one virtual currency into another as a money transmitter, which means licensing and (in the US), $100K liquid assets to get the license, etc.
It appears, though, that even just mining coins and then selling them for USD falls under the money transmitter requirements unless you are doing so through a licensed exchange. So far as I know, BTC-E and MtGox are foreign companies that aren't licensed as money transmitters in the USA.
So not only will I not be making any sort of exchange as a fun hobby project, I'm now a bit worried about the legal ramifications of just mining coins and selling them on the existing foreign exchanges.
Topic: Exchange legalities (Read 720 times)
It is an interesting topic. If you buy and sell bitcoins and in the end make a profit, I see a few scenarios:
- The profit made is declared as income at tax time and it taxed.
- The profit made or lost is declared as a capital gain or loss, which means in theory you could recoup losses if you sold for a loss during the recent correction.
- The profit is reinvested into bitcoins, they you hold no profit (in currency terms) to be taxed
Just some thoughts..
- The profit made is declared as income at tax time and it taxed.
- The profit made or lost is declared as a capital gain or loss, which means in theory you could recoup losses if you sold for a loss during the recent correction.
- The profit is reinvested into bitcoins, they you hold no profit (in currency terms) to be taxed
Just some thoughts..
I can just go out an open a store that buys and sells baseball cards without some sort of various oversight and licensing.
Are bitcoins different from baseball cards?
Are bitcoins different from baseball cards?
Well in theory, bitcoins are trying to become adopted as a valid form of currency. That's different than baseball cards. If bitcoins are just these virtual electronic items, like say Team Fortress 2 hats, then sure, you can set up an exchange to swap TF2 hats for items in some other game. It just seems a bit too close to the financial industry to not run into trouble eventually, since it's so highly regulated?
I'll try to find the bitcoin related guidance from FinCEN that you referenced. Thanks for the tip.
I mean, you can't just go open your own currency exchange or forex trading business without some sort of various oversight, licensing, etc? There are all sorts of government regulations and agencies above forex sites like Oanda, for instance. And if bitcoin really is a currency, then how is setting up an exchange any different?
I can just go out an open a store that buys and sells baseball cards without some sort of various oversight and licensing.
Are bitcoins different from baseball cards?
The are not prepaid access ("stored value"), according to FinCEN.
If you are providing exchange to and from fiat, FinCEN recently released guidance on that.
If you are holding other peoples dollars, there are already regulations that address that as well.
If you are seriously thinking of opening an exchange, there are others that have done it that might be able to provide some advice. At a minimum, you'll need some capital to cover the legal fees in getting started.
There are trading platforms that could be purchased and used for bitcoin exchanges which maybe some reasonable reliability and various tools, stand alone trading clients (or metatrader compatible), etc. However I can't see ever participating (in making such an exchange) because at what point does bitcoin (and maybe other alt coins) get recognized by various governments as legal currency? If that happens, then aren't exchanges immediately under the authority of your country's version of the SEC (for USA residents)?
I mean, you can't just go open your own currency exchange or forex trading business without some sort of various oversight, licensing, etc? There are all sorts of government regulations and agencies above forex sites like Oanda, for instance. And if bitcoin really is a currency, then how is setting up an exchange any different?
I mean, you can't just go open your own currency exchange or forex trading business without some sort of various oversight, licensing, etc? There are all sorts of government regulations and agencies above forex sites like Oanda, for instance. And if bitcoin really is a currency, then how is setting up an exchange any different?
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