Topic: FinCEN addresses Bitcoin (Read 28359 times)

http://www.fincen.gov/fromHome/openGov.html

under FinCEN's Commitment to Open Government :: Participation

Comments on Regulatory Proposals: Public comments received electronically or through the U.S. Postal Service sent in response to a "Notice and Request for Comment" will be made available for public review as soon as possible on Regulations.gov. All comments received may be physically inspected in the FinCEN reading room located in Vienna, VA. Reading room appointments are available weekdays (excluding holidays) between 10 a.m. and 3 p.m., by calling the Disclosure Officer at (703) 905-5034 (not a toll free call). FinCEN posts links to all comments received on pending and past regulatory proposals.

... http://www.fincen.gov/statutes_regs/frn/pdf/OP-1445++Joint+NPRM+BSA+definitions1.pdf [we missed the deadline]

Public Hearing: On July 9, 2012, FinCEN announced an opportunity for members of the public to participate in the policy-making process and provide their collective expertise and experience. FinCEN has announced the first in an intended series of public hearings to continue gathering information on its Advance Notice of Proposed Rulemaking (ANPRM) on Customer Due Diligence (CDD) Requirements for Financial Institutions, published in the Federal Register on March 5, 2012. FinCEN has invited various components of the law enforcement and regulatory communities to participate. In addition, FinCEN has invited other interested parties, including industry representatives, to attend and/or provide comments at this first public hearing, to be held on July 31, 2012 at the U.S. Department of the Treasury building in Washington, D.C. FinCEN has also provided information about how to submit comments at and/or attend the hearing.

Ok, we are late here too, but they still need us :-)

Would they consider BFL a giant money laundering operation ?

Tyranny does not go quietly into the night. The ATF has had decades to be liquidated for unconstitutionality. It hasn't. Neither will FinCEN.

Or you could grow a spine and shape the type of govt. you want ... not let the govt shape you.

The Bank Secrecy Act is/was an abomination when it was introduced and has only ever gotten worse with amendments and enforcement.

Go to the root of the problem, don't try putting layers of FUD on top of fail.

Bitcoin highlights major constitutional weaknesses in both the BSA and the Federal Reserve Act (both written by/for the bankers). Ask your elected legislature to address those issues before asking the enforcement branch to work with unworkable laws ... or you will just get the "War on Alcohol/Drugs/Guns" fiascos all over again, or let's just call it the "War on Money" and get started.

FinCEN is not the answer, they are the problem, trying to make money an enforcement tool is compromising money the economic tool. Unless you are okay using inferior monetary systems.

We are planning to deploy a large mine in US. To be compliant with FinCEN we have to generate only empty blocks with no transactions :-) How stupid is that :-)

I think they are looking at miners like the are a Automated Clearing House type deal.

Of course asking FinCEN or a lawyer will not solve our problems. Let's assume they posted the guidelines as a call for help :-) Let's tell them that we are willing to help :-)

FinCen keeping lawyers employed since 1972.

The annoying thing isn't the compliance it is the impossibility of compliance.  FinCEN doens't even know what the answer is.  Anyone who has actually read the regs on money transmitter can probably spot a whole host of areas where they simply don't apply to a "virtual currency exchanger". FinCEN can't by fiat give itself oversight authority over a new class of MSB (which is what virtual currency exchanger should be) so it is trying to force a round peg into a square hole.

Fun game to play.  Call FinCEN hotline with a list of six questions about the (in)applicability of money transmitter regs on virtual currency exchanger.  Record the answer.  Call again and get six new answers. 

If FinCEN doesn't know what companies should do how can companies know.  How can a lawyer provide counsel when the regulator doesn't even know how they intend to regulate.

I think you're exactly right.

FinCEN cares mostly about big-time money laundering and terrorist financing. If I was running a cash-for-bitcoins service in the US and started moving more than a few hundred bitcoins a month through my bank account, then I'd talk to a lawyer. If I was running an exchange, I would have already talked to a lawyer. If I was a US-based miner exchanging more than a few hundred freshly-made bitcoins for cash every month, then I would talk with a lawyer. If you hold other people's bitcoins... then I'd talk with a lawyer (even if you're not a money transmitter, there might be consumer protection or banking laws that might apply).

Otherwise, I wouldn't worry. If I was a miner transferring my bitcoins to an exchange and selling them, then FinCEN won't come after me. FinCEN will get reports from the exchange, and that's what they really care about. The IRS might come after me if I don't report the income, but I think they'd charge me with tax evasion, not being an unlicensed money transmitter.

I am not saying they made Bitcoin illegal intentionally. I am saying they made this by mistake. This is why we should discuss this with them.

This is what happens when You generate a block:
"In addition, a person is an exchanger and a money transmitter if the person accepts such de-centralized convertible virtual currency from one person and transmits it to another person"
(... this is vague: as part of the acceptance and transfer of currency, funds, or other value that substitutes for currency ...)
FinCEN also "goes after" miners :-)

=> I could not find anything in the guidelines that would exempt block-generators from registering.

(A user [not miner] does not generate a block)

That wouldn't make any sense. If you look at the complete FinCEN statement they clearly spell out three categories - users, administrators, and exchangers - and the difference between them. I imagine FinCEN had some help understanding the underlying way Bitcoin works, which is why they address it so specifically. If this is true then they would know simply running the software as a full node is a way to be only a user, the one category they say requires no regulation.

I don't think they're looking at the way the underlying network works. I think they're talking about the infrastructure built on top of it.

Yep. As I said on one of the many other FinCEN threads...

All nodes that generate blocks (transmitters) must register and (I assume) to be compliant must know both parties of all transactions included in the block. This is impossible and thus the guidelines make Bitcoin illegal [in the US and wherever FinCEN thinks it has jurisdiction :-)]

I would urge the US Bitcoin community to discuss Bitcoin with FinCEN. There are positive statements:
- bitcoin is not a currency
- Users of bitcoin do not need to register.
There is good will from the other party :-)

Yes, that's a good point. I think eWallets would also be regulated.

The difference I think between you sending to a recipient directly vs. using an eWallet as intermediary is something we've discussed on this forum, which is fractional reserve. An eWallet holding user funds MyBitcoin.com style can abscond with the funds or misrepresent the amount of funds they had. With virtual currencies having real value and FinCEN essentially saying that's ok, I think it makes sense they want to cover any entities dealing with funds.

I just re-read that and am now seeing that part being missed in the various initial interpretations of FinCEN's guidance.   FinCEN's guidance only addressed transfer of virtual currency when "as part of the acceptance and transfer of currency, funds, or other value that substitutes for currency".  

But how would an EWallet provider know if I was sending from my EWallet to someone as part of a transfer of currency or if it was a gift, or perhaps I bought something and was paying with bitcoins.

From the director's remarks, it sounds like an EWallet would be an MSB (and thus need to obtain identity of the users then).   But almost no EWallets require that.     And I don't need an intermediary to transfer bitcoins anyway -- I can send right from my own client, without using an EWallet.

Or, are all peer nodes now considered "money transmitters" that must register with FinCEN as MSBs.

This isn't guidance from FinCEN, this is mis-guidance from the highest level.

Not quite. Registration of a money transmitting business under section 5330 is only required if the business is also required to file reports under section 5313, which involve transactions in US currency above a certain amount.  This creates the weird situation where a business that is otherwise exempt from registering could get nailed when they try to cash out.  As others have suggested in this thread, there are possible ways around this, such as not directly receiving US dollars, or doing so through a bank or MSB.

I'm more interested in what the Chinese Govt thinks of BTC.

Again, we need a definition of "real money".

You may incur a minor loss but the amount you could have made selling btc for cash than purchasing and selling bullion would definitely be offset by not only the fee for the licensing if individual miners are even able to purchase one but related tax as well. Question however is if gold bullion  would be considered a good/commodity purchased online or the equivalent of currency.