Topic: FinCEN addresses Bitcoin - page 2. (Read 28359 times)

Would be a viable option unless they just make it illegal to purchase gold or any precious metal online. Furthermore, wouldnt this method mean you would not only not have to purchase the money transmitter license and register as an msb, and you would not pay the significant taxes on it as well. Instead you would treat the bullion sold as capital gains, saving you perhaps thousands in taxes.

Legal, perhaps. Smart? Doubtful. Bullion dealers sell over spot and buy under spot. So unless you're willing to wait for your PM of choice to go up significantly in value to eventually cash out at parity...

How about if you use bitcoin to purchase bullion from coinabul and sell the bullion at your local dealer? This method legal?

This is my future call on this one, I have been right on most of my bitcoin calls so far.
This is the U.S. way of trying to trace illegal transactions, either comply or die. Thats the way they work do as they say or they will make you life living hell until you
A) Give up and go to prison
B) Spend all of your money defending yourself and go to prison broke and pissed
C) They still take all your money and belongings, but you win the case and it takes 3 years to sue the gov for all your belongings back.
D) "Only gonna happen 1 time" You set a president case and win. Or lose and A & C still happen.

I do not see any country sending citizens to the U.S. for bitcoin related crimes lol. But I do see non compliant business getting a generic cease and desist letters if they are not compliant.

Theoritically speaking  all business have not applied are liable to this

http://www.fincen.gov/news_room/ea/ea.msb.html

And the plot thickens...

TBH, I don't see how FinCEN can enforce this idiotic edict. If I was a pool operator, the most I'd do is move my operation offshore. As far as complying with not accepting US based miners, "err, sorry, I do not recognize your "universal jurisdiction" over the entire planet." They'd need the cooperation of the foreign host government, which they currently do not have regarding matters like closing down domains that infringe "copyright" - Not universally at least. Until I can no longer move to a place that is not cooperating with them, I'll continue to wave my willy in their faces. 

even better. once you're accepting transaction fees and not only create BTC from the block reward you are a money transmitter by default.

It's an attempt to institutionalize mining. And while I am an optimist at heart, my bet is on their plan going through, unless the totalitarian power of governments itself will be shaken during the upcoming currency collapse.

The advantage of an institutionalized mining landscape is that it CAN be governed. How bad that may sound, it's a significant improvement over the existing money systems, because bitcoin is a completely transparent system - and transparent government should be embraced.

Unfortunately institutionalized mining also allows for capital control, because it can enforce rules which disrupt the ability to send funds freely around. This may be a problem if the majority of participating countries become totalitarian regimes.

However, there is a silver lining. The evolution of cryptocurrencies has just begun. We need to put more development emphasis on  concepts which disrupt the ability of governments to capture the mining industry - which is the real warrant for economic freedom.

Do we non-US people (miners/hoarders/exchanges) have to worry too much about FinCEN?

FinCEN has extended their reach to include MSBs serving those from the U.S. regardless of where in the world the MSB is based:

- http://www.fincen.gov/news_room/nr/pdf/20110715.pdf


I'm wondering here ... if I mine at a pool then I am getting payout not with newly mined coin but from the pool operator's wallet.    The pool would be, in that instance, the recipient of the "created" coin.  Now the pools that payout generated coin directly to the miners (e.g., Eligius), then that's different.

But this could turn into something that becomes something of a threat to Bitcoin.

If a pool wants to avoid serving those from the U.S., that means it would then need to know where the miner is from.  A pool would then be unable to serve miners who remain anonymous then, unless the pool follows the steps like online casinos follow where they block IP addresses for those trying to access the service from the U.S.   But that means no Tor access either.

So this becomes a choke point where FinCEN regulations could be used to seize equipment at a pool for sending payouts to miners in the U.S. where neither the pool nor the miner have registered as MSBs as money transmitters.  The only protection from this is for the pool to verify ID of all miners.

This may not have been their intention or it may be their tactic to prepare the battlefield.

Problem areas are things like the money-changer non-player-character in a MUD, who exchanges gold pieces and platinum pieces and copper pieces and whatever, basically all the different regions of the MUD are able to have currencies of their own and this NPC lets you turn in the money you got in some other region for whatever they happen to use in the region the moneychanger is in.

Blockchain technology lets currencies no longer have to be stuck in just one region or even just one MUD, so any MUD anywhere could accept and change any blockchain-based tokens.

-MarkM-

They can't do that.

Congress passed a law which allows FinCEN to regulate certain things.  And in that law (31 USC § 5312) it says "United States coins and currency" and "coins and currency of a foreign country" and certain other monetary instruments such as travelers’ checks.  "Virtual currency" isn't in there.  They cannot change the definition of currency to include virtual currency or bitcoin, because the law does not give them the authority to do that.  And if they try to do that, someone can take them to court and have it struck down.

So instead they come up with this stuff about bitcoin exchanges being money transmitters.  In many cases, this type of activity would not meet the legal definition of a money transmitting business, but in some cases it might.

There's already so many arcane laws, rules, regulations, guidances, by-laws, treaties, etc you are already in violation of ....  they can "go after you" if they like anyway.

If 70 out of 100 miners are not in the USA? And the other 30 miners which are in the USA but you can't figure out their IP address for whatever reason?

OTOH, if you don't, you're in violation of FinCEN, they can go after this key group of people if they want to.

The question is how practical it is to enforce this.

"A person must exchange the currency of two OR MORE countries to be considered a dealer in foreign exchange". This "or more" means probably that mtgox is a dealer. You can not do a transaction with 3 currencies ... so "two or more" means that it does not have to be a single transaction. But of course it is better to ask a specific question :-)

Well no you can't.  You can exchange USD for BTC and you can exchange EUR for BTC.  MtGox (and other specifically) don't have a USD:EUR market for this exact reason.  APMex sells gold bullion in USD, CAD, EUR (and likely half dozen other currencies).  In theory you could use them to trade USD for EUR using gold purchases and sales as a middle man.  They aren't a dealer in foreign exchange.

If you want real info go to the source:
http://www.ecfr.gov/cgi-bin/text-idx?SID=1b9bbca34ea4e56340935841929ee09c&c=ecfr&tpl=/ecfrbrowse/Title31/31cfrv3_02.tpl#1000

The two sections most relevent to MSB are 1010 and 1022.  If you are real interested open 1010 and 1022 is seperate tabs/windows because both sections make lots of references to the corresponding other section.

You can't simply ask for a "generic" administrative ruling.  You need to provide a specific example.  Say you are the owner (or legal counsel for) a company called CoinFort which allows clients to buy and sell coins using ACH as a funding and disbursement method.  If you have specific question on your business model related to specific MSB regulation (most likely needing clarification on a definition or meaning) you can request an administrative ruling.

In an administrative ruling, FinCEN is obligated to respond to the specific questions asked by an MSB.  The purpose is to prevent a lawsuit (which would be the only other way to get a resolution).

There is no legal right (sadly) for them to answer general questions, hold open hearings, or hear criticisms/concerns in a public forum, etc.

Still , mtgox and others have more than 2 currencies and are thus "dealers in foreign exchange". I can perfectly exchange EUR against USD there (via BTC).

Nobody has ever thought Bitcoin (and other virtual currencies) are legal tender.  Not sure what you think that means.

Dealers in Foreign Exchange

            A person must exchange the currency of two or more countries to be considered a dealer in foreign exchange.19 Virtual currency does not meet the criteria to be considered "currency" under the BSA, because it is not legal tender. Therefore, a person who accepts real currency in exchange for virtual currency, or vice versa, is not a dealer in foreign exchange under FinCEN's regulations.

Not sure if anybody has highlighted this yet.

I think FinCET still does not know how to treat BTC. I think we should lobby to convince them to treat BTC as cash in foreign currency. This will simplify the full legalization and understanding of BTC.

- if You exchange your own BTC against cash in other currency (USD): You don't need to register
- if You provide the service of holding, sending, exchanging BTC: You need to register (like any other financial institution)
- businesses accepting BTC need to follow the same rules as if they would accept cash (their banks follow FinCEN guidlines)
- miners are like businesses that accept BTC (cash) for their service. Sooner or later there will be income tax on that :-) but only if this cash will arrive on a bank account, the facilitating bank / exchange must follow AML guidlines.
- the status of mining pools is not clear, but most likely they could be treated like any other business that generates revenues and pays their employes/contractors (unfortunately normal businesses know with whom they do business and are required to report this ... pools don't ! US based pools will be probably required to collect a lot of information from miners and miners will not accept this => I worry that US based pools will be hit the hardest by the FinCEN guidelines => they will go offshore)

Whenever a conversion of BTC to USD bank deposits happens then AML rules must be followed and will be followed by the exchanges. After BTC is converted to funds on bank accounts then AML rules are already in effect (when an exchange send BTC converted to USD to the client's account).

Basically, I think it is better if we write the guidelines on behalf of FinCEN rather than letting them do this. This would prevent some strange rules, like requiring every miner to register at FinCEN.