However someone would have a legit argument if they wanted the cost and complexity of a court case.
I agree that it's a logically valid conclusion and I'm not optimistic about logical validity being very reliable when it comes to the US court system. Perhaps I'm overly cynical, but I expect a smart hostile regulator would levy a fine of $1 less than the cost of winning that case. 
Topic: FinCEN addresses Bitcoin - page 6. (Read 28359 times)
I think the actual creation occurred in 2009 when the Bitcoin Protocol was launched. I would argue that the protocol "creates" the coins, and USA based miners are just claiming them.
It's a point that a hostile regulator or judge would not likely accept.However someone would have a legit argument if they wanted the cost and complexity of a court case. A Bitcoin miner can't make any Bitcoin not allowed by the protocol. The protocol has always allowed only 21M coins. On day zero there were 21M coins available (for someone with sufficient hashing power). The protocol decides how and when a Miner will receive a coin (as a subsidy for securing the network).
^ Note the above shouldn't be seen as legal advice. Ultimately on this or any other issue what matters is what the old guy in a robe thinks, still many judges are logical and a logical argument can be made that Bitcoin miners aren't "creating" coins anymore than gold miners are creating gold. They are simply "unlocking" them.
I think the actual creation occurred in 2009 when the Bitcoin Protocol was launched. I would argue that the protocol "creates" the coins, and USA based miners are just claiming them.
It's a point that a hostile regulator or judge would not likely accept. I would argue that the protocol "creates" the coins, and USA based miners are just claiming them.
This is a fair point (not that my opinion is relevant, as no court case or other precedent has yet established either way)
Here are my 2 cents
* Any regulation that applies to Money Orders will eventually apply to Bitcoin.
* This includes businesses that accept or resell Money Orders ( http://www.fincen.gov/financial_institutions/msb/materials/en/prevention_guide.html )
* What explicitly isn't mentioned is that merchants (people who accept BTC) are required to register. This seems to be partially covered by this sentence
If that sentence means that anyone who provides a service for BTC needs to register, then it's possible that miners, who are accepting BTC for securing the network, needs to register.
Aside:
I don't like saying mining "creates units of this convertible virtual currency" like the notice indicates. I think the actual creation occurred in 2009 when the Bitcoin Protocol was launched. I would argue that the protocol "creates" the coins, and USA based miners are just claiming them.
* Any regulation that applies to Money Orders will eventually apply to Bitcoin.
* This includes businesses that accept or resell Money Orders ( http://www.fincen.gov/financial_institutions/msb/materials/en/prevention_guide.html )
* What explicitly isn't mentioned is that merchants (people who accept BTC) are required to register. This seems to be partially covered by this sentence
Quote
Accepting and transmitting anything of value that substitutes for currency makes a person a money transmitter under the regulations implementing the BSA
If that sentence means that anyone who provides a service for BTC needs to register, then it's possible that miners, who are accepting BTC for securing the network, needs to register.
Aside:
I don't like saying mining "creates units of this convertible virtual currency" like the notice indicates. I think the actual creation occurred in 2009 when the Bitcoin Protocol was launched. I would argue that the protocol "creates" the coins, and USA based miners are just claiming them.
Please link you article when you are finished 
I am preparing an article about this and I have a call into Fincen for clarification.
If you get someone knowledgeable on the phone clarify that a miner exchanging Bitcoins for "real currency" using a broker/exchange registered as a MSB, doesn't itself need to register as a MSB.
i.e. Bob the miner exchanges coins for USD at CoinFort (a registered MSB). Bob is not registered as an MSB is Bob compliant? Lets say Bob is running his mining operation as a business but never sells coins to other individuals but only to CoinFort is he still compliant?
Well I guess there is no loophole then lol
Trading bitcoin isn't "foreign exchange".If this is relevant to your business, I would advise obtaining an up-to-date version of the regulations, and discussing it with legal counsel.
If I'm interpreting this correctly the definition for Centralized Virtual Currencies would apply not just to Second Life's Linden dollars, but also to WoW gold and any other video game economy?
By the preceding definition, Magic the Gathering: Online tix are a virtual currency, as they have an equivalent cash value (a dollar) and are a substitute for real currency in the game (they are used to pay event entry fees, and are a preferred medium of exchange for purchasing cards when trade partners cannot be found).
The implications of this 'guidance' appear to be pretty far reaching.
Quote
In contrast to real currency, "virtual" currency is a medium of exchange that operates like a currency in some environments, but does not have all the attributes of real currency. In particular, virtual currency does not have legal tender status in any jurisdiction. This guidance addresses "convertible" virtual currency. This type of virtual currency either has an equivalent value in real currency, or acts as a substitute for real currency.
By the preceding definition, Magic the Gathering: Online tix are a virtual currency, as they have an equivalent cash value (a dollar) and are a substitute for real currency in the game (they are used to pay event entry fees, and are a preferred medium of exchange for purchasing cards when trade partners cannot be found).
The implications of this 'guidance' appear to be pretty far reaching.
I wonder if they could nail every company that sells gift cards? They are virtual currency.
What about Microsoft xbox points? that's a virtual currency?
Every game online store? Blizzard, EA, all screwed.
This is a huge can of worms.
Well I guess there is no loophole then lol
Trading bitcoin isn't "foreign exchange".If this is relevant to your business, I would advise obtaining an up-to-date version of the regulations, and discussing it with legal counsel.
Well I guess there is no loophole then lol
Its the exchange part that gets you, but I think the stipulation is over 1000 USD if you are not a bussiness. But really at this point no one knows.
(1) Currency dealer or exchanger. A currency dealer or exchanger (other than a person who does not exchange currency in an amount greater than $1,000 in currency or monetary or other instruments for any person on any day in one or more transactions).
This does not apply to bitcoins. "Currency" is defined in 31 CFR 1010.100(m) as "The coin and paper money of the United States or of any other country that is designated as legal tender and that circulates and is customarily used and accepted as a medium of exchange in the country of issuance." (1) Currency dealer or exchanger. A currency dealer or exchanger (other than a person who does not exchange currency in an amount greater than $1,000 in currency or monetary or other instruments for any person on any day in one or more transactions).
Also note that the part you quoted (31 CFR 1010.100(ff)) has been updated recently. The wording was changed from "Currency dealer or exchanger" to "Dealer in foreign exchange".
Thats pretty funny cause Miami was built on laundered drug money.
Incidentally,
AML specialists are hard at work this week for the moneylaundering.com 18th Annual International AML & Financial Crime Conference at the Westin in Miami:
- http://www.moneylaunderingconference.com/2013/default.asp
They might be overjoyed to learn that through this guidance FinCEN found some new meat to help them generate some billable hours that well allow them to make it through these lean times.
AML specialists are hard at work this week for the moneylaundering.com 18th Annual International AML & Financial Crime Conference at the Westin in Miami:
- http://www.moneylaunderingconference.com/2013/default.asp
They might be overjoyed to learn that through this guidance FinCEN found some new meat to help them generate some billable hours that well allow them to make it through these lean times.
Can go either way. Chances are that the regulators will want to screw both you and your pool. They will screw the pool for creating bitcoins and then selling them for fiat. I am referring here to functionality of, say, eclipsemc to cash out mined coins via paypal. And then they will screw you for mining and selling bitcoins and having the pool as your agent. Whoever has got better lawyers or a pocket judge wins this one....
Quote
c. De-Centralized Virtual Currencies
A final type of convertible virtual currency activity involves a de-centralized convertible virtual currency (1) that has no central repository and no single administrator, and (2) that persons may obtain by their own computing or manufacturing effort.
A person that creates units of this convertible virtual currency and uses it to purchase real or virtual goods and services is a user of the convertible virtual currency and not subject to regulation as a money transmitter. By contrast, a person that creates units of convertible virtual currency and sells those units to another person for real currency or its equivalent is engaged in transmission to another location and is a money transmitter.
See my emphasis. This is while not crystal clear but it is difficult to interpret any other way than as bitcoin miners are money transmitters if they sell for fiat. You can interpret it as you like, but what is important is how judges and regulators will interpret it and you can bet they will not be trying their best to bend over in favor of miners, the opposite is more likely.
However, selling for fiat on an exchange is unlikely to make the miner a "money transmitter", because "money transmitting" function is performed in this case by the exchange.
Soo.. if I contract with a mining pool to provide hashes, and get paid in BTC.. am i a miner? Or is the Pool Op the miner? After all, the mined coins go to HIS wallet when first "created" ...
I'm just providing hashes.. he's the one who's building the new block, and broadcasting it out to the world to be included in the blockchain....
Sigg
Its the exchange part that gets you, but I think the stipulation is over 1000 USD if you are not a bussiness. But really at this point no one knows.
(1) Currency dealer or exchanger. A currency dealer or exchanger (other than a person who does not exchange currency in an amount greater than $1,000 in currency or monetary or other instruments for any person on any day in one or more transactions).
(1) Currency dealer or exchanger. A currency dealer or exchanger (other than a person who does not exchange currency in an amount greater than $1,000 in currency or monetary or other instruments for any person on any day in one or more transactions).
By contrast, a person that creates units of convertible virtual currency and sells those units to another person for real currency or its equivalent is engaged in transmission to another location and is a money transmitter.
I don't see how this applies to selling mined bitcoins. Suppose I mine some bitcoins and sell them for cash. I hand over a private key and receive cash, at the same location. Where is the other location? This doesn't meet the definition of a money transmitter.
Look I sold Flexcoin last year mostly because of this crap.
Instawallet needs to address their business model as well as several of the exchanges.
You'll also see a few other ewallets eventually get caught up in this regulation.
Overall however it's not terrible news, there at least NOW guidelines to build a valid bitcoin economy, something that didn't exist as of yesterday morning.
Instawallet needs to address their business model as well as several of the exchanges.
You'll also see a few other ewallets eventually get caught up in this regulation.
Overall however it's not terrible news, there at least NOW guidelines to build a valid bitcoin economy, something that didn't exist as of yesterday morning.
Never said it was a fact just my view on it. You do not see me going on your page and telling your customers your illegally operating now do you? That would be broad and unsubstantiated claims.
Like it says in the posts
It does not declare this to be required, I just brought it up. But do you really think if the fed classifies you as that, the state won't?
Fed trumps state? Yes or NO?
Legal Definition of a Money Transmitter Per Fin Cen
http://www.fincen.gov/news_room/rp/rulings/html/fincenruling2003-8.html
Here is the whole definition
Like it says in the posts
Quote
Now this brings up the states
It does not declare this to be required, I just brought it up. But do you really think if the fed classifies you as that, the state won't?
Fed trumps state? Yes or NO?
Legal Definition of a Money Transmitter Per Fin Cen
http://www.fincen.gov/news_room/rp/rulings/html/fincenruling2003-8.html
Quote
The definition of money transmitter for purposes of BSA regulations found at 31 CFR 103.11(uu)(5) includes:
(A) [a]ny person, whether or not licensed or required to be licensed, who engages as a business in accepting currency, or funds denominated in currency, and transmits the currency or funds, or the value of the currency or funds, by any means through a financial agency or institution, a Federal Reserve Bank or other facility of one or more Federal Reserve Banks, the Board of Governors of the Federal Reserve System, or both, or an electronic funds transfer network; or
(B) [a]ny other person engaged as a business in the transfer of funds.
FinCEN does not currently interpret the definition of money transmitter to include the third-party origination service that is described in your letter. The nature of the transactions you describe is the transfer of funds through the ACH system from a customer to a merchant as payment for goods and services. [ ]’s role in the transactions is to provide merchants with a portal to a financial institution that has access to the ACH system. [ ] acts on behalf of merchants receiving payments rather than on behalf of customers making payments. For these reasons, the service that [ ] provides through [ ] more closely resembles payment processing/settlement than money transmission. Therefore, to the extent that the role of [ ] in such transactions is limited to submitting payment instructions obtained from a merchant to a bank for ACH processing, and remitting the funds received through the ACH process to the merchant (or in some cases, refunding money to the merchant’s customer through an ACH transaction), FinCEN would not deem [ ] a money transmitter for purposes of 31 CFR 103.11(uu)(5).
In arriving at our decision in this matter, FinCEN relied upon the accuracy and completeness of the representations made in your February 5, 2003 letter. Nothing precludes FinCEN from seeking further action should any of this information prove inaccurate or incomplete. Finally, we note that you have requested that certain information contained in your letter be held in confidence and exempt from disclosure under the Freedom of Information Act, 5 U.S.C. 552. FinCEN reserves the right to publish this letter as guidance to financial institutions with all identifying information about you, [ ], [ ], and [ ], redacted. You will have 14 days after the date of this letter to identify any other information you believe should be redacted and the legal basis for the redaction. Should you have any questions, please telephone Christine Del Toro of my staff at (703) 905-3590.
Edit(A) [a]ny person, whether or not licensed or required to be licensed, who engages as a business in accepting currency, or funds denominated in currency, and transmits the currency or funds, or the value of the currency or funds, by any means through a financial agency or institution, a Federal Reserve Bank or other facility of one or more Federal Reserve Banks, the Board of Governors of the Federal Reserve System, or both, or an electronic funds transfer network; or
(B) [a]ny other person engaged as a business in the transfer of funds.
FinCEN does not currently interpret the definition of money transmitter to include the third-party origination service that is described in your letter. The nature of the transactions you describe is the transfer of funds through the ACH system from a customer to a merchant as payment for goods and services. [ ]’s role in the transactions is to provide merchants with a portal to a financial institution that has access to the ACH system. [ ] acts on behalf of merchants receiving payments rather than on behalf of customers making payments. For these reasons, the service that [ ] provides through [ ] more closely resembles payment processing/settlement than money transmission. Therefore, to the extent that the role of [ ] in such transactions is limited to submitting payment instructions obtained from a merchant to a bank for ACH processing, and remitting the funds received through the ACH process to the merchant (or in some cases, refunding money to the merchant’s customer through an ACH transaction), FinCEN would not deem [ ] a money transmitter for purposes of 31 CFR 103.11(uu)(5).
In arriving at our decision in this matter, FinCEN relied upon the accuracy and completeness of the representations made in your February 5, 2003 letter. Nothing precludes FinCEN from seeking further action should any of this information prove inaccurate or incomplete. Finally, we note that you have requested that certain information contained in your letter be held in confidence and exempt from disclosure under the Freedom of Information Act, 5 U.S.C. 552. FinCEN reserves the right to publish this letter as guidance to financial institutions with all identifying information about you, [ ], [ ], and [ ], redacted. You will have 14 days after the date of this letter to identify any other information you believe should be redacted and the legal basis for the redaction. Should you have any questions, please telephone Christine Del Toro of my staff at (703) 905-3590.
Here is the whole definition
Quote
(uu) Money services business. Each agent, agency, branch, or office within the United States of any person doing business, whether or not on a regular basis or as an organized business concern, in one or more of the capacities listed in paragraphs (uu)(1) through (uu)(6) of this section. Notwithstanding the preceding sentence, the term ?money services business? shall not include a bank, nor shall it include a person registered with, and regulated or examined by, the Securities and Exchange Commission or the Commodity Futures Trading Commission.
(1) Currency dealer or exchanger. A currency dealer or exchanger (other than a person who does not exchange currency in an amount greater than $1,000 in currency or monetary or other instruments for any person on any day in one or more transactions).
(2) Check casher. A person engaged in the business of a check casher (other than a person who does not cash checks in an amount greater than $1,000 in currency or monetary or other instruments for any person on any day in one or more transactions).
(3) Issuer of traveler's checks, money orders, or stored value. An issuer of traveler's checks, money orders, or, stored value (other than a person who does not issue such checks or money orders or stored value in an amount greater than $1,000 in currency or monetary or other instruments to any person on any day in one or more transactions).
(4) Seller or redeemer of traveler's checks, money orders, or stored value. A seller or redeemer of traveler's checks, money orders, or stored value (other than a person who does not sell such checks or money orders or stored value in an amount greater than $1,000 in currency or monetary or other instruments to or redeem such instruments for an amount greater than $1,000 in currency or monetary or other instruments from, any person on any day in one or more transactions).
(5) Money transmitter?(i) In general. Money transmitter:
(A) Any person, whether or not licensed or required to be licensed, who engages as a business in accepting currency, or funds denominated in currency, and transmits the currency or funds, or the value of the currency or funds, by any means through a financial agency or institution, a Federal Reserve Bank or other facility of one or more Federal Reserve Banks, the Board of Governors of the Federal Reserve System, or both, or an electronic funds transfer network; or
(B) Any other person engaged as a business in the transfer of funds.
(ii) Facts and circumstances; Limitation. Whether a person ?engages as a business? in the activities described in paragraph (uu)(5)(i) of this section is a matter of facts and circumstances. Generally, the acceptance and transmission of funds as an integral part of the execution and settlement of a transaction other than the funds transmission itself (for example, in connection with a bona fide sale of securities or other property), will not cause a person to be a money transmitter within the meaning of paragraph (uu)(5)(i) of this section.
(1) Currency dealer or exchanger. A currency dealer or exchanger (other than a person who does not exchange currency in an amount greater than $1,000 in currency or monetary or other instruments for any person on any day in one or more transactions).
(2) Check casher. A person engaged in the business of a check casher (other than a person who does not cash checks in an amount greater than $1,000 in currency or monetary or other instruments for any person on any day in one or more transactions).
(3) Issuer of traveler's checks, money orders, or stored value. An issuer of traveler's checks, money orders, or, stored value (other than a person who does not issue such checks or money orders or stored value in an amount greater than $1,000 in currency or monetary or other instruments to any person on any day in one or more transactions).
(4) Seller or redeemer of traveler's checks, money orders, or stored value. A seller or redeemer of traveler's checks, money orders, or stored value (other than a person who does not sell such checks or money orders or stored value in an amount greater than $1,000 in currency or monetary or other instruments to or redeem such instruments for an amount greater than $1,000 in currency or monetary or other instruments from, any person on any day in one or more transactions).
(5) Money transmitter?(i) In general. Money transmitter:
(A) Any person, whether or not licensed or required to be licensed, who engages as a business in accepting currency, or funds denominated in currency, and transmits the currency or funds, or the value of the currency or funds, by any means through a financial agency or institution, a Federal Reserve Bank or other facility of one or more Federal Reserve Banks, the Board of Governors of the Federal Reserve System, or both, or an electronic funds transfer network; or
(B) Any other person engaged as a business in the transfer of funds.
(ii) Facts and circumstances; Limitation. Whether a person ?engages as a business? in the activities described in paragraph (uu)(5)(i) of this section is a matter of facts and circumstances. Generally, the acceptance and transmission of funds as an integral part of the execution and settlement of a transaction other than the funds transmission itself (for example, in connection with a bona fide sale of securities or other property), will not cause a person to be a money transmitter within the meaning of paragraph (uu)(5)(i) of this section.
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