Topic: FinCEN addresses Bitcoin - page 7. (Read 28359 times)

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.

Just because FinCEN and states use the same term "Money Transmitter" doesn't mean they have the same definitions.  There is no universal legal definition of anything.  One needs to look at the state statute and see if the definition applies.  This is best done with legal counsel and not by making broad and unsubstantiated claims on the intertubes.

What is bizare is that FinCEN failed to address that obvious exception.  Seems they would have clearly identified that a person selling virtual currency they "created" to an exchange (registered as a MSB) doesn't need to register as an MSB as well. 

We (TC, LLC) will be filing for an administrative ruling asking for clarification on a few points and we have included the one above. 

Do you mean OKpay reportedly shaving 6.75% on some debit card accounts already? I guess they have not fared that well.

I would not be so certain that one will not get 40% haircut in some other EU banks before long. Cyprus might turn out a safe heaven in coming years, depending on how this will play out. Islandic banks are definitely looking rather as a safe bet at this point.

If you want them to take 9.9% of your bank account at will lol
But a MAJOR bitcoin business does bank in cyprus I wonder how they faired.

almost time to move the biz to cyprus.

I kinda seen this coming hence moving my business offshore, As the first person to sell Bitcoin-Key's for credit card and later copied by BTCquick, I talked to a informed member of the gov who warned me of this move. Of course If I would have said anything Like I did about the S.E.C. I would have looked like I was trying to bump off the competition, not only that I seen no need to warn business that are competition or have previously stolen my idea pretty much in a whole.
But I can tell you right now that
BTCquick
ZIGZAP
Cash for Bitcoins LCC

Will all have to comply or cease operations, which sucks, cause its going to cost into the 5 to 6 digits to get all that crap sorted out and be in 100% compliance just ask Bitinstant. Doing this with in the 6 month period will be doable but we are in a sequestration right now and I am sure this will reflect on the processing time.
http://www.fincen.gov/financial_institutions/msb/msbrequirements.html

Now this brings up the states your U.S. registered company does business in, now they want a cut to. So every state you have customers you buy or sell to, you will need to be registered in that state as well, just like good ole paypal.
North Carolina Requires 500k capital <---- They got it posted on the Gas station doors that sell green dot and netspend
http://www.dfi.ca.gov/Licensees/money_transmitters/default.html
3,500 app fee lol
http://www.banking.state.tx.us/forms/forms.htm#msb
I know one of the companies listed above is a a Delaware company
http://banking.delaware.gov/services/applicense/tmvintro.shtml
http://delcode.delaware.gov/title5/c023/index.shtml
Its a little cloudy I just skimmed it quick

But it seems if you register your business in the USA and want to trade coin you are going to need more then 100k to do it.

And probably cash back not into fiat but into PM's and real estate.

That's how I see it, too. They force people to never come back. Maybe it will be time to cash out into Bitcoin sooner than we think.

One more observation. It was mentioned by someone before, that the Cyprus thing makes Euro less fungible. I would observe that all the AML/KYC multilayered legal BS is nothing less than a direct (and suicidal) attack on fungibility of all fiat currencies.

They are making their fiat currencies worse and worse and less competitive as money by making them less fungible. Should have been just doing decent police work instead of making their money vulnerable like that.

Perhaps the key to success of Bitcoin as money is preserving Bitcoin fungibility as much as possible and getting to the point where Bitcoins do not have to cross to fiat world and circulate within Bitcoin economy as much as possible. In this case Bitcoin will simply win because it is better money than less fungible fiat currencies. We are making quite good progress on this so far but this can be improved on a lot.

How are businesses that pay bitcoins to independent contractors in exchange for their services, which help the business profit in USD, classified?

My first thought when I read about this ruling was, like many, "great! bitcoin is legal!". Now I'm unsure again. I've always held nagging doubts about bitcoin, and how amazingly effective it would be as a 1984-esque tool for population control and governance. To recap, just suppose BigGovt gains >51% of mining, and suddenly the only transactions getting through are government-approved transactions, to government-approved bitcoin addresses - it would be the ultimate Big Brother.  Yeah, yeah, yeah, I know, many people more clever than me have suggested measures against this, but I'm still not convinced.

So, now what, are these bitcoin "money transmitters" going to need to register their bitcoin address(es) with some government department so they can be monitored for compliance? How exactly are they going to police this ruling?

This ruling seems positive for bitcoin, but I'm seeing it more as a shot across the bow: "bitcoin: we're coming for you." In fact, many threads have said that the weak point in the bitcoin ecosystem is the fiat exchangers. How about that.

I call on the devs to prioritize a modification to the block approval code in the client, to reject blocks that do not include enough valid and well-broadcasted transactions. We need better discussion on this in order to establish exactly how to proceed.

As lucid as ever Vlad .. this is precisely what is happening. It is the diminishing marginal returns of complexity effect and we are witnessing it as the slow motion collapse of the existing monetary system as more and more layers of complexity, regulation, jobsworth, BS, etc are piled higher and deeper, yet every move makes the situation worse not better. It has already begun to fall under its own weight.

The legitimacy of the state is seriously undermined by all this arbitrariness of course, it is how banana republics evolve.

harvesting? lol

Of course! Ben Bernanke told us under oath that gold is not money. If it is not money, then it is certainly not "real money" either or is it?

It seems they are starting getting diminishing return on legislation as well. It is getting more and more complicated because they have turned such a simple thing as money into much more complex one by all this money laundering BS and by adding more and more layers of BS that is self contradictory, sooner or later this heap of BS will fall down under its own weight.

bitcoin --->gold---->fiat.

Problem solved.

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.

As a miner, you are not "engaged as a business in the exchange of virtual currency for real currency, funds, or other virtual currency."

If you return from your holiday with 1000 EUR in cash, and change them at a money changer (or do a swap with someone), are you "engaged as a business in the exchange of real currency for funds, or other virtual currency."?

No.


The law only covers those who "create" virtual currency. E.g. Linden Labs for SLL. I don't see how this can cover miners, who are "granted" virtual currency. I think you are drawing conclusions far too soon here.

A significant downside to the ruling, but one that's easily circumvented; all you need to do is cash in your mining spoils by actually spending them in the Bitcoin economy. Buying 1oz rounds, for instance (which can then easily be exchanged for fiat if that's your thing).

Edit: Of course, you could also just ignore the law, provided you're careful enough about where you cash out (and willing to risk the book getting thrown at you if you're discovered).

There's also this exemption:

- http://cfr.regstoday.com/31cfr1010.aspx#31_CFR_1010p100

The only time I've seen a definition of "infrequent" was in this report from McGladrey in which the definition mentions "fives [trades] or less [per year] and not done for profit":
 - http://bit.ly/XYi9AF

Now that's for needing to register as an MSB.  That doesn't mean you aren't a money transmitter.