Fincen Requirements? | Bitcointalksearch.org

btcash

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Quote from: MSantori on June 03, 2013, 01:56:40 PM

Quote from: btcash on June 03, 2013, 01:54:27 PM

Why do some companies have to apply in each state for a money transmitter licenses and some only register as a MSB with FINCEN?
Banks are not considered as MSBs?

Speaking generally, both banks (a kind of depository institution) and money transmitters (a kind of MSB) must register with FinCEN and obey AML regulations.

A company must register in every state for which it provides MSB services under that state's law.

So registering with FinCEN as MSB doesn't mean that you are allowed to conduct business in the USA?
Why do I read everywhere that MtGox just needs to register with FinCEN and they will be fine? Why don't they need a money transmitter state license?

DeathAndTaxes

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Gerald Davis

Quote from: MSantori on June 03, 2013, 01:56:40 PM

A company must register in every state for which it provides MSB services under that state's law.

In general terms do you know why this has not been found to violate the prohibition of states regulating interstate commerce. That prohibition clearly applies on states which do commerce other than MSB which cross state lines yet MSB related services seem strangely treated differently.

To avoid confusion I am not talking about State X regulating a business which reside in State X and provides regulated services to residents of State X but rather a business in State X offering services remotely (i.e. through mail, internet, or phone) to a resident in State Y.

MSantori

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Quote from: btcash on June 03, 2013, 01:54:27 PM

Why do some companies have to apply in each state for a money transmitter licenses and some only register as a MSB with FINCEN?
Banks are not considered as MSBs?

Speaking generally, both banks (a kind of depository institution) and money transmitters (a kind of MSB) must register with FinCEN and obey AML regulations.

A company must register in every state for which it provides MSB services under that state's law.

btcash

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Why do some companies have to apply in each state for a money transmitter licenses and some only register as a MSB with FINCEN?
Banks are not considered as MSBs?

MSantori

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Quote from: Viceroy on May 30, 2013, 01:15:55 PM

Quote from: Viceroy on May 30, 2013, 12:34:36 PM

So if the issue-er was, let's say, FastCashforBitcoins and they sold bitcoin to a person in California they would be a money transmitter acting without a license. Right?

Quote from: MSantori on May 30, 2013, 12:41:00 PM

So, yes, I believe that most bitcoin businesses would be snagged by this.

Thank you for that opinion, Mr Esquire.

To your point, sir, I am a law abiding American and proud to be one. If I cannot do what he is doing then he cannot do it either.

* Viceroy bows in the face of the flamethrower that's about to be unleashed.

Viceroy, it might look to an uncritical observer like you are trying to put words in my mouth. I did not refer at all to FastCashforBitcoins and do not intend to pass on their regulatory status. That's all I really have to say on that issue.

Otherwise, thank you for the kind words. I'm happy to help however I can.

Viceroy

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As any good lawyer should. That is why I pay lawyers, for their opinion. Securities lawyers with an expertise are very very very expensive because it takes a ton of work to figure it all out. We are lucky you play with us, Marco. On behalf of the community I thank you for any and all insight as we try to figure out all these convoluted regulations.

The conservative thing to do is to become licensed in every location in which you want to operate.

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Quote from: pilotniq on May 30, 2013, 01:26:56 PM

I disagree. Who is the "issuer" of a particular bitcoin, and is liable to the holder of the bitcoin, and has undertaken to pay the stored value? There is no one!

Bitcoin is more like gold, with an intrinsic value. No-one issues gold, it is a commodity which men have given an intrinsic value.

I would guess that someone selling gold for investment purposes would not qualify under these rules (but surely under other rules pertaining to trading in investment commodities). Should be possible to check?

I hear you. The problem that we're both struggling with is reasoning by analogy. The statute doesn't specifically address our situation. No client has yet retained me to do a specific, close analysis of California law on the issue, so I'm left with the bare statutory framework and the scariest analogies I can make. Lawyers are good at scary analogies, and its our job to protect our clients. So, you can imagine why I come out on the risk-averse side of the decision tree.

Viceroy

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Yea I'd sure hate to make case law. ;-)

pilotniq

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Ok, you may be right regarding the FinCen rules.

However, I still maintain that there is no issuer according to the California rules you quoted.

I expect it is possible that you may have to register with FinCen, but not with the state of California as an MSB or money transmitter?

Viceroy

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How about this comment in that thread:

Quote

-1 It says in your quote "A {miner} who uses the units to purchase real or virtual goods doesn't have to register". VS "A {miner} who sells those units to another person is a money transmitter". MtGox is just enabling the transaction. Each person is party to the transaction, so I think registration may be required – makerofthings7 Mar 19 at 3:37

pilotniq

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Quote from: Viceroy on May 30, 2013, 01:38:35 PM

Didn't FinCEN say that miners who sell their bitcoin need to be registered as MSB's?

edit:

Yes, here:
#3 If a miner exchanges their mined bitcoin for real money they MUST register with FinCEN.

https://bitcoinfoundation.org/blog/?p=152

According to the top reply in this thread on StackExchange, it's not so clear:

http://bitcoin.stackexchange.com/questions/8486/do-usa-based-miners-need-to-register-with-fincen

Viceroy

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Didn't FinCEN say that miners who sell their bitcoin need to be registered as MSB's?

edit:

Yes, here:
#3 If a miner exchanges their mined bitcoin for real money they MUST register with FinCEN.

https://bitcoinfoundation.org/blog/?p=152

pilotniq

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Quote from: Viceroy on May 30, 2013, 01:32:06 PM

Miners are issuers. If they sell to "some-bitcoin-website" and they don't say they are miners that could be a problem, no?

Yes.

I don't think so. Miners don't have a liability to pay someone something for the coins they've mined. Just like a gold mine is not an issuer of gold. I see it more as miners being paid by the bitcoin system, or winning a lottery. The creation of bitcoins are a part of the technical protocol.

Viceroy

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Miners are issuers. If they sell to "some-bitcoin-website" and they don't say they are miners that could be a problem, no?

Yes.

* Viceroy declares "I am an issuer".

But I don't sell any of my btc. So I'm ok... I pray.

pilotniq

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Quote from: MSantori on May 30, 2013, 12:41:00 PM

Quote from: pilotniq on May 30, 2013, 11:48:50 AM

My italics:

Quote from: MSantori on May 25, 2013, 05:06:07 PM

California, for example, is notoriously broad. It defines money transmission as "selling or issuing stored value." In turn, "stored value" is defined as "monetary value representing a claim against the issuer that is stored on an electronic or digital medium and evidenced by an electronic or digital record, and that is intended and accepted for use as a means of redemption for money or monetary value or payment for goods or services." Yikes! Many of the bitcoin business ideas I'm approached with are probably within this definition.

I would argue that Bitcoin does not fall under that definition, because it has no issuer, and therefore can not represent "a claim against the issuer".

For the purposes of that statute, the definition of "issuer" is spectacularly broad:

"Issue" and "issuer" mean, with regard to a payment
instrument, the entity that is the maker or drawer of the instrument
in accordance with the California Commercial Code and is liable for
payment. With regard to stored value, "issue" and "issuer" mean the
entity that is liable to the holder of stored value and has
undertaken or is obligated to pay the stored value. Only a licensee
may issue stored value or payment instruments.

So, yes, I believe that most bitcoin businesses would be snagged by this.

I disagree. Who is the "issuer" of a particular bitcoin, and is liable to the holder of the bitcoin, and has undertaken to pay the stored value? There is no one!

Bitcoin is more like gold, with an intrinsic value. No-one issues gold, it is a commodity which men have given an intrinsic value.

I would guess that someone selling gold for investment purposes would not qualify under these rules (but surely under other rules pertaining to trading in investment commodities). Should be possible to check?

Viceroy

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Quote from: Viceroy on May 30, 2013, 12:34:36 PM

So if the issue-er was, let's say, FastCashforBitcoins and they sold bitcoin to a person in California they would be a money transmitter acting without a license. Right?

Quote from: MSantori on May 30, 2013, 12:41:00 PM

So, yes, I believe that most bitcoin businesses would be snagged by this.

Thank you for that opinion, Mr Esquire.

To your point, sir, I am a law abiding American and proud to be one. If I cannot do what he is doing then he cannot do it either.

* Viceroy bows in the face of the flamethrower that's about to be unleashed.

DeathAndTaxes

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Gerald Davis

What stored value? Bitcoins aren't stored value. What obligation does a Bitcoin create for the seller? None. A bitcoin sold can't be later "redeemed" by the buyer at the obligation of the seller. Once sold it is sold and no obligation exists on either party. FinCEN (even as broadly interpreting as they are) has stated that decentralized virtual currencies are not prepaid access (another term for stored value).

MSantori

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Quote from: Viceroy on May 30, 2013, 12:34:36 PM

So if the issue-er was, let's say, FastCashforBitcoins and they sold bitcoin to a person in California they would be a money transmitter acting without a license. Right?

Wow, Viceroy, you really have it out for Tangible Cryptography!

MSantori

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Quote from: pilotniq on May 30, 2013, 11:48:50 AM

My italics:

Quote from: MSantori on May 25, 2013, 05:06:07 PM

California, for example, is notoriously broad. It defines money transmission as "selling or issuing stored value." In turn, "stored value" is defined as "monetary value representing a claim against the issuer that is stored on an electronic or digital medium and evidenced by an electronic or digital record, and that is intended and accepted for use as a means of redemption for money or monetary value or payment for goods or services." Yikes! Many of the bitcoin business ideas I'm approached with are probably within this definition.

I would argue that Bitcoin does not fall under that definition, because it has no issuer, and therefore can not represent "a claim against the issuer".

For the purposes of that statute, the definition of "issuer" is spectacularly broad:

"Issue" and "issuer" mean, with regard to a payment
instrument, the entity that is the maker or drawer of the instrument
in accordance with the California Commercial Code and is liable for
payment. With regard to stored value, "issue" and "issuer" mean the
entity that is liable to the holder of stored value and has
undertaken or is obligated to pay the stored value. Only a licensee
may issue stored value or payment instruments.

So, yes, I believe that most bitcoin businesses would be snagged by this.

Viceroy

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Activity: 924

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Quote from: MSantori on May 25, 2013, 05:06:07 PM

California, for example, is notoriously broad. It defines money transmission as "selling or issuing stored value." In turn, "stored value" is defined as "monetary value representing a claim against the issuer that is stored on an electronic or digital medium and evidenced by an electronic or digital record, and that is intended and accepted for use as a means of redemption for money or monetary value or payment for goods or services." Yikes! Many of the bitcoin business ideas I'm approached with are probably within this definition.

So if the issue-er was, let's say, FastCashforBitcoins and they sold bitcoin to a person in California they would be a money transmitter acting without a license. Right?

Topic: Fincen Requirements? (Read 9480 times)