Topic: FinCEN responds to clarification requests - page 2. (Read 9008 times)

Frazier v. Cupp, 394 U.S. 731 (1969), was a United States Supreme Court case that affirmed the legality of deceptive interrogation tactics.

Yup, the Constitution, Supreme Court rulings and legal precedent matter not.

And, since the government routinely lies to people and it almost always goes unpunished (whether Frazier v. Cupp, 394 U.S. 731 (1969), et al applies or not), even if the government says what you're doing is 100% legal, good luck having a judge rule in your favor after you get prosecuted anyway.

Well, that's not true. At all. Except in the sense that the IRS attempt to intimidate people into believing they have legal authority to tax, but legally, they have no authority to tax.

** not true.  Doug Jackson of e-gold had a legal opinion from his attorneys that said they were 100% certain what he was doing was not illegal.  He was still indicted

http://www.justice.gov/opa/pr/2007/April/07_crm_301.html

From your description you sound like a user, though if you want to be covered, then you get a lawyer to write a legal opinion for you and follow their advice.
Relying on competent legal advice can show that you have no intent to break any law.  "Intent" being a component in most any serious crime.

I got a phone response from a representative who points me to this documentation:

http://www.fincen.gov/statutes_regs/guidance/pdf/FIN-2013-G001.pdf

They have also stated that I need to determine whether I qualify as one of the following:


User
Exchanger
Administrator


According to the representative on the phone, if I fall into Categories that are not User, I will be required to create an AML policy and enforce my participatnts to use it. 


Looking into details on this form, I see here that both Exchanger and Administrator use this specific language:  Engaged As a Business

Furthermore, the Administrator is simply and Exchanger that has the ability or 'authority' to rightfully add or remove units of currency from circulation.  (To me this is akin to using the program itself to adjust the hard limit issued either upwards or downard. 

I will proceed to attempt defining what constitutes what...I'd love for a lawyer to clarify or point me out if I'm wrong on these assertions (sorry if i muck this one up in advance)

Individual Miner - is not engaged as a business: USER
Individual Miner with 20+ TH distributing bitcoin dividends - not engaged as a business, not converting to local fiat: USER
Exchange that transacts in Alts only - Engaged as a business, not converting to local fiat: USER
Exchange that can transact to USD  - Engaged as a business, converting to local fiat: EXCHANGER
Ripple Network  - Engaged as a business, Converting to local fiat, ability to add/remove money into the system: ADMINISTRATOR
Localbitcoins.com User who sells more than 10K fiat - Not engaged as a business, converts to local fiat: USER
Localbitcoins.com website/administrator - Engaged as a business, facilitates but doesn't itself convert to local fiat:  USER


From the reasoning set forth in the guidelines, unless you are Registered as a Business (such that you are an LLC or an INC that is writing off mining equipment hardware to offset mining earnings Tax revenue liability), AND you provide a service where you Buy and Sell Bitcoins for USD then you are an: EXCHANGER

Words used in technology are often not the words needed in Law.  Sure, Transmit-Receive pairs on your RJ-45 pins 1,2,3,6 are transmitting your bitcoins... but if the opposing lawyer asks you that, it can be a trap.  The judge may be bamboozled, and legal precedent set.  Duplicity is a linguistic art form used to devastating effect in the law, and unless you are getting expert assistance from someone that speaks the local language of legalese, you are at a strong disadvantage.

In my industry, folks are afraid to call a coin a coin unless it was made by a government, because governments have the ancient (non-exclusive) power to coin money.

The verb form and the noun form may be used by a savvy lawyer to suggest that the minter is committing fraud by claiming to be a government, and that (possibly justifiable) fear has tarnished our industry for years.

This is correct.

You've already capitulated on a matter of arguable fact. You have conceded that such activity meets the legal definition of money transmission.

I feel this is a strategic mistake.

Via legal precedent, taking on unsophisticated adversaries, as well as venue shopping, the 'legal system' will incrementally expand their side of the story, leaving the only available activities (i.e. still legal) as mere vaporous scraps.

https://bitcointalksearch.org/topic/m.3069520

... and then move to a place where Libertarians are not scorned and Freedom is not a dirty word.

Thanks Help.org,


I've also sent a letter and am awaiting a reply : 

Hello Mr. Hudak,

I am planning to mine for bitcoins myself and will be acting as a buyer and seller of virtual currencies for US dollars.  As an individual, I may have months where I transmit nothing and other months where I transmit literally $1000's of dollars.  I currently reside in CA but plan to move to adjacent states within the next 3-5 years and understand that I will need to comply with the local rules of the jurisdiction where I reside.  In the meantime, can you clarify for me wether or not I will need to register with fincen?  Is there an individual licence or permit that I could apply for which would allow me to participate in the bitcoin economy without worry of fear of my accounts/funds being seized?

+1

And if you don't thing the US has reach beyond its boards, read this.

http://www.nytimes.com/2013/09/01/business/in-treasurys-war-missiles-for-a-financial-battlefield.html?ref=books&_r=1&

Basically, you are suggesting we use laundering services to avoid getting in trouble with the AML authority.

The only way forward is to work with the government by educating them, turning influential individuals into Bitcoin stakeholders, and avoiding suggestions like the one above. It is perfectly clear that current FinCEN interpretations are anywhere from misguided to idiotic, but it is also perfectly clear that the bigger Bitoin grows, the less under the radar it remains. Regulation is here to stay, and we as stakeholders need to do all we can to ensure the rules are acceptable for those who generally follow rules. Even if you don't follow rules, this is still in your best interest.

Well there is Fidor Bank.

By "it" I meant the government, not FinCen specifically. Also, to be fair, one of the primary purposes of FinCen is to enforce AML laws, and the main purpose of AML laws is to ensure that taxation happens, so yea.

Since almost every single bank in the US is scared shitless to do any business with BTC I think it's going to end up biting them in the end.  I bank with US Bank and went to them about future deposits coming in to my account.  I was told that at this point they want nothing to do with it, and if they see any deposits coming in they will shut me down. I have been waiting on the magic Google search for "bitcoin friendly banks" to spit out a friendly answer and can't get a winner... When Google doesn't have an asnswer something is wrong.   There are plenty of other ways to get fiat without leaving a trace, and it seems like that is what they are going to force everyone to do.  They scream tax evasion while forcing your hand.  Got to love the government.  Although... someone has to pay for the illegal searches they do on the American people every day... that has to get expensive.  

The thing that makes sense and is actually enforceable and reasonable is for FinCen to regulate transactions at the same time its taxing them: When fiat becomes involved. Furthermore, doing an exchange within a regulated exchange should prevent you from needing to become a regulated exchange. That doesn't seem that hard.

This deal about miners needing to become regulated just to exchange is sorta dumb, especially if they are going through something that actually needs to be regulated (like Mt Gox). Also, how the fuck are you going to tell I mined the coins myself? Mine 'em, stick 'em through a mixer, oh look I no longer have new coins time to exchange.

Everything other than the regulation of exchangers to me seems like a load of bollocks.

Another thing that is stupid is that the exchanger has to be registered 51 goddamn times, making the barrier to entry several hundred thousand dollars, which serves no purpose other than stifling competition, its not as if Mt. Gox needs to collect each client's ID 51 times over or something. But thats a different subject. 

And it going to be bigger than government created market for radar detection widgets. Though not sure about the size of antivirus software market raised by Microsoft

The IRS.... and for that matter the government being shady?  Well I wear a cement helmet all day long and I sure have never seen anything of the sort!  How could anyone think such nonsense bahahaha.