Topic: FinCEN responds to clarification requests (Read 9008 times)

Japan has had massive budget deficits for 2 decades and still has not collapsed. I am just trying to speed up the process a little.

You wont see that picture in the US. The US doesn't have the mechanisms necessary to create hyper inflation.  We will have a deflationary collapse where the dollar will become very scarce and very strong.   

http://www.youtube.com/watch?v=iquemUNNYY8   

Interesting. I'm not a libertarian so I guess I wouldn't know. But the us government seems to be doing a good job running out of funds all by itself.  The total amount of US tax dollars collected supports less that 1/2 of the cost of all the programs the government provides.   Thus the need to continue to print USD  to the tune of $85 Billion Dollars a month.  

Soon we'll see this photo with US Dollars.

Not for much longer ... those days are coming to an end, squandered by insane laws and stupid, venal lawmakers.

Never heard "starve the beast"? That is a tactic promoted in the libertarian movement. It is typically referred to in regards to taxation. Liberty candidates advocate for cutting tax revenues to such a great degree that the government stops functioning and is forced to enact massive budget cuts.

I support bitcoin because every transaction that happens with it is tax revenue that the state no longer has.

My goal is to defund the governments of the world.

They are not going to willfully let it happen. I told my family when I started that at some point i would probably be labeled a financial terrorist. 

Huh???

Bunch of pussies. I support bitcoin to "starve the beast." You think a beast is gonna willfully let you starve it?

MTGox is based in Japan, but they are also incorporated in Delaware, most likely so they could open up US based bank accounts..

But Mt Gox's money was located in the US.  As the world financial hub and the issuer of the world reserve currency, The US and its regulations will carry significant weight globally.

What does the bitcoin foundation actually do? they are just an organization, like a think tank, aren't they? do they mine? do they sell bitcoins? do they trade in bitcoins? If I recall in their response to them, they said just that.. also, I believe its the State of California that sent them that letter, not the federal government.. I may be wrong.. I dont think the bitcoin foundation has too much to worry about, unless they are involved in a day to day bitcoin type of trading operation.

Also, the Fincen report doesn't mean that they are going to start targeting small guys, but the big boys better be on their toes.. I just looked up campbx, i believe they are in the state of Georgia and from what I have found, they are not licensed as a money transmitter. Granted, they might have some different llc name that has the license, but its not under bitbul or campbx, the 2 names that have appeared on money transfers from them.. Also, the internet database may not be current or have flaws, but its certainly a question ill be asking them. Im going to be making sure any USA based bitcoin exchange is licensed before I transfer any money to them. Sure, ill transfer a small amount to withdraw, but im not going to leave any coins there or cash just sitting....

This is something that we all should be looking at. Look at Mt.Gox, they put on their application at the bank that they were not a money transmitter, yet they are and the govt swooped in and took about 5 million dollars. They aren't even based here...

Looks like tradehill just stopped business at the end of August due to regulatory issues.. I bet you anything they are getting licensed as a money transmitter....

Yes, no, but definitely maybe...

We still have not left the land of speculation on what it all means.  The guidance is new.  It has yet to be enforced anywhere, and the enforcement has yet to be litigated, adjudicated, appealed, heard and made into case law precedent.

We may get our first taste of it from the Bitcoin Foundation vs California, which frankly suits me much better than the Feds going after some tiny miner without the patience and perspicuity to defend a Federal case.

I found a paragraph in the Fincen guidelines that I believe is talking about miners.

"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. In addition, a person is an exchanger and a money transmitter if the person accepts such de-centralized convertible virtual currency from one person and transmits it to another person as part of the acceptance and transfer of currency, funds, or other value that substitutes for currency."

So, if your a miner and takes the bitcoins to purchase something, be it virtual goods or a computer from a place from an online store that takes bitcoins, you don't have to be licensed as a money transmitter. But, if you exchange it for real currency, then you have to be licensed.  So, my question is this. is silver/gold, etc considered real currency or an equivalent? In some states, silver is legal tender, ie, State of Utah, so it might be considered "real currencies equivalent". Is silver a real good?

Im getting more and more convinced that if you are based in the USA and are a miner and you sell your bitcoins for cash, you are, in fact, a money transmitter. The only loophole that Im trying to figure out is if a miner purchases silver with the bitcoins, is that considered a real currency equivalent? Its pretty obvious that cashing out coins for cash is under Fincens guidelines.

The other thing that I have been thinking about is what happens to the guy that has purchased mining bonds? Well, most of these mining companies are violating the SEC law anyways, (Im just assuming that, so I could be totally wrong, but common sense tells me that all these bitcoin IPOs should be technically regulated by the SEC especially if they are based in the usa, but thats not the argument here)

IF I buy bonds of a miner, I wouldn't be considered a money transmitter as Im not mining the currency, but since the bond has a real value, the mining company that pays out the dividends, even if it is in bitocoin, should be licensed as a money transmitter.

Since I know for a fact the the US government HATES bitcoin and every alt currency, I have a feeling that big miners are going to be targeted. Obviously, if your not based in the USA, you dont have too much to worry about. The US Govt would love nothing more than to see bitcoins obliterated.

Like I said before, the small miners don't have a lot to worry about unless they get in trouble for something else and they decide to push it and throw on extra charges. Its the big miners and pool operators that should really worry.  That brings up another question. If Im a miner thats in a pool, and that miner cashes out his coins for currency but didn't actually find the block, would that miner fall under "creation"? That leads me to believe that if you are in a pool, the pool is the one creating the currency, not the miner.

Man, im getting a headache trying to figure this out..

1. Solo miners need to be licensed as money transmitters
2. Pools need to be licensed
3. miners in a pool is a grey area that I personally don't think they need to be registered as the pool is the one creating the currency. So this one is up to interpretation.

Also remember there are 3 definitions that are important. 1. User 2. Exchanger 3. Adminstrator a user doesn't have to worry about being licensed, its the other 2 that need to. here is their definitions.

 "This guidance refers to the participants in generic virtual currency arrangements, using the terms "user," "exchanger," and "administrator."6 A user is a person that obtains virtual currency to purchase goods or services.7 An exchanger is a person engaged as a business in the exchange of virtual currency for real currency, funds, or other virtual currency. An administrator is a person engaged as a business in issuing (putting into circulation) a virtual currency, and who has the authority to redeem (to withdraw from circulation) such virtual currency."

So a miner would be considered a administrator and a pool could be considered either a administrator or an exchanger. The bottom line is the Fincen has drawn the line in the sand. Granted, us miners can ignore the rules, but with any law, if caught doing something illegal, we will have to pay the price.. Like I've said before, getting licensed as a money transmitter is a pain in the ass. But, It looks like we are going to have to do it to be in compliance with the law. At least in the USA..

Thoughts?

I forgot to add that this part of their statement  "In addition, a person is an exchanger and a money transmitter if the person accepts such de-centralized convertible virtual currency from one person and transmits it to another person as part of the acceptance and transfer of currency, funds, or other value that substitutes for currency." Is for companies that dont buy bitcoins, but acts as exchanger. The one in the usa that comes to mind is campbx. So, they need to be licensed as money transmitters. This is why Its not a good idea to keep much, if any, coins at one of these places, (especially if they are based in the usa) all it takes is one raid and all of your coins and cash could be gone if they aren't abiding by the laws. I wonder if localbitcoins.com is based in the usa. It wouldnt surprise me one bit to see them shut down soon. At least, if they are .com their website could be shut down.. They are also acting as a money transmitter, at least thats how I see it...

Only if the person who receives the bitcoins from the pool in Kazakhstan sells his bitcoins to someone in the US.

So a pool in Kazakhstan gets licensed under the non-existent MSB laws there?

I don't think that its too crucial or even necessary to register as a money transmitter right now if your a miner. The law is so vague, its up to interpretation. I would think that a pool should get licensed, but while i think that "technically" all miners are money transmitters, i wouldnt worry too much about it. I think its something that the FINcen is going to have to address sometime since there are many miners out there.

I think its more important to pay your taxes and follow the law to the best of your ability, I wouldn't think it would be come an issue unless they caught you for tax evasion when you sold your mined coins, it would be one more charge they could get you with.. So, don't raise any red flags and most of us should be okay..

I've talked to tax attorneys and most of them don't even know how to answer it..  It would be nice if Fincen would give an official stance on miners. Like I said before, getting a MTL is no easy task...

Thanks!

What happens if you're a small-time miner (like me), and have really only mined maybe $2-3K BTC total?

I have been spending a lot of time looking into becoming a money transmitter business. My personal conclusion is that a miner is a money transmitter. At least thats my personal opinion on how they have worded everything, I think it will need special legislation for it to change. I don't like it one bit, its a pain in the butt to get licensed in all states. My state barely has over 40 licensed money transmitters, I now know why.

Im my state.

1. You must have a net worth of at least 1 million dollars
2. own an out of state depository institution (a bank)
3. be bonded for at least 50k (statute bond, I think is the name) can cost between 5-15k
4. About 100 other regulations.

But in Nevada

1. You must have a net worth of 100k
2 bonded for 10k and 5k for each location

Each state is different. Then you have to registered with Fincen, thats the easy part.... Then, you have to have a relationship with a bank, we all know that most US banks are avoiding bitcoin like the plague.

I wonder if someone got a big business put together and thats all they did, get licensed in all 50 states as a money transmitter and then let miners use the license. the business would be held liable for any error or wrong doing by the miner, so I don't think that would work, wish it could.

Thats going to be my IPO, ill get registered a MT and let miners use my license, for a small fee of course (kidding of course)

Bottom line, Its a pain in the ass to get a license, even in one state, let alone in all 50. Thats why these Bitcoin atms are going to have such a hard time getting going, they have to be a MTL.

So still no one has checked with FinCEN if in there situation whether a miner is a money transmitter?

The Constitution is null and void and prohibited by law in practice, as it doesn't have the ability to magically strike down almost the entire government, which constantly violates it with impunity.

You are delusional if you really believe that multiple court rulings at various levels are figments of the imagination. There is a clear contradiction, don't get me wrong, not all cases win on constitutional law arguments. But the contradiction emanates from the fact that the US constitution plainly forbids an income tax that is charged as a percentage of income. Is the constitution delusional too? I always thought it was the basic law that no other legislation can contradict.

I think that's an unhelpful mis-characterisation, they are not "arguments" they are the letter of the law. That the IRS has been routinely breaking since it's establishment.

What position will you take when the law is misconstrued to confiscate your legal property? That they're using the correct argument? This is the same argument that all thieves use: "that's not yours, it's mine, and always was, give it back"

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. 

Are you accusing the IRS of creating a market?

Looks like there is a market for keypairs to 3 year old bitcoins

Should have clarified.  Im not a miner.  I talked to the CPA about it though.  She said it was just like if you dug up gold in your yard.  There is no reason to claim anything until you sell it.  

I sold my BTC for cash, and I made sure I made that a point when I spoke the CPA.  She just stated, tell me what you bought it for and tell me what you sold it for.  Pretty hassle free.  I have never purchased coins from an exchange, only in person and I only trade for cash.  So, YMMV.

EDIT:  She said that there is a 3 year lookback window from the IRS.  She stated that it was in my best interest to keep everything above the table, because I do believe BTC will continue to climb higher in the following years, you know the IRS will not sit idly by this entire time.  My advice, pay your taxes!

Have you signed up as a MT?


For @HELP:

  I assume based on your latest postings you still have not received a response from FinCen on the question for MTs.  Has anyone else tried emailing them directly to ask in their situation, e.g., mining and NOT selling coins, or mining and selling coins whether they are a MT? There are quite a few folks in the wings on this one who would be very interested in the results. Maybe we should offer a bounty for a brave soul to go ask this question and see what they find out.

It isn't taxed until you sell it for USD.  Same for any investment in IBM, for example.  There is also no wash sale rule for BTC so far, AFAIK.

I paid 15% on my BTC that i sold last year.  Went to the accountant, she stated that it was all good.  CPA signed off on it.. so... wasn't a lot of money though.  This coming years taxes will be different. My tguess is that we will see the .gov start to come after people after the huge run this year.

That's a really good question for them to collaborate on.
 
I was thinking about how they define their terms in the document.
"The term money transmission services means the acceptance of currency, funds, or other value that substitutes for currency from one person and the transmission of currency, funds, or other value that substitutes for currency to another location or person by any means."
"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."
Unless I am thinking something wrong, those 2 contradict each other. The first one states that in order to transmit money you have to take it from a person and then give it to another person or location whereas the second one states that you just need it to transmit to another location.

It is stuff like this which just goes to show how much the modern nation state has descended to obscene depths of micro-management and surveillance, reducing people to peons of servitude.

https://bitcointalksearch.org/topic/m.2891729

I have a question about FinCEN, what is published by them a law? Or law is what published by Federal Government and different US states? There seem to be differences. 

Also if you want to register as a money transmitting business there are certain prerequisites. For examples some states require you to meet certain Tangible Net Worth, does that mean if you don't meet that you cannot be licensed as a money transmitting business?

...along a similar line, catch a baseball, keep it, owe $200,000 in taxes. The tax man is scum.

http://development1.blogspot.com/2007/08/756-irs.html

The tax issues are much more clear than the registration issues. 
What constitutes a registration requirement is at issue here.

They did "jump the gun" and are getting shot in the belly for their exuberance.  The FinCEN folks were responding to pressure to "do something", and issued preliminary guidance, it will certainly be amended, and it will be due to the inquiries from impacted individuals. 

They will respond to reason, they will respond to money, they will respond to fame.  They do want to appear that they are "doing something".  If we were to act like scoundrels, drug dealers, and the things that the media may imagine that we are, that is how we will be treated by them.  If we act like reasonable responsible members of their constituency who are interested in lawfully engaging in commerce which makes the people within the geographies in which it occurs more resilient to central banking failures, we are likely to get a very different response.

Much of law relies upon the framing of the questions to be answered.  Government has many branches, they don't work together, or for a unified agenda.  FinCEN is not the Federal Reserve.  They care about money laundering, terror funding and financial crimes.  They don't care so much what currency we are using.

So yes it is not a bad idea to funnel questions through Bitcoin Federation, and folks like Jon Matonis for Forbes, but FinCEN does welcome questions directly from affected parties, but please do be aware that you are talking to Law Enforcement if you do it, and comport yourself appropriate to that.

These are all good points. Everyone should try and come up with as many interpretations as possible, then carefuly consider consequenes of each. Be careful what you wish for. Share your thoughts with others - these are critical moments for Bitcoin, as legal precedents are being set.

If someone finds a dollar bill on the sidewalk, are they issuers of currency? No. They are 'discoverers' of the unit of currency.

If a miner discovers a number that unlocks 25 of the 21M existing bitcoins, are they an issuer of currency? Magic 8 ball says 'reply hazy - ask again'.

There is room in the definitions to argue with FinCEN's interpretation. Not that I can afford enough lawyerly badassery to get the job done, but it seems to me there is an argument to be made.

I would speculate that FinCEN jumped the gun a bit with their earlier recommendations; I wouldn't be surprised if they amended their guidance on miners.

Mining is interesting, as per their vague definitions technically miners are issuers of money (however miners are not exchanges of money, particularly from BTC to USD), but can also be classified services business because technically a miner is just a transaction processor, from which you are granted new currency as a reward for operating one. I doubt FinCEN has any classification that actually fits this accurately.

Seems FinCEN still isn't sure what to make of this, and so much the better.

Bitcoin can be used either with or without the government's blessing. Let people make their choice - those that choose to comply won't affect those that don't.

That's clear enough. Bitcoin mining coupled with sale of the Bitcoins for cash is money transmission.

That makes sense.  Miners are issuers of a currency.

No big deal. Mining is going all-ASIC anyway. The big pools will have to register, and everybody else will be making so little money they'll be below the reporting threshold.

Most of exchanges simply match your offer to buy or sell coins to another individual's offer to sell or buy coins. They facilitate the trade between the two of you. They don't buy and they don't sell coins.

I've been trying to pay very close attention to the legal status of anything related to bitcoin transactions, and it all seems like it's a gigantic grey area for the time being.  I've decided to put 20 % of any profit in a savings account and have it ready should they come knocking for capitol gains.  I have yet to find anyone who can give a solid answer to these questions at all, including FinCen. I think a lot of them don't know what to do because 90 percent of the financial "experts" said bitcoin would never make it.  I spoke with my lawyer which was totally useless (not surprised though) and will probably talk to a CPA should it become necessary.  I think your statement seems right on point, but the government doesn't care what I think.  Looks like there's plenty of room for some lawyer to make a name for himself defending bitcoin clients against Uncle Sam, even though there is no official law in place.  Our government designs laws with loopholes designed for the very people passing the laws as standard practice.  The outcome should be very interesting.   


-MW





My Bitcoin Adventures / Mis-Adventures
http://bitcoin.thefrogspot.com

Did anyone ever get clarification on whether being a miner in the USA requires registration?
The fincen guidance from march 18th says:

' 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. In addition, a person is an exchanger and a money transmitter if the person accepts such de-centralized convertible virtual currency from one person and transmits it to another person as part of the acceptance and transfer of currency, funds, or other value that substitutes for currency.'

I'm an LTC miner, and i convert LTC to BTC and I'm thinking of selling that BTC for USD thru campbx.
If I do that, I'm thinking I'm a user of the currency, and the exchange (campbx) is the money transmitter.
I'm not selling them to another person, I'm using an exchange to convert BTC to USD.

What do you guys think?

That's different because it's illegal to deal drugs. I'm all for a decentralized currency that's free from governmental control in issuing the currency, but, it still needs to play by the rules. I will operate my bitcoin transactions under the law, as I feel that you shouldn't be using it to evade taxes and use it for other illegal purposes (ie buying drugs, etc) in the first place. I don't support that.

Just like there are those that buy and sell drugs, there will be those that ignore FinCEN. More power to ya. I live in the US, so I will do what I need to do to stay legal.

People are listening (and bothering to care) what FinCEN thinks about something that was invented to avoid organizations like FinCEN from having any say in your money.

It's like being a drug dealer and asking the police where the safest areas to peddle are.

Meaning what, exactly?

Like moths to a flame.

Has FinCen issued responses to anyone?

It would really be interesting if you could cite some actual examples with FERC where this has happened.

For the most part the rule of lenity applies, particularly if there is any prosecution that could result in jail time due to due process constitutional requirements.

The guidelines concept is used all the time in tax law with things like revenue rulings, private letter rulings, etc.

If an area of the law is unclear and guidelines have been issued and the party has attempted in good faith to follow those guidelines then it is going to be extremely difficult to prosecute that party and even if the trial judge rules against them it will likely be overturned by appellate judges..

Good work Milly, also nice blog (bookmarked).

I fear we won't get any straight answers until the first person gets thrown in jail.

Pretty much what I'd been saying.

Along the same lines, I was just talking a lawyer friend of mine, and he mentioned FERC (Federal Energy Regulatory Commission) as an example of why you shouldn't read too much into something like the FinCEN guidelines.   He said that FERC is notorious for having a set of rules, publishing guidelines for following the rules, then slamming companies with millions of dollars in fines for violating the rules, even if they followed the guidelines exactly.  The reason?  "Well the guidelines are not the law, the law is the law, and it should be perfectly clear how to interpret them.  We're not sorry if you got it wrong." 

I asked what was the point of publishing guidelines at all if it offers you no legal cover for "misinterpretations" of the underlying laws?  He didn't have a good answer for me, other than they publish guidelines because of all the requests they get for clarifications.  Perhaps such clarifications can do more harm than good, giving actors a false sense of security about what they're doing.

I'd like to think there's more sanity in the world than that.  I'd like to think that the FinCEN guidelines gives you something legally-meaningful to use in self-defense in these cases.  It might be worth someone (probably a lawyer), doing a bit of research on the past cases involving FinCEN to look for precendents of this type.   You know it's true of FERC because of all the cases where this has happened... perhaps we can find similar evidence for FinCEN.  Perhaps, cases where a judge ruled in favor of someone following the guidelines instead of trying to interpret the law.  Or vice versa.

I tried asking some questions via that email. I got a response stating 'I’ve forwarded your inquiry to our regulatory affairs division. You should hear back from them shortly.'

We see this type of BS "guidance" in the self-defense rights movement all the time. California Department of Justice's Bureau of Firearms loves chilling the exercise by making shit up (formally called "underground regulation"). Gotta report their shit to the Office of Administrative Law, which overrules the underground regulations. Maybe there is a similar office to OAL charged with weenie-whacking corrupt bastards in the fed gov.

easy rule to live by...

dont offer a person bitcoins for fiat for over $1000

so do $500 a day for each person and you don't have to worry about KYC Fincen rules.

just be sure you double check that one person doesn't create multiple usernames just to get around your daily limits

I would recommend contacting Timothy Lee or Jon Matonis at Forbes with your story of being denied clarification, and see if they can get a response, being from big financial media.

If the ruling is all that is published, it can be interpreted as a law, where you should get legal advice from a lawyer, and decisions on violations of the ruling will be made by a judge. Your lawyer would probably advise you not to get on FinCEN's radar. FinCEN is likely used to strong-arming big banks with their play-ball tactics into handing over unfettered back-door access to individuals, not dealing with the individuals directly. It is likely the "new" MtGox now includes a nice government portal for downloading customer transaction data.

The "Bank Secrecy Act" is the "your bank account is no secret to the government act". The secret is that telling people about it is punishable, and records are exempt from the freedom of information act.

Title 31 of the United States Code, section 5324, provides (in part):

    No person shall, for the purpose of evading the reporting requirements of section 5313 (a) or 5325 or any regulation prescribed under any such section, the reporting or record keeping requirements imposed by any order issued under section 5326, or the record keeping requirements imposed by any regulation prescribed under section 21 of the Federal Deposit Insurance Act or section 123 of Public Law 91–508— [...] (3) structure or assist in structuring, or attempt to structure or assist in structuring, any transaction with one or more domestic financial institutions.

Section 5324 further provides that a violation of this provision may be punished by a fine or up to five years in prison, or both.[6]

http://overlawyered.com/2012/04/structuring-who-can-get-away-with-it-and-who-cant/

Some enterprising activists are creating services and means pf exchange that these desk jockeys never even imagined.

Let those necktie oxygen deprived fuckers know not to fuck with the Internet.

FinCEN already made a ruling in legalese. If you want an additional clarification, typically you'd need to ask a lawyer, and even that could potentially be a *different* opinion, especially in a court of law. If I were working for FinCEN, I'd shy away from giving blanket statements of the legality of things to a wordpress blog operator too. I doubt asking Jon would help much in this particular case.

Lets get Jon Matonis to send them an e-mail, lets see how thaey address that one!

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