Topic: FinCEN Ruling Requested for Bitcoin Mining (Read 2697 times)

I have to agree with MSantori here.  This looks like it was written by someone without a clear understanding of the legal issues involved.

First of all, you can not request an administrative ruling on an issue that is the subject of an enforcement action or court case.  If you believe that the facts of your case are similar enough to Liberty Reserve that you would be affected by a ruling in that case, then you would need to make that argument to the court.

It really is not at all clear what you are requesting from FinCEN.  You bring up the issue of reversibility of payments.  Reversibility of payments is possible under the Electronic Funds Transfer Act.  The definition of electronic funds transfer under this act refers to "ordering, instructing, or authorizing a financial institution to debit or credit a consumer's account".  I am not aware of any claim that bitcoin falls within this definition (and it pretty clearly does not).  The statement regarding Liberty Reserve indicates that FInCEN director Calvery thinks irrevocable payments are a bad idea, and this is used to bolster the argument that LR is laundering money, but nowhere does it state that irrevocable payments are per se illegal.

I would strongly suggest that you retain legal counsel and withdraw this request or amend it to address the specific factual circumstances that you are concerned about.  Your request in its current form is likely to be dismissed, and this will simply make it more difficult for you to get the answers that you seek.

In a fantastic post, DeathAndTaxes states:


https://bitcointalksearch.org/topic/m.2432003

You're absolutely right on this point clarification is required. The existing guidance leaves room to interpret it either way, but I'm inclined to say you're right because using an exchange is not the same as selling to a "person" which is how the statute defines it.
It will be interesting to see how this develops further.

I agree there guidance seems pretty clear cut, if you mine and use the coins for yourself or you buy coins and use them for yourself, it is not regulated.
Basically, it is the selling of the coins to individuals for USD that requires reporting as an MSB under Fincen.
At least that's how I read this:
http://www.fincen.gov/statutes_regs/guidance/html/FIN-2013-G001.html



What clarification do you hope to get? What aspect of the existing guidance is unclear? Maybe I'm missing something.

its all over twitter

https://twitter.com/search?q=fincen&src=typd

https://www.facebook.com/permalink.php?id=138401546325686&story_fbid=154657731366734

bitinstant exchanges fincen mtgox regulation united states US usa
FINCEN: Bitcoin Users Not Regulated, Exchanges Are

Government regulation has for a long time been a gray area for Bitcoin, both in the United States and elsewhere. Although we have seen a number of disparate government reports either simply talking about Bitcoin or providing a regulatory opinion on some aspect of Bitcoin exchange, to date we have not seen anything close to a conclusive statement on digital currencies from any government organization in any country in the world. The problem is a difficult one; nearly all laws to date that attempted to regulate online payments of any form have all assumed a central issuer, and in the case of Bitcoin it could be just as easily argued that everyone is an issuer or that no one is. Today, however, we have gained a much clearer picture of what regulation for Bitcoin will look like, as FINCEN just released a paper clarifying their position on virtual currencies, touching on the concept of “decentralized digital currency” in detail with Bitcoin clearly in mind.

Does FinCEN have a representation on this forum yet ? or anyone employed by the organisation to speak in a kind of autonomous way?

It's great you take care of this, I just thought it should be handled by a central "authority" to reach consent for the whole community. If BF doesn't want or can not do this, we maybe should try to bring them this way.

As of my understanding, as long as a pool makes no conversions of Crypto Currencies (BTC -> LTC etc.) or exchanges to real currencies (BTC -> US$ etc.) and only sends the pro rata outcome of the mining itself, it's not regulated. But youre right, it's ambiguous and could be interpreted as transmission, though I doubt thats the stuff they're after.
Realized (cashed out) earnings of this activity (fees, donations etc.) have to be stated as income.

One point is that it would be hard to FinCen to back up that a pool miner is doing a financial transaction.  A pool itself is bundling transactions together so while I don't agree they should be regulated there is room for FinCen to play.

for me these rules are clear enough:

- mining = unregulated
- cashing out = regulated

all in between should be clarified by bitcoin foundation, I see this as one of their main tasks. IMO it's a waste of time and money when individuals try to do this.

Then again, if he did hire a lawyer familiar with FINCEN regulation, and paid a handsome sum, what incentive is there, really, for that lawyer to get them to say that bitcoin mining is NOT regulated.  If he succeeds, all he succeeds in doing is losing a customer, a bitcoin miner that has no further need of his legal services.  There is an inherent conflict of interest with any lawyer experienced with finCEN regulations for MST or MSB in that if they win by getting bitcoin left unregulated, they lose for themselves and all their friends.

It's a tough spot, I know.  A six-figure retainer is probably overstating it a bit, but you're right: regulatory attorneys aren't cheap.  The Bitcoin industry needs a well-funded industry group that can engage the proper legal counsel so that competing individual interests don't sink the whole ship.  In any event, good luck!

@MSantori,
Can you point us in the right direction for whom might be the best lawyer for this type of work?
I realize that this industry does not have any precedent, (or does it?)

To ACB: Are you working with a local attorney?  I think it's great that you are trying to influence the rulemaking process.  It's civic participation at its finest; you are rocking the boat, and that's the only way change is made in this country.  That said, it looks to me like you are flying solo.  Most people who do this don't fly solo.  They do it with legal counsel.  Without a knowledgeable lawyer at your side, you risk rocking the boat in the wrong direction.  As a bitcoiner myself, that concerns me.

In sum, you seem to be lobbying to affect the regulation of an entire industry without someone who knows how the regulations truly work.  There must be a local attorney that you can work with in New Jersey that can guide you through this process, help you focus your communications, and aid you in representing the industry in a more effective manner.

I don't believe they will make mining illegal, because they just don't care about it. They only need to cut the ropes to cashout (whats already happening at the moment).

In the future (2 years?) you will mine 2 months and get 10.000 BTC, because 99% of the miners quit mining. These 10.000 BTC can be exchanged against a cool, unique Sheldon-T-Shirt during checkout of your next purchase at Amazon. Or 5% discount when you buy a new AMD graphic card. Or a WOW "Mithril tuning fork of the winds", which distracts your enemy for 2 seconds and can be used once every 3 hours. Or other cool stuff like that.

So this should make bitcoin mining illegal then for 99% of miners.

1. Transmitter / regulated

2. Transmitter / regulated

3. User / not regulated

When crypto currency changes to real currency or the other way round, they want to know about it {2}.
Any business that accepts crypto currency for goods or services is by their definition an exchanger and transmitter {3}.
No small business will be able to comply and by this, they try to break the neck of crypto currencies and leave it as a kind of monopoly money for nerds {1}.

Indeed 

Delay, deter, deny. It's how government works (against humanity).

At the end of the delay period, the "ruling" will deter (chill) economic liberty, and those who cannot afford to pay millions of dollars in legal and government fees will effectively be denied.

He filed it June 2nd.  These things move at the speed of government.   Bookmark it and check back in 60-90 days.  30 days for a response would be an a amazing feat of hyper efficiency for a regulator.