Topic: FinCEN says you must be MSB if you sell bitcoins for $ - page 2. (Read 21172 times)

Given that Bitcoin has no equivalent value in any "real currency"  The applicability hinges on the words "substitute for real currency".  It is beyond doubt that virtual "currencies" like Amazon Points or Facebook Credits fall under the guidelines but it is unfortunate that FinCEN didn't provide more guidance on the term "substitute for real currency".  Time to draft another request for administrative ruling.

Probably not.  "Real currency equivalent" is specifically mentioned and that would almost certainly apply to MtGox codes.

Selling someone the private keys would almost certainly be regarded as "transmission" as that recipient then has effective ownership of the "units of convertible currency".

FinCEN regulations only requires that you transmit "currency, funds, or other value that substitutes for currency". Transferring Bitcoins to the buyer transmits currency (or value that substitutes for currency).

But *selling* Bitcoins has counter-party risk for the buyer. The seller might take his money and not provide him the Bitcoins. This is precisely the reason (or at least, the supposed reason) money transmitters are regulated.

This guidance addresses "convertible" virtual currency. This type of virtual currency either has an equivalent value in real currency, or acts as a substitute for real currency.

Respectfully, I disagree entirely with that interpretation.

If you mine and sell via an exchange that is MSB/MT-registered, seems like you are ok.

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.
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2 FinCEN's regulations define "person" as "an individual, a corporation, a partnership, a trust or estate, a joint stock company, an association, a syndicate, joint venture, or other unincorporated organization or group, an Indian Tribe (as that term is defined in the Indian Gaming Regulatory Act), and all entities cognizable as legal personalities." 31 CFR § 1010.100(mm).

apparently it's been formally documented now. http://www.fincen.gov/statutes_regs/guidance/html/FIN-2013-G001.html

if you mine and sell, you're an MSB, but if you mine and spend you're not... 

I wonder if it changes if you send a physical print out of a private key or mt. gox code.

They are. Thanks to the Patriot Act, gold dealers are financial institutions and are subject to FinCEN AML regulations.

Joel, you aren't using the word "transmit" according to its legal definition.  It doesn't mean the same thing as "trade".  It means something like "trade via a third party."  It is not the traders who are regulated.  It is the third party "transmitter" who is regulated, for the benefit of the traders.

Sorry if I did not make this clear in my examples, but that's the reason I chose MtGox codes.  In the case of MtGox codes, BitInstant acts as a third party "transmitter" between MtGox and the purchaser.  In the case of Bitcoin, well, there is no third party since Bitcoin is just a communications protocol.  The two parties, the buyer and seller, are simply engaging in trade, which the US at least has no jurisdiction to regulate.

Money transmitter:

(i) In general.

(A) A person that provides money transmission services. 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. “Any means” includes, but is not limited to, through a financial agency or institution; a Federal Reserve Bank or other facility of one or more Federal Reserve Banks, the Board of Governors of the Federal Reserve System, or both; an electronic funds transfer network; or an informal value transfer system; or

(B) Any other person engaged in the transfer of funds.

(ii) Facts and circumstances; Limitations. Whether a person is a money transmitter as described in this section is a matter of facts and circumstances. The term “money transmitter” shall not include a person that only:

(A) Provides the delivery, communication, or network access services used by a money transmitter to support money transmission services;

(B) Acts as a payment processor to facilitate the purchase of, or payment of a bill for, a good or service through a clearance and settlement system by agreement with the creditor or seller;

(C) Operates a clearance and settlement system or otherwise acts as an intermediary solely between BSA regulated institutions. This includes but is not limited to the Fedwire system, electronic funds transfer networks, certain registered clearing agencies regulated by the Securities and Exchange Commission (“SEC”), and derivatives clearing organizations, or other clearinghouse arrangements established by a financial agency or institution;

(D) Physically transports currency, other monetary instruments, other commercial paper, or other value that substitutes for currency as a person primarily engaged in such business, such as an armored car, from one person to the same person at another location or to an account belonging to the same person at a financial institution, provided that the person engaged in physical transportation has no more than a custodial interest in the currency, other monetary instruments, other commercial paper, or other value at any point during the transportation;

(E) Provides prepaid access; or

(F) Accepts and transmits funds only integral to the sale of goods or the provision of services, other than money transmission services, by the person who is accepting and transmitting the funds.

Thanks, I should have googled first. A quick google search reveals there's a threshold of $50,000 for gold / jewelry dealers to be covered by the regulations. I'm not sure if this has since be amended.

http://www.fincen.gov/statutes_regs/guidance/html/faq060305.html

They are. Thanks to the Patriot Act, gold dealers are financial institutions and are subject to FinCEN AML regulations.

Why isn't gold regulated in this manner? (Especially, since you even have legal tender gold coins...)

Once again, the legal position of Bitcoin is very simple.  "Money" is that which has future value.  "Currency" is that which has current value.  Bitcoin is a currency, with no guarantee of future value.

So, now it's time for the OP to tell us what scenario he *actually* described to them.  Because this doesn't at all sound like "selling Bitcoins on my website."

Once again, the legal position of Bitcoin is very simple.  "Money" is that which has future value.  "Currency" is that which has current value.  Bitcoin is a currency, with no guarantee of future value.

This has nothing to do with Bitcoin.  Bitcoins can't be regulated, because they come with no implied guarantees of future value, no backing and thus no counter-party risk to regulate.

For example the largest retail gold buyer in the US (APMEX) doesn't have a money transmitter license (or any MSB license).  They buy "purchasing a valuable" (gold) and pay sellers via a transmission (ACH or bank wire).