Topic: FinCEN's definition of a Money Exchanger (Read 3146 times)

No money, No honey:(
So how does someone do business in the states without shelling out so much cash? this is crushing my entrepreneurial vibe. I heard of BTC global offering a legal umbrella.I basically explained the elements of what I want to do above Any help about how to go about my business legally would be appreciated!!

No need for such weak legal foolery (which any court would see through anyways).  FinCEN has already stated Bitcoins are not stored value (prepaid value).  Period.  If you are exchanging Bitcoins for another form of Bitcoins there is no "exchanging" going on.

Now if you want to sell BTC for USD then regardless of if you send them as on chain transactions, "physical Bitcoins", or private keys written by hand on the back of a napkin FinCEN says you are a "money transmitter". 

The law isn't a videogame, you can enter a cheat code and bypass the law.  If your intent is to sell BTC for USD or vice versa then any weak attemtps to obfuscate it ("I am selling this paperclip for $140 and it includes 1 BTC as a free gift") has no legal merit.  I mean stop for a second if that worked as a legal strategy then why wouldn't drug dealers be "paper clip dealers" and each sale includes some free drugs.   Granted possession is still a crime but it is significantly lower penalty than distribution.

Yes I would be selling a funded private key. Take for example cassasius. If he were to sell his 1 BTC coin in USD, he could sell his coins for the 1.3 BTC exchange rate (ATM 140$), and claim that the he charges 140 per piece of physical metal, meanwhile the BTC is a gift. If legally necessary the coin could be funded with BTC at a later date (lets say after you bought the coin at a store, go home and send me an email with your public key), that way you paid 140 for the coin and the extra BTC is not considered "consideration" because it was not on the card at the time of purchase. Is this feasible and legal?

So if I sell bitcoins on gift cards but less than 1000 per person per day I don't have to deal with bureaucracy ?

Gift Cards = Stored Value Cards and therefore are regulated by FinCEN

"(3) Issuer of traveler's checks, money orders, or stored value. An issuer of traveler's checks, money orders, or, stored value (other than a person who does not issue such checks or money orders or stored value in an amount greater than $1,000 in currency or monetary or other instruments to any person on any day in one or more transactions). "

but the BSA does not give FinCEN the authority to require MSBs to register.  It only requires money transmitting businesses to register.  So in requiring MSBs to register, FinCEN is actually claiming that all 6 types of MSB are money transmitting businesses that are required to register under section 5330.  Really.

The above aren't money transmitting businesses.  Money transmitter is a money transmitting business.  The BSA gives FinCEN the authority to consider the following financial institutions.

Oh really?  Show me where in the BSA it defines "stored value" or "prepaid access".  It's not there.  These are just new categories of money transmitting businesses that FinCEN added to the regulations.  In 2011, they removed "stored value" and added "prepaid access".

(2) “financial institution” means—
(A) an insured bank (as defined in section 3(h) of the Federal Deposit Insurance Act (12 U.S.C. 1813 (h)));
(B) a commercial bank or trust company;
(C) a private banker;
(D) an agency or branch of a foreign bank in the United States;
(E) any credit union;
(F) a thrift institution;
(G) a broker or dealer registered with the Securities and Exchange Commission under the Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.);
(H) a broker or dealer in securities or commodities;
(I) an investment banker or investment company;
(J) a currency exchange;
(K) an issuer, redeemer, or cashier of travelers’ checks, checks, money orders, or similar instruments;
(L) an operator of a credit card system;
(M) an insurance company;
(N) a dealer in precious metals, stones, or jewels;
(O) a pawnbroker;
(P) a loan or finance company;
(Q) a travel agency;
(R) a licensed sender of money or any other person who engages as a business in the transmission of funds, including any person who engages as a business in an informal money transfer system or any network of people who engage as a business in facilitating the transfer of money domestically or internationally outside of the conventional financial institutions system;
(S) a telegraph company;
(T) a business engaged in vehicle sales, including automobile, airplane, and boat sales;
(U) persons involved in real estate closings and settlements;
(V) the United States Postal Service;
(W) an agency of the United States Government or of a State or local government carrying out a duty or power of a business described in this paragraph;
(X) a casino, gambling casino, or gaming establishment with an annual gaming revenue of more than $1,000,000
(Y) any business or agency which engages in any activity which the Secretary of the Treasury determines, by regulation, to be an activity which is similar to, related to, or a substitute for any activity in which any business described in this paragraph is authorized to engage; or
(Z) any other business designated by the Secretary whose cash transactions have a high degree of usefulness in criminal, tax, or regulatory matters.

What you say is "completely wrong" is absolutely right.  There are only 6 types of MSBs.  No more, no less.  They all have exact definitions in the eCFR.  When registering as a MSB you must select one or more of the following six types.  You can't select none, you can't write in a new type.  All MSBs must be one these six.   

(1) Currency dealer or exchanger.
(2) Check casher.
(3) Issuer of traveler's checks, money orders or stored value.
(4) Seller or redeemer of traveler's checks, money orders or stored value.
(5) Money transmitter.
(6) U.S. Postal Service.

The law doesn't allow any other type of MSB.

FinCEN can't write new law.

I do not believe "not for profit" is the same as (not "engaged in business").  There are plenty of non-profit and not-for-profit entities who are "engaged in business".  There are also many for-profit companies who are losing money and not "profitting" but again they are "engaged in business".

( Limitation. For the purposes of this section, the term “money services business” shall not include:

(i) A bank or foreign bank;

(ii) A person registered with, and functionally regulated or examined by, the SEC or the CFTC, or a foreign financial agency that engages in financial activities that, if conducted in the United States, would require the foreign financial agency to be registered with the SEC or CFTC; or

(iii) A natural person who engages in an activity identified in paragraphs (ff)(1) through (ff)(5) of this section on an infrequent basis and not for gain or profit.

I wonder if there may be some exception for "sole proprietors" but you are probably right that the Department of Treasury has only begun to consider bitcoin at all.

(ff) Money services business. A person wherever located doing business , whether or not on a regular basis or as an organized or licensed business concern, wholly or in substantial part within the United States, in one or more of the capacities listed in paragraphs (ff)(1) through (ff)(7) of this section. This includes but is not limited to maintenance of any agent, agency, branch, or office within the United States.

not for profit

I think the one thing I'm taking out of this is the following:


Note the highlighted part.

Since I'm just an individual, not running a business, I figure that a lot of those really don't apply to me.

I am not spreading misinformation, I am quoting the definition from the finCEN guidance document. You're making yourself look very silly.

I think the one thing I'm taking out of this is the following:


Note the highlighted part.

Since I'm just an individual, not running a business, I figure that a lot of those really don't apply to me.  Yes I mine bitcoins, but there's no way I could be running a business off of only 0.01 BTC per day. 

So I figure FINCEN won't be bothered by what I'm doing. 

An exchanger is a person engaged as a business in the exchange of virtual currency for real currency, funds, or other virtual currency

I've got no idea why you are writing me a wall of text. The definition is quoted straight out of the definitions section of the guidance document. "An exchanger is a person engaged as a business in the exchange of virtual currency for real currency, funds, or other virtual currency".

For clarity, this is the exact part of your original post that is wrong: "FinCEN has definitively and clearly indicated that an entity which exchanges virtual currency for real currency is NOT a "(1) Currency dealer or exchanger"

An administrator or exchanger that (1) accepts and transmits a convertible virtual currency or (2) buys or sells convertible virtual currency for any reason is a money transmitter under FinCEN’s regulations
" ... a person who accepts real currency in exchange for virtual currency, or vice versa, is not a dealer in foreign exchange under FinCEN's regulations."

is a money transmitter under FinCEN’s regulations
is not a dealer in foreign exchange under FinCEN's regulations