Topic: I just got off the phone with FinCEN (Read 5383 times)

That's a valid point.

Also, not everyone in government is evil.  Most of them are just regular people working a day job to get by.  They might listen to what you have to say and seriously consider it.

Because most transactions in bitcoin are USD transactions and most bitcoins are owned by americans and US companies will benefit most from its success, like the internet, so they should try not to attack it but rather let it thrive because that is what is best for America.

If it's too bad the miners would simply operate in other countries.
Why would you assume that's not their goal?

Registration requirements for miners or mining pools would break de-centralization by barring all but the largest miners from operating legally.  This de-centralization and distribution of mining is a core feature of bitcoin, it is a critical security feature, so any attempt to regulate miners by imposing registration requirements is an attack on a core feature of bitcoin and the security of the bitcoin network.

If you are having a dialogue with a regulatory agency on this point, try to make them aware of this.

Kind of comes down to how serious they are about that bolded "and". Miners can't withdraw coins from circulation, so maybe that excludes them from the "Administrator" label.

Update 4/3/2013

Anthony had this to clarify after checking with his colleagues:

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

Even if you obtain the bitcoins as part of a business, if you are not in the "business in the exchange of virtual currency for real currency, funds, or other virtual currency" and are just selling coins obtained from a user standpoint, including from a business such as sale of items, etc, then that does not require you to register just because you exchange for USD later.

I think this latest clarification will make a great number of users of bitcoin not needing to register. However, if miners are still required to register, I still don't know how transacting with sites such as mtgox will work.

The all powerful blog. It's free speech, which is worth nothing, except a possible momentary distraction from the mundane. Your sarcasm is justified.

Unfortunately, just like with a great many things, the only thing that may motivate our illustrious governments, and people creating all of these wonderful laws is $$$.

I'm sure "Anthony's" view will stand up in the Supreme Court, and influence the Parliament and statutory agencies to make laws

I saw this link in another thread in the forum but believe it applies to this one.

https://bitcoinfoundation.org/blog/?p=163

"Is a “miner” of bitcoin, a person who receives “new” bitcoin in exchange for his computing efforts, considered a “creator” under the guidance? A person who obtains bitcoin by his own manufacturing effort is not differentiated from an ordinary “user” under the guidance, and informal communications from regulatory sources indicate that it is unlikely the guidance intended to consider every “miner” a “creator”. This is confusing because in the bitcoin community, a successful miner might be thought of as creating new coin."

Take it for what you will after reading the blog entry, however it seems like a pragmatic interpretation of the FinCEN statement.  I for one generally approach legal issues a bit cautiously, however am a small miner with no intention of making a business about it. I just want to understand how to cover my bases, without unnecessarily "poking the bear", which is just bad practice in general.
 

"Oh, my old .22 rifle?  Yeah, I sold that at a yard sale years ago."

Update 4/2/2013

From FinCEN's perspective, if you mine coins and sell them, you would be considered an administrator.

Anthony is checking with his colleagues as to how you would go about trading on sites such as MtGOX if you decide to register as a business rather than a user.


FinCEN probably does not care about bitcoin at all. They just care about using bitcoin to launder money.

If you register you invite regulation, and audits.  Just saying. 

Thats why gun rights people are against registering the fire arms, cause then they know who to demand they be turned in when they later ban them.

When it comes time to attack bitcoin they know who to tell to stop bitcoining.  Just saying.  You register, you disclosed your usage, then a cease and desist letter will come in a year or two.  Who knows?

Or maybe they were asked to help form the chokepoint.  With a list of everyone who has control of hashing capacity (since mining pools and solo miners are the ones who control what transactions go in the blockchain), the next step is to force them to comply with "later guidance", such as KYC on each party submitting a transaction.  Like .. no more P2P, if you want a transaction through one of these "licensed" miners, you connect to them directly.   And then Bitcoin is toast.  Muahahahahaha!!!

I'm probably seeing more to it than exists, but this is one possible direction.

That's about as clear as mud as applied to mtgox.  How are you supposed to identify the counter-party in a automatic trading system where mtgox acts as the order book, broker, and account administrator for all trades.  And trades are filled from multiple counter-parties with different order sizes and no method exists to pre-screen the people you are going to be matched to.  Impossible.

The deeper you try to understand the FinCEN guidance, the more you realize it makes no sense as applied to bitcoin.  It only makes sense when applied to centralized virtual currencies.

Registering as an MSB for "administrating" a decentralized  currency is ridiculous.  There is no administrator of a decentralized currency.  Hence the term "decentralized".  It's all rather frustrating from a standpoint of a law-abiding citizen who wants to comply, but cannot because the regulators propose nonsense regulations.  They are obviously just making things up as they go along with the idea that helping bitcoin succeed is not the goal, but trying to make it fail isn't the goal either, just leave it murky at best for a while.

But are bitcoins really ever created, past the first time the network got online? The way i see it Satoshi Nakamoto is the only person (or group) in the world to have ever created bitcoins, all 21billion of them...

No problem. I don't know, however, that "mining for speculative purposes" is an actual thing, he is more talking about investing money into virtual currency, rather than creating it. IMO mining is a business activity. Should I ask?

Interesting.

Seems like if I'm mining coins for a speculative purpose, I don't need to register.  Sounds good to me!

Thanks for posting the details of these phone conversations, btw.

I wish we could have a binding legal opinion from a higher court on that, so we know exactly which bitcoin users *should be* immune from prosecution and which aren't. You can literally be prosecuted for anything, and need a factual finding of innocence at the end of malicious prosecutions that are dismissed with prejudice.

I talked to Anthony from FinCEN again for further clarifications on our discussion.

It's not so much whether the other party is registered by FinCEN but it's what you are doing with the coins that matters. Basically, if you're only buying/selling coins for speculative, investment purposes then you are a user and don't need to register. That could include buying/selling from another person directly, or buying/selling physical casascius or virtual coins on ebay. If you do the ability to show that it is only for investment purposes, and use as a "user" would be on you if there were any questions.

If you're doing this as part of a business (which includes mining coins probably, since mining leads to profits of income), then you would need to register. Some points about registering, though:

-It's free to register with FinCEN
-You CAN, in fact, be your own compliance officer. He said that many business owners do just that.
-Was pointed to the following page: http://www.ecfr.gov/cgi-bin/retrieveECFR?gp=&SID=8540ec934b849dc3f899a9454b6f32d4&n=31y3.1.6.1.6&r=PART&ty=HTML

He explained that for the most part, the only things that need to be reported are suspicious transactions, and you can search the web for examples of sample anti-money laundering programs. I asked what forms of identification we needed to collect from those we did business with, he replied that I should read the regulations but in general, MSB don't have the same guidelines, as say, banks do. My interpretation of the guidelines found at http://www.ecfr.gov/cgi-bin/text-idx?c=ecfr&SID=b99714739ce703375951af7f060e38ef&rgn=div8&view=text&node=31:3.1.6.1.2.3.3.7&idno=31 is that you only need to verify the identity of the person when the amounts exceed certain thresholds.

I technically am registered as a sole proprietor, so I might or might not register. It honestly doesn't seem to be a big deal after actually talking through it and reading the stuff. I do not know, however, how the state level will impact it as of now.

what the OP means, is that if you go to and buys coins, and then use these coins to buy goods and services - thats OK without FinCEN reg, regardless of the 's FinCEN reg status.
If you go to and buy coin, save then, and the sell them again to , you are trading in speculative purpose and its OK without FinCEN reg - as long as is FinCEN registred.

However if you mine X coins, and then sell them to MtGox, you need a FinCEN reg.
And if you sell your stereo for X bitcoins, and then sell to MtGox, you also need a FinCEN reg.

Bitcoins are fungible, so FinCEN does not care if you take your 10 mined bitcoins and sell back to MtGox when you have bougt 10 bitcoins from MtGox.
However, you are allowed to mine X bitcoins and purchase good/services for that, except services that can be expressed in real currency, like store gift cards, prepaid cards, mobile top-ups and such.

What FinCEN cares about, is that you DONT sell more bitcoins for real currency than you buy for real currency!

So in short:
If you have goods/services to sell, you are allowed to do that. The Bitcoins for those goods/services may NOT be exchanged to real currency or any good/service that can be expressed in real currency.

If you have Money, you are allowed to buy bitcoins for that Money by anyone. That bitcoins may only be sold to the same person/entity as long as the person has FinCEN registration. Only purchasing bitcoins does not require FinCEN reg at all.

If you have Bitcoins, you are allowed to buy any goods/services for this - EXCEPT goods/services that can be expressed in real currency. In this category, is present, but NOT limited to:
-Store gift cards
-Game cards, Wii Points cards, such*
-Prepaid VISA cards
-Mobile Top-ups*
-Gold, Silver, Oil, and other materials that can be expressed in real currency
-Bonds/shares
-Currency valid in any country
-Discount coupons expressed in a fixed value. (For example, a coupon that gives 1$ off a burger king burger may not be bought with bitcoin without FinCEN reg, but a coupon that gives 10% off is allowed)

* (Only if these are expressed in a currency. A mobile top-up that gives free calls and internet for 30 Days is OK to buy. Same with a game card that gives item X, that does not have a set store price. But a mobile topup for 10$ = forbidden. A game card that gives 50$ ingame store = forbidden.)

If you have Bitcoins, you are also allowed to sell them to a FinCEN registred entity, but ONLY if you bought the bitcoins from the EXACT same entity. However, since bitcoins are fungible, it does not matter which coins (eg which outputs) you use.