Topic: Looking for legal guidance (Read 1215 times)

Thanks, MSantori.  It definitely did get the wheels turning.  That is very close to what I'll be doing, if not exactly it.  Sounds like I shouldn't have too much to worry about. 

One thing is for certain.  The only exchanging of USD<>BTC will be through an exchange that is licensed to begin with, once I get this going.  I figure as long as I do that and get verified with whichever one I decide to use regularly, I'll be fine.

Gotta start getting paychecks first.  I'm so glad I finally got a job and won't have to mooch off of relatives any more just to pay my bills/rent!  New job starts July 1. 

Hi Wolfman,

There are no absolute truths in this space, and even if there were, I wouldn't be at liberty to give you legal advice on a public forum.  Instead, I'll try to use a fact pattern that might get you thinking.  If you've read my other posts, you know I like these.

Johnny thinks BTC is more stable than his local fiat currency, so Johnny uses an exchange to convert his fiat to BTC.  He then sends the BTC to his own private wallet address and stores it there.  Occasionally, he'll send that BTC to other people as payment for goods or services, but he never accepts fiat or BTC from one person to send BTC or fiat to another.  He's just using his wallet address as storage, like  savings account.  He may even occasionally try to buy BTC for low value and sell it at a high value, but Johnny isn't doing so regularly, isn't operating as a business, nor is he acting for profit at all.    Under FinCEN's most recent guidance, Johnny is not a money transmitter.  He's merely a "user" of a convertible virtual currency.

Hope that gets the wheels turning.

Agreed.  I also agree FinCEN is not a big problem in creating an exchange.  I think, though, that the department of Commerce (who also regulates commodities) requires an public exchange to need $20,000,000 in assets before they can trade with the public.  Steven disagrees but I'd like to see more input.

I'll have to disagree here.  FinCEN's guidance clearly indicates it is legal, just not sure how it falls under their rules because of how they explained it.  Yes, there is always the risk of seizure, but I'm not going to be leaving money sitting at the exchange except in smaller amounts I can afford to lose.  Most of my holdings, as I mentioned in my OP, will be in bitcoins and only be cashed out to USD on a very infrequent basis.

I'm really hoping one of the lawyers here can chime in on this. 

I don't think any exchange is legal for Americans and I believe any money or bitcoin held in exchanges by Americans is subject to seizure by the fed.  But I am not a lawyer and I'm awaiting confirmation on my belief.


https://bitcointalksearch.org/topic/is-it-legal-to-run-a-public-bitcoin-exchange-that-americans-can-use-246162

I was being semi-facetious but making a serious point. Is there enough liquidity / trading action to keep a bot fed? There might be, I don't use campBX, just something to bear in mind. Also it depends on what sort of trading algorithm you are implementing.

Yeah, I plan on including some logic to keep it running, or to quit if it looks like CampBX is down. 

See, I have to write my own, since NONE of the bots available will work with it to actually trade. 

Just make sure your bot doesn't go into sleep mode at CampBX 

I'm not asking for actual legal advice here, just some guidance based on what I'd like to do to make sure I'm thinking this through correctly.  And to help me figure out what I might need to change.

So I gave up on mining recently, as it was nothing but a black hole for me in terms of cost effectiveness (way more electricity used than what I got back in BTC) and I can't afford any ASICs (or even used FPGAs).  Instead, I'm thinking of treating my bitcoin wallet as a savings account, of sorts.

Basically, I'll be using Coinbase, or maybe CampBX through Dwolla, to put a few USD into BTC.  Mostly I'll just be holding them in my main wallet that is not public, likely to even use a mixer service like what blockchain.info offers to make sure it's not directly linked to my public address for security.  I'm thinking of keeping a smaller portion of the total at CampBX and try running a bot against it to see if I can get it to grow some, try to at least beat out the usual savings accounts at banks APR with it.  I will only be taking money out of it in case of emergencies, and never in very large amounts when going USD<>BTC.

Most likely I'll be putting $10-$20 in per paycheck for now, maybe more if it turns out I can afford it after bills every month.

So my main concerns are around the FinCEN "guidance" and how this might interact with MTB/MSB laws.  I'm pretty sure that I'll most likely not need to worry about that, and just make sure I keep track of amounts for when I cash out anything to USD so I can figure the capital gains correctly on my income tax returns.

Looking forward to the discussion and any feedback I may get on this.