Topic: Run 'Round FINCEN Rules. Bitcoin Exchanges without Registering (Read 4256 times)

It just being used as a broad term it is going to become more of an issue as the years progress, all I have to say is hopefully it will move in a good direction.

Also when the reward halves, just have some funn!!

FINCEN issued guidance. None of his has actually been tested in a court of law yet. Ignoring until there are clearer legal cases and precedents seems a reasonable strategy for an individual, perhaps more risky for a business.

You aren't, this is true.  But e-trade and scottrade probably have to have license to allow you to do this.

bitcoin is not different. its just that a few numbskulls have mis-read the fincen guidelines and put on their panic hats.

99% correct - green is statement on point. red is not so on point.
miners making bitcoin are fine. but mining pools such as 50BTC.com which allows withdrawals in FIAT at the pool. have to be careful.
mining 'workers' dont need to be concerned but pools offering FIAT(direct bank transfer)/convertible virtual currency (dwolla /webmoney online representation of FIAT) Do need to be careful

anything touching FIAT has to be careful. fincen rules are all about dollars and always have been.

the words
Convertible virtual currency - is not bitcoin. so bitcoin remains unaffected just like the last 4 years.

convertible virtual currency = a database on a server(not owned by the banking sector) with a numeric amount that represents a FIAT value.

EG bitstamp dollar is not a legal tender dollar as its only viewable on bitstamp servers. so this is the convertible virtual currency.

bank account dollar is legal tender. so when bitstamp convert their online balance into someones bank account they need to be registerd as a MSB and regulated(licenced) for money transmission because they are moving legal tender aswell as convertible virtual currency.

for a mining pool owner just moving dwolla balances from his dwolla account to his mining workers dwolla accounts. he just needs to be a MSB registered but not money transmission licenced, due to the fact that they are not moving legal tender. only convertible virtual currency (dwolla dollars). so no money transmission licence.(because they dont touch BANK accounts of customers)

the simple rule is. if your moving FIAT around or handling the online digital form of it AS A BUSINESS you need to be MSB registered. if you are then doing specific things like moving it into bank accounts (legal tender) then you need money transmitter licences ontop.

If I buy a currency via e-trade, scottrade, or the other with USD i'm not required to have a license.  Why would bitcoin be any different?

I'd be interested to hear arguments against.

I should point out that there are no administrators since the requirement states they be able to both issue and redeem (withdraw from circulation) --- nobody can withdraw a bitcoin from circulation - so we have no administrators.

so the only thing at applies is "as a business" re: exchange of bitcoin to fiat or vice versa.

So miners and users don't need to concern themselves - only exchanges and people who are registered as a business...

"In addition, a person is an exchanger and a money transmitter if the person accepts such de-centralized convertible virtual currency from one person and transmits it to another person as part of the acceptance and transfer of currency, funds, or other value that substitutes for currency."
http://www.fincen.gov/statutes_regs/guidance/html/FIN-2013-G001.html

I can only see how that can be applied to escrows and exchanges, but not to (I)ndividuals who simply buy BTC from one person (A) one day, sell it to another person (Z) another day, with no express or implied contract between the two people who sold and bought the BTC, (A) and (Z), and the (I)ndividual. This is the "as part of the acceptance and transfer of..." clause. There is a contract with (e)scrows and (e)xchanges, that they will execute trades between two (sometimes anonymous to each other) people with mutually-agreed-upon terms.

I believe that this may be a practical approach.  And it might be possible to donate or loan addresses to the escrow services, to increase the decentralization.  But could the escrow services remain out of the grasp of FINCEN?  Can high-volume buyers or sellers remain out of the grasp of FINCEN?

Here's another approach that will be hard for banks and regulators to respond to.  An escrow service that matches buyers and sellers in which cash is deposited by the buyer into the seller's bank account.   Seller's coins get escrowed to Bitcoin-Brokers.org.     

 - http://www.Bitcoin-Brokers.org
 - https://bitcointalksearch.org/topic/buy-bitcoin-with-cash-deposits-at-most-banks-in-the-usa-with-bitcoin-brokers-237164

The high volume sellers will have the risk of the bank concluding that the deposits are for bitcoin (or a sting) and the seller ending up without access to the funds in the bank account.

Instead of there being a handful of exchanges each with a high volume of cash deposits there will be a high number of exchanges (individuals selling coins) each with a low volume of cash deposits.   

Decentralization FTW!

US dictator Roosevelt was successful with outlawing gold for 40 years

Since BTC is a bit easier to own anonymously than gold, of course, they are trying to stop the USD flow into BTC. The US leaders know very well they are like Cyprus, just that Cyprus could not force others to accept the EUR they printed forever.

I would wholeheartedly agree with you on this. You are correct.
However, businesses like Paypal and Moneybookers Skrill, do not see things this way. They probably just choose to see it this way because it competes with their precious dollar.
Until they agree that people who buy and sell bitcoins, not engaged in the business of it, are users, still....it may be difficult to bypass unless there is another alternative.
But, as far as your interpretation of this law, I believe you are correct.

I found the advisory

http://fincen.gov/statutes_regs/guidance/html/FIN-2013-G001.html

And I quote


and the definitions of user, administrator or exhanger


Draw your own conclusions but it seems clear to me that unless you are in the business of buying / selling or exchanging bitcoins then FinCEN clearly does not apply.

Where did you get this information from? Please provide a source, it is false.

The aim of FinCEN is to control money laundering from US->Other countries.

FinCEN does not apply to personal transactions only to companies in the money transmission business e.g. Western Union.

A FinCEN Advisory from a little while ago made it clear that personal transactions are exempt.

Using this logic then selling gold, silver or anything of any value would fall under FinCEN? Even your pet rock.

I just came across one attorney's opinion on selling digital goods for fiat and giving away bitcoins in order to comply with FINCEN regulations:

https://bitcointalksearch.org/topic/m.2276374

I still believe something along these lines can be done without running afoul of FINCEN regulations.  Maybe two separate transactions would help keep things in accordance with FINCEN's regulations or at least make it more difficult for them to enforce.  Suppose Alice has 5 BTC that she wants to convert to $500 in fiat and Bob has $500 in fiat that he wants to convert to 5 BTC.  Alice could agree to buy some of Bob's artwork for 5 BTC and Bob could agree to buy some of Alice's artwork for $500.  They could use alternate identities for each transaction and they could also use an escrow agent that's located in Russia or China.  Countries like these might be less likely to waste their time assisting American bureaucrats trying to enforce asinine regulations.

Personally, I think the best interim solution is distributed exchanges and in-person exchanges. The best long-term solution is when one buys and sells other items with BTC directly, avoiding the need for exchanges.

Those guys are the subject of this film, huh?
http://www.youtube.com/watch?v=b8bG5NxQ66g
Bunch of racist, hate mongering zionist fascist piglets.
Fuck the ADL, and Fuck you if you support them and their bullshit.

It's still a bit strange, if a consumer in the u.s buys foreign currency does that make him need some kind of license ? Why would that same consumer not be allowed to buy bitcoin ? Assuming that the people / biz he buys it from are outside the U.S located.

"Stored value" refers to CARDS that store value, in US dollars. Bitcoins do not store value, and they are not "Stored Value Cards".

Not making sense?

The problem with something "physical" is that it has to be mailed, to complete the transaction.
Magic Cards have actual value, so it will not work.

Replacing Bitcoins with Magic Cards, is going 2 steps backward.