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US Treasury Updates Bitcoin Regulations

by Bradley Jansen March 19th, 2013 8:06 am

Congratulations, Bitcoin, you've made the big time!  How do we know?  Easy, the Feds have you in their sights.

I'm leaving today on a trip, but I'll have more on my analysis later.  Keep in mind that it was the anti-money laundering laws that brought down e-gold and stifle currency competition.  Let's hope this won't be the case moving forward.

Here's the key part, "A user of virtual currency is not an MSB under FinCEN’s regulations and therefore is not subject to MSB registration, reporting, and recordkeeping regulations. However, an administrator or exchanger is an MSB under FinCEN’s regulations, specifically, a money transmitter, unless a limitation to or exemption from the definition applies to the person."

They explain the terms here, "This guidance refers to the participants in generic virtual currency arrangements, using the terms “user,” “exchanger,” and “administrator.”6 A user is a person that obtains virtual currency to purchase goods or services.7 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."

The Financial Crimes Enforcement Network (FinCEN) is the bureau of Treasury that enforces the Bank Secrecy Act (which requires banks to spy on their customers for the government).

FinCEN Issues Guidance on Virtual Currencies and Regulatory Responsibilities

To provide clarity and regulatory certainty for businesses and individuals engaged in an expanding field of financial activity, the Financial Crimes Enforcement Network (FinCEN) today issued the following guidance: Application of FinCEN’s Regulations to Persons Administering, Exchanging, or Using Virtual Currencies. The guidance is in response to questions raised by financial institutions, law enforcement, and regulators concerning the regulatory treatment of persons who use convertible virtual currencies or make a business of exchanging, accepting, and transmitting them. Convertible virtual currencies either have an equivalent value in real currency or act as a substitute for real currency. The guidance considers the use of virtual currencies from the perspective of several categories within FinCEN's definition of MSBs.

News Release: http://www.fincen.gov/news_room/nr/pdf/20130318.pdf

Guidance: http://www.fincen.gov/statutes_regs/guidance/pdf/FIN-2013-G001.pdf

I wrote a good background on the anti-money laundering laws for Dr. Paul here:

http://financialprivacy.org/1999/03/written-testimony-of-ron-paul-on-know-your-customer-regulations/

 

I've written extensively on FinCEN previously here:

http://financialprivacy.org/?s=Fincen

Here is the guidance:

FinCEN Bitcoin Regulation

2 Responses to “US Treasury Updates Bitcoin Regulations”

  1. avatar Rick says:

    Peter Surda, "told you so" ;-)

  2. avatar raqsebismil says:

    Posted following question on facebook free banking group. Reposting here:

    I see that one of the major criticisms of this "guidance" is putting too much regulatory and compliance responsibility on someone even remotely involved in alternative currencies, and secondly, the attempt of fincen to legislate or expand its jurisdiction without due process. Both of these are valid points.

    However, how do you see a small benefit or victory in this document, that at least they have acknowledged the legality of e-precious metal and other alternative currencies, and implicitly by issuing this guidance, they are giving legitimacy to the operation and development of such systems.

    Compared to the ambiguity in the law which brought liberty dollar to its fate, don't you think that this make it easier for new liberty dollars to operate within a certain protection and recognition of the law through such fincen documents? If a new liberty dollar starts operations by meeting all the onerous reporting and documentation responsibilities which this guidance places on it, at least doesn't this give strength to such a company in the court of law against baseless charges of "domestic terrorism". It will now be able to say that it was following officially issued fincen guidance on the matter?

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