What money transmission licences are relevant to Bitcoin?


FinCEN is still looking at what regulations if any will be pushed on to bitcoin industry. Like it or not and folks can stomp their feet, hold their breath until they are blue in their face but there is no doubt regulatory authority will be pushed on Bitcoin Industry.

OR- They could make it illegal. Going back to the civil war the US has outlawed alternative currency (my term)

To answer your question the Money Transmitter Regulatory Association and State regulations should be your guide. Different types of transactions fall under MSB rules/regs. In general there are likely going to be around 45 states that will require some type of regulatory oversight and licensing. Some will only care if the transaction means funds will be held in a balance or stored value account. some will say only the exchanges will need to be licensed.

Our company is working on that stuff now plus ways to monitor coins to prove it is not the proceed of a crime.

For a bitcoin to be...

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Marco Santori is a blockchain and bitcoin specialist who leads the FinTech practice at law firm Cooley LLP.

In this multi-part series, Santori gives a basic primer on the state of US law as it applies to digital currency entrepreneurs.

In Part I, we covered the law of money transmission on the federal level in the United States. We learned about the BSA, AML and KYC. We learned why money transmitter classification on the federal level has real consequences.

Now, in Part II, I’ll explain why the state level is really where the action is. Recall that FinCEN registration is just that: registration. Fill out a form, click a button, and your business is registered.

Contrast this mere “registration” with full-blown “licensure”, which is required by state regulators. In the US, a business must comply with federal regulation and obtain licensure in any state whose regulation requires it.

A money transmission license is not a right, but a...

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When digital currency entrepreneurs today decry the regulation that is “stifling innovation” in their industry, they’re usually talking about money transmission regulation. Money transmission regulation exists at both the state and federal levels in the US.

Money Transmitters under Federal Law

On March 18, 2013, the Financial Crimes Enforcement Network (“FinCEN”) published guidance announcing that it would make no distinction between government (or “fiat”) currency and digital currencies like Bitcoin for the purposes of the money transmission laws. Thus, taking Bitcoin as an example:

individuals and businesses who merely exchange Bitcoin for goods and services (and vice-versa) are not money transmitters. businesses that accept Bitcoin from one person and send it to another (or back to the same person) are money transmitters, and are not exempt from money transmission regulation simply because they do not deal in fiat currency. any business that exchanges fiat...
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the actual interpretation is that bitcoin foundation moved fiat across state lines into california as a business to pay for the convention centre. so the large (above $1000 in a single transaction) to a Californian bank from a business created a risk flag.

Where are you guys getting this


The Financial Crimes Enforcement Network (“FinCEN”) is issuing this interpretive guidance to clarify the applicability of the regulations implementing the Bank Secrecy Act (“BSA”) to persons creating, obtaining, distributing, exchanging, accepting, or transmitting virtual currencies.1 Such persons are referred to in this guidance as “users,” “administrators,” and “exchangers,” all as defined below.2 A user of virtual currency is not an MSB under FinCEN’s regulations and therefore is not subject to MSB registration,...

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Is Selling Bitcoin On LBC Considered "Money Transmission" in Texas, USA? | Localbitcoins


Alright, so the official .gov website I pulled my information from was here. http://www.dob.texas.gov/public/uploads/files/consumer-information/sm1037.pdf Now it states "Exchange of cryptocurrency for sovereign currency between two parties is not money transmission. This is essentially a sale of goods between two parties. The seller gives units of cryptocurrency to the buyer, who pays the seller directly with sovereign currency" However, later it states "Exchange of cryptocurrency for sovereign currency through a third party exchanger is generally money transmission. For example, most Bitcoin exchange sites, such as the failed Mt. Gox, facilitate exchanges by acting as an escrow-like intermediary. In a typical transaction, the buyer of cryptocurrency sends sovereign currency to the exchanger who holds the funds until it determines that the terms of the sale have been satisfied...

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There once was a website, with 50 million unique visitors per day. Hosting 12 billion files, it was the 13th most visited site on the internet, accounting for 4% of all internet traffic. Do you know what site I’m talking about?

It’s not Google, nor is it Yahoo or YouTube; in fact, it’s none of the large established businesses you would expect it to be. Have you guessed the answer yet? It’s the money laundering, racketeering, copyright infringing site everyone used to know and love: Megauploads.

Megauploads were once an established business dominating the cloud computing service’s industry. It was legitimate, had global recognition and overwhelming success, being endorsed by prominent artists such as Kanye West, Puff daddy, Snoop Dog and many more.

Megauploads generated over $175 million in profits over 7 years of operation, but this came at the ultimate price, 500 million in damages and 7 arrests. So how did this seemingly legitimate business accounting...

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Regulation has been a hot topic in the Bitcoin community since the FINCEN guidance in March, and in the Bitcoin conference that took place this past weekend an entire quarter of the conference was dedicated to economic and regulatory issues. The guidance evoked strong feelings of both relief and uncertainty throughout the Bitcoin community; although ordinary Bitcoin users are now almost certainly clear of regulation, a fact that has allowed the Humble Bundle and the Electronic Frontier Foundation to feel comfortable accepting the currency, Bitcoin exchanges will now likely be required to have money transmitter licenses in all 48 states to operate across the country – an extremely onerous procedure that has repeatedly stymied even businesses outside the Bitcoin space. Many figures have been thrown around as to just how much that process costs; a common understanding was that it takes millions of dollars of legal effort and surety bonds, and Jeff Berwick said in his resignation from...

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Marco Santori of the Bitcoin Foundation has a piece up on CoinDesk in which he explores money transmission licenses at the state level in the US.

This, he argues, is much trickier than simple FinCEN registration.

The state with jurisdiction ultimately decides whether to grant a business a license to transmit money. It’s not a right, and it’s no entirely predictable for a 50-state rollout.

Also, because a business meets FinCEN’s definition of a money transmitter does not mean the same applies at the state level. South Carolina and Montana do not even require licenses for such companies, and New Mexico seems not to worry about it for Bitcoin businesses.

The problem so far, though, is that the other 47 states have not been too forthcoming about their own requirements for licensed Bitcoin transmitters.

What we do know is that states will reserve the right to police a business that has customers in state, regardless of whether the business itself is...

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When the U.S Treasury Department declared in March 2013 that exchangers and administrators of virtual currencies like Bitcoin were “money service businesses” subject to regulation under the Bank Secrecy Act, Reason‘s Brian Doherty issued a prescient warning.

“What the government cannot stop (and ought not try to stop) it can still interfere with, and ruin lives in the process,” he wrote that May. “Those who think it necessary that Bitcoin be regulated, even if they want to be in on making the regulations as sane and harmless as possible, need to remember that every regulation has a punishment attached for violating it.”

On Friday, the Treasury’s Financial Crimes Enforcement Network charged Phoenix-area neurologist Peter Steinmetz with operating an unlicensed bitcoin exchange.

FinCEN alleges that Steinmetz, along with co-defendant Thomas Costanzo, “enabled their customers to exchange cash for ‘virtual currencies’ charging a fee for their service” without a...

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Find answers to recurring questions and myths about Bitcoin.

Table of contents


What is Bitcoin?

Bitcoin is a consensus network that enables a new payment system and a completely digital money. It is the first decentralized peer-to-peer payment network that is powered by its users with no central authority or middlemen. From a user perspective, Bitcoin is pretty much like cash for the Internet. Bitcoin can also be seen as the most prominent triple entry bookkeeping system in existence.

Bitcoin is the first implementation of a concept called "cryptocurrency", which was first described in 1998 by Wei Dai on the cypherpunks mailing list, suggesting the idea of a new form of money that uses cryptography to control its creation and transactions, rather than a central authority. The first Bitcoin specification and proof of concept was published in 2009 in a cryptography mailing list by Satoshi Nakamoto. Satoshi left the project in late 2010...

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“I think we will know when bitcoin has reached prime time when it is transferring more value each day than Western Union or Money Gram…”

– Roger Ver, November 2013

Bitcoin money transfer is usually discussed in either sensational or downright misleading way. There is a significant category of Bitcoin or, currently more popular, blockchain stakeholders and observers who seem to be completely vested in this innovative product’s awesome potential and are unable to entertain a deviating opinion. This very smart and capable, but, unfortunately, close-minded group believes that Bitcoin cancels a need for regulation and would soon destroy Visa, Western Union and “banks.” Articles written for and by such audience are easy to find, and we will not link to them to avoid enabling such either outrageously ignorant or deceptive opinions.

Rational view of Bitcoin/Blockchain for Sending Money

In this context, we are always grateful to find discussion about...

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Concord, NH – New Hampshire exempted bitcoin from money transmission regulation by a bill signed into law by Governor Chris Sununu. The bill states that individuals “who engage in the business of selling or issuing payment instruments or stored value solely in the form of convertible virtual currency or receive convertible virtual currency for transmission to another location” are exempted from the state’s money transmission regulations.

Rep. Barbara Biggie, a former employee of Western Union, introduced the bill. Rep. Keith Ammon, one of the bill’s co-sponsors, said the bill’s intentions represent those who swap virtual currency for U.S. dollars. Ammon asserts that this bill is very important as earlier attempts to legislate a similar bill weren’t coordinated well. During a 2015 attempt to institute a regulation, cryptocurrency businesses succumbed to state banking authorities leaving currency markets like Poloniex out of operations in certain jurisdictions.

The bill...

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Since Bitcoin’s legal status in not fully clear (even to U.S. regulators), it is very difficult for Bitcoin businesses to stay compliant with local laws.

It is unclear whether governments consider Bitcoin to be a “currency” or a “commodity”. Depending on how Bitcoin is classified, a business may or may need to seek a money transmitter license.

Recent law enforcement action by a Florida prosecutor charging two sellers at LocalBitcoins.com with operating an “unlicensed money service business” might give us an idea as to the U.S. governments stance on this issue…

But, things may be different overseas.

Legislators in Europe may be taking a different stance towards the regulation of Bitcoin as a currency. In Finland, the head of oversight at the Bank of Finland declared that Bitcoin doesn’t meet the definition of a currency. In this case, this small country to declared Bitcoin to be a commodity.

The country of Norway also followed suit to...

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Regulating companies active in the bitcoin world have proven to be quite challenging. In most cases, bitcoin startups dealing with customer deposits are labeled as money transmitters. New Hampshire legislators are now seeking an exemption for bitcoin startups through the HB 436 proposal. It remains unclear if their proposal will be approved, as it will set an intriguing precedent for other US states.

Under the HB 436 proposal, New Hampshire regulators want to add a formal definition for bitcoin to state laws. Additionally, they strive to obtain exemption for people conducting business using transactions, conducted wholly or partially in cryptocurrency. Right now, that exemption does not exist. Every person involved in cryptocurrency transactions is automatically labeled as a money transmitter. This also means those individuals are subject to strict regulation.

HB 436 Is A Big Step For Bitcoin Regulation

Additionally, HB 436 aims to add a clear definition for...

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A Federal Court yesterday agreed with the SEC, holding that, for the purposes of the definition of a security, Bitcoin is money:

The SEC argues that the BTCST investments are both investment contracts and notes, and, thus, are securities.

The term “security” is defined as “any note, stock, treasury stock, security future, security-based swap, bond…[or] investment contract…” 15 U.S.C. § 77b. An investment contract is any contract, transaction, or scheme involving (1) an investment of money, (2) in a common enterprise, (3) with the expectation that profits will be derived from the efforts of the promoter or a third party. SEC v. W.J. Howey & Co., 328 U.S. 293, 298-99 (1946); Long v. Shultz Cattle Co, 881 F.2d 129, 132 (1989). First, the Court must determine whether the BTCST investments constitute an investment of money. It is clear that Bitcoin can be used as money. It can be used to purchase goods or services, and as Shavers stated, used to pay for individual...

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Flickr / zcopley

Ars Technica reports on the finer details of how the government was able to seize a bunch of cash from Mt. Gox, the world's largest Bitcoin exchange.

Homeland Security says it had probable cause to believe that Mt. Gox is guilty of money transmitting without a license. Companies like PayPal and Western Union have this license, but Mt. Gox does not.

Punishment for money transmitting without a license is a fine or a maximum of five years in jail.

By using a confidential informant to move Bitcoins through Mt. Gox to Dwolla, one of the most popular ways to turn the digital currency into physical currency, authorities were able to trace the money and find it to be a violation.

This is an interesting (and major) way for the government to acknowledge Bitcoin.

We reached out to Dwolla, but it was unable to provide us with any additional information.

Gawker has the full seizure...

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Video transcript

But what I wanted to do in this video is talk about what a bitcoin is in more general terms and what differentiating characteristics they have compared to other approaches. So for starters, bitcoin is just an electronic payment system. By electronic payment system, I mean it's just a vehicle, a conduit, by which two parties can transact over the internet. I call these parties Alice and Bob. And let's say Alice for whatever reason wants to give money to Bob over the internet. And this may be because she owes Bob money, or maybe Bob is a merchant and Alice is buying something from Bob. Or maybe Bob is a not-for-profit, and Alice is making a donation to Bob. So there could be many reasons why Alice is trying to pay Bob over the internet in some capacity. Now, if Bob is willing to accept bitcoins, which are a form of electronic payments, then Alice can go ahead and send Bob some value in bitcoins. And really, a bitcoin transaction between Alice and Bob amounts...

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Want to start a new Bitcoin business in California? A new legislative proposal may make you think twice. On February 27, 2015 AB 1326, was introduced by Matt Dababneh as part of the Money Transmission Act. As an Assembly member, Matt Dababneh represents the Banking and Finance Committee as Chairman. He and the state of California want you to pay $5,000 just to start your business and be considered a legal operation.

Also Read: OP-ED: BitLicense’s Superficial Changes

The California Bitcoin bill AB 1326 would require all non-exempt Bitcoin and virtual currency businesses to pay this non-refundable fee to obtain a license from the Department of Business Oversight (DBO). Additional requirements of AB 1326 include providing information such as audited financials for the most recent fiscal year, and in some cases maintain a certain level of funds in “investment-grade permissible investments” as specified.

The Definition of Virtual Currency

The bill defines...

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One of the hardest concepts to grasp for novice Bitcoin users is how and where they can buy their first digital currency. The answer to that question is relatively simple, as the most commonly used method is purchasing Bitcoin from a Bitcoin exchange. But what is a Bitcoin exchange exactly, and which one should you choose?

The Concept of a Bitcoin Exchange

A Bitcoin exchange is not all that different from your average stock market, as it is a platform which lets users intermittently buy and sell currencies and assets. For example, you want to buy bitcoin, and you have fiat currency at your disposal. Or you have some Dogecoin, which you want to exchange for Bitcoin. All of these things can be done by using an online exchange.

It has to be said however that not every Bitcoin exchange will let you buy and sell Bitcoin in exchange for fiat currency. There are specialized Bitcoin exchanges that will let you do exactly that – such as Bitstamp, Coinbase, Safello,...

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Bitcoin, a Florida judge says, is not real money. Ironically, that could provide a boost to use of the crypto-currency which has remained in the shadows of the financial system.

The July 22 ruling by Miami-Dade Circuit Judge Teresa Pooler means that no specific license is needed to buy and sell bitcoins.

The judge dismissed a case against Michel Espinoza, who had faced money laundering and other criminal charges for attempting to sell $1,500 worth of bitcoins to an undercover agent who told the defendant he was going to use the virtual money to buy stolen credit card numbers.

Espinoza's lawyer Rene Palomino said the judge acknowledged that it was not illegal to sell one's property and ruled that this did not constitute running an unauthorized financial service.

"He was selling his own personal bitcoins," Palomino said. "This decision clears the way for you to do that in the state of the Florida without a money transmitting license."

In her ruling,...

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