On Monday, after running a piece covering the regulation going into effect in January enforcing the requirement of a traditional money transmitters license for anyone selling digital currency in the State of New Hampshire (eg. bitcoin), it was surprising to learn that very few had any knowledge of this. 

The news inspired debate and conversation throughout the community while the topic heated in social media, specifically Facebook, after free-staters appeared blindsided by the news. Obviously they were not alone. It seems as if few knew this was coming.

A fact that is rather disturbing considering the amendment will essentially make the unlicensed sale of bitcoin a criminal offense in certain cases. Perhaps unintentionally, but accurate nonetheless.

More on that in a minute, lets review some of the reactions yesterday.


Neal Conner sent a public message on Facebook to the Bitcoin New Hampshire group asking for specifics and offering advisory:

1. What the hell is this? Was this on anyone's radar?
2. This is exactly what this group should be fighting

Another user had this to say:

How did this pass with no on noticing?
Can anyone dispute the analysis of the new law?

Sadly, the post is synonymous with the general consensus industry wide in that few knew about this, and those who were aware of HB666, were oblivious to its passing. It simply was not on anyone's radar.

Christopher David's comments not only further made the point that few were acutely aware of the regulation but also started one of many lengthy discussions on the topic Monday. While intelligent and explanatory, most were evident of the overall surprise of the news with the exception of a select few. One of which was Denis Goddard who brought to attention the discussion on other threads sharing that:

In case anyone missed it on the other threads:

The bill got horribly twisted in the Senate; the text that passed is NOT the text that Rep. Laura Jones submitted! However, once you are the sponsor of a bill, you're left as the sponsor, even if the bill does the opposite of what you want, even if you speak AGAINST the amended bill.

You can see the various versions of the bill, and the amendments made to it, here: link

Jones being New Hampshire Representative Laura Jones [R], the sponsor of House Bill 666 of which this amendment originated. We have not been able to review these claims, but if true, this would suggest that the original bill is dissimilar enough to its current form for at least one contributor to describe it as "twisted". A few asserted full awareness of the regulation going into affect, however , overall this percentage was low at best.

Most were rather shocked, some were pissed off.

So What Does The Amendment Actually Mean?

For the legal parsing and assembly of the applicable regulation at 399-G:1 that amends virtually currency to the definition of monetary value implicitly adhering it to existing money transmission laws, I would defer to Monday's article which explains this in detail.

In a nutshell what this means is that digital currency, including bitcoin, cannot be sold in New Hampshire without a money transmitters license. However, it can be used for the purchase of goods and service as 399-G:4 has a provision exempting this activity. 

The wording of the title of Monday's article may have been alarming at first glance, and although not inaccurate, we will state again with clarity, just as the article does, that only unlicensed transactions are prohibited under the new rule. 

That in itself is enough to cause allot of issues for small businesses and independent traders, but also be cognizant of the lack of provision exempting personal sales, something that may or may not have been intentional, but factual nonetheless.

Regardless, it is clear that peer-to-peer trading and retail sales of digital currency will most certainly be negatively effected and they are the most vulnerable once this goes into effect.

We all know that Western Union and Coinbase are going to easily coast right by this as if it wasn't in the way to begin with. This is of no relevance to these organizations, it's a small charge in comparison to their mountains of money and more synonymous to the annoyance of a gnat.  They are not the ones who are going to be potentially devastated by this regulation, its the little guys and the small business owners,

This is one of the items of we specifically requested clarification in our inquiry to the department of banking.

In our inquiry, and to be fair they did contact us but we failed to directly communicate due to the time difference, this is an excerpt from what that correspondence where we asked specifically:

According to the exemptions at 399-G:4, there is no provision for personal use of bitcoin or other digital currencies. This would lend support to the assumption that nobody at all can sell bitcoin, not even for individual personal sales, without a money transmitters license in New Hampshire.
Is there any clarification that you can provide in regards to this? Are personal sales for personal use or investment purposes going to be illegal under this new amendment? 

That is exactly what was asked, and we reported nothing to the contrary in regards to this. In the article we in fact say exactly this:

Last month, federally registered money services businesses were notified by the New Hampshire Department of Banking that registered money transmitters, of which anyone in the United States selling or buying bitcoin beyond that of personal use (assumption) or as a business is required to become, needed to submit an application for a money transmitters license. This was commendable given that most states say nothing at all, however, what they failed to include were the regulations that go into effect January 1st, 2016.

Going so far as commending the department for its diligence in sending anything at all. Since the article ran yesterday Emelia Galdieri, legal counsel with the department, has now publicly stated that:

...if Western Union were to take bitcoin from one person and give it to another, that would be money transmission. We are not concerned if you personally want to have a bitcoin and use it to pay for something. We are not worried about that transaction at all.” 
Well of course, I absolutely agree and nothing was reported in Monday's article that would be of any objection to this statement at all. However, it's not the second part of that statement that anyone is concerned with. There was no doubt, or report of anything suggesting otherwise, that one could not purchase goods or services with bitcoin. If Sally wants to go buy a cheeseburger with her bitcoin, by all means, Sally will still be able to go buy that cheeseburger in January. Her doctor my not appreciate that activity, but the state of New Hampshire isn't going to have an issue with it.

The concern is with small business, independent traders, and related activity that would be considered money transmission under this amendment. Using the exact same example as Geldieri used, if Joe Average, instead of Western Union, takes a bitcoin from one person and gives it to another, that is considered money transmission under this regulation, and that is where the concern lies.

This is precisely what many small businesses selling bitcoin in the retail space and independent traders in the peer-to-peer space do specifically. Now this activity will be considered money transmission in New Hampshire. That is the concern. That is the issue. Just as it was in New York which led to many companies and independents to cease and desist or leave the state.

Regulations like these, regardless of their intent or what companies they are being aimed at, choke small companies to death and cripple innovation where others inadvertently get caught up in the broad blanket of definitions that end up labeling them a money transmitter, when they are in fact not transmitting money.

Here's The Actual Problem

What I have yet to see anyone realize over the last 2 days of discussion, and what needs to be addressed, are the consequences of failure to comply with the amendment when it goes into affect in January. Many have commented on how this can be ignored alluding to the suggestion that New Hampshire will be incapable of actually enforcing the regulation which may be seemingly accurate given the lack of penalties or inclusion as a criminal offense if violated.

One problem with this line of thinking is that this is only an assumption, New Hampshire may very well choose to heavily enforce the regulation, however, the bigger problem is that they don't have to.

Any violation after the amendment will clearly be a federal offense. One of which if convicted, is punishable by both civil and criminal penalties including fines and timed served in federal prison.

When the 399-G:1 amendment goes into effect, federal regulations at 18 U.S.C § 1960 will then subsequently go into affect. Under 18 U.S.C § 1960(a)

Whoever knowingly conducts, controls, manages, supervises, directs, or owns all or part of an unlicensed money transmitting business, shall be fined in accordance with this title or imprisoned not more than 5 years, or both. 

If an offense is found to have violated anti-money laundering laws, the penalties increase in severity. Additionally, failure to register federally (a prerequisite to the money transmitters license), regardless of the knowledge of its requirement, is brutally enforced:

Any person who fails to comply with any requirement of 31 U.S.C. 5330 or this section [31 CFR 103.41] shall be liable for a civil penalty of $5000 for each violation.BSA registration requirements, in an amount up to $5,000 for each day a registration violation continues. [31 U.S.C. § 5330(e) and 31 C.F.R. § 103.41(e)]

These are just two references of many applicable to the federal enforcement of New Hampshire's regulation confirming the seemingly harmless new amendment is actually punishable by substantially severe penalties if convicted under federal law. Just ask John Powell or Pascal Reid, who both fell victim similar definitions that were not the aim of their acts and amendments either, however, sections in these regulations were certainly used to help prosecute them.

I am not saying that New Hampshire intentionally meant to make things this way. The motive of aiming this regulation at the Western Unions of the world may indeed be completely accurate, but that's not the point because regardless of intention, the above is true and when a situation escalates to a federal issue, any decision on that level to pursue civil or criminal charges will now have these regulations to justify whatever use of them they see as fitting. This will be regardless of what anyone meant or intended because at that point, it is exactly what it is, a federal offense.

In other words .... it's not just New Hampshire you have to worry about.

In a closing note. We considered further changing yesterday's title to differentiate types of transactions that would be illegal or not. We chose to leave it alone for two reasons, it was not inaccurate regardless of its ease of misinterpretation for one, and more importantly this needed to be discussed. Whereas we do apologize if anyone read only the title and misunderstood its actual meaning, the article was very clear.

At the end of the day, the title grabbed enough attention to light a fire and people are discussing the actual problem and that is certainly a positive thing. 

Story by dinbits
Banner image by dinbits staff
Special thanks to Neil Conner, Denis Goddard, and Christopher David from who's posts we extract ed excerpts from during discussion . 

The opinions expressed by authors of articles linked, referenced, or published on dinbits.com do not necessarily express, nor are endorsed by, the opinions the of dinbits.com or its affiliates.

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