According United Sates federal law 31 CFR, no.

I was delighted to stumble across the conversation going on here. The author was doing what many have done, file for an administrative determination on whether his business model fit the model of an MSB [Money Services Business]. But many great points are discussed, I encourage you to read for yourself. One of the best points was "TL/DR: Guidance is [FinCEN] way of saying "this old law applies to this new stuff and here is how and why". FinCEN doesn't pass laws so you are free to disagree. One should expect to find themselves in court if your interpretation and FinCEN interpretation are not in alignment. Depending on how strong your case is this could be a very good thing or a very bad thing. Only legislature can pass new law and ultimately the courts will decide if the law is applicable." This is actually correct! FinCEN does not legislate.

When I asked Key Bank if someone like me who only purchased bitcoin for my own account and only sold bitcoin from my own account directly to a customer was a money services business? They easily determined from 31 CFR 1010.100(ff) that I was not. Of course, it helped that they had a former employee of Fincen working in their compliance department. Key bank easily determined that I did not fit any of the MSB models mentioned in the document. At first glance it looks like section 5 might apply, but this is easily negated by limitation (ii) F which states "A person who accepts and transmits funds only integral to the sale of goods or the provision of services (other than money transmission services) by the person who is accepting and transmitting the funds." This means accepting payment, or making payment for the sale or purchase of goods and services IS NOT money transmission. We can easily see this example when we shop at a store. The clerk that uses VISA to accept money from a customer is not a money transmitter precisely because of this limitation. In fact, each and every one of us would be a money transmitter if not for this limitation. Thus, we can make this determination without ever even confusing ourselves with complex guidance from FIncen which essentially says the exact same thing, albeit more verbose and at times possibly circuitous. 

Now, what FinCEN will say when I request an administrative ruling I can't even predict given the random responses their customer service department gave me. I asked them what if any MSB I was and I was told I was a currency exchanger! [Dealer in Foreign Exchange] Then I asked if I need to check ID for sales $3,000 and over and they replied I must save my reports for 5 years. I don't consider either response as anything rational or reasonable making any sense. No supporting documentation citing laws or regulations was included. When I questioned the responses, my further questions were ignored. On the phone when I read FinCEN FIN-2008-G008 the representative wasn't even aware of the content as written. This leads me to wonder, "Is anyone at FinCEN even qualified to give any guidance on CFR 31 and Money Services Business laws? Perhaps there should be an inquiry into this. I plan to write to congress about my experience and how I was given inaccurate answers or no answers at all. My second thought is that they may in fact be capable but instead choose to intentionally mislead which is just plain tyranny if true.  

What about 31 U.S. Code § 5330 - Registration of money transmitting businesses?

(d)Definitions.—For purposes of this section, the following definitions shall apply:(1)Money transmitting business.—The term “money transmitting business” means any business other than the United States Postal Service which—(A) provides check cashing, currency exchange, or money transmitting or remittance services, or issues or redeems money orders, travelers’ checks, and other similar instruments or any other person who engages as a business in the transmission of funds, including any person who engages as a business in an informal money transfer system or any network of people who engage as a business in facilitating the transfer of money domestically or internationally outside of the conventional financial institutions system

I think once again here it is very clear the person must be engaging in a business that facilitates money transfers. A person simply buying or selling bitcoin as his primary purpose wouldn't fall under this definition, even if tricked into providing a few money transfers under the guise of making sales or purchases. As long as the trader wasn't advertising remittance services to transfer money to third parties for a fee. This is common sense and to think otherwise is an intentional misreading of the law as written.

And what about 18 U.S. Code § 1960? This is basically the punishment for not complying with section 5330 of title 31 above. It only summarizes the definition which is defined in section 5330. It also includes transmitting proceeds of illegal activities or funds designated for illegal activities.

* Disclaimer this is not intended to be legal advice and is solely the opinion of the author based on reading the applicable laws and regulations.

Editors note: Please review the disclaimer(s) of our Terms of Use. As the author indicated, this is not legal advice. We recommends always seeking advice from legal counsel.

Article by Scott Emick
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