Money Transmitter Licensing Grimes Law PLLC

Playing with fire with FinCen and SEC, Binance may face a hefty penalty again after already losing 50 percent of its trading business

On 14 June, Binance announced that it “constantly reviews user accounts to improve (their) platform security and to comply with global compliance requirements”, mentioning that “Binance is unable to provide services to any U.S. person” in the latest “Binance Terms of Use” attached within the announcement.
According to the data from a third-party traffic statistics website, Alexa, users in the U.S. form the biggest user group of Binance, accounting for about 25% of the total visitor traffic.
In the forecast of Binance’s user scale compiled by The Block, the largest traffic is dominated by users in the U.S., surpassing the total of the ones from the second place to the fifth place.
Also, considering that the scale of digital asset trading for the users in the U.S. far exceeds that of the users of many other countries, it could mean that Binance may have already lost 50 % of the business income by losing users in the U.S. Apparently, such an announcement by Binance to stop providing services to users in the U.S. means Binance has no other alternative but “seek to live on.”
So, what are the specific requirements of the U.S. for digital asset exchanges and which of the regulatory red lines of the U.S. did Binance cross?
Compliance issues relating to operation permission of digital asset exchanges
In the U.S., the entry barrier for obtaining a business license to operate a digital asset exchange is not high. Apart from the special licencing requirements of individual states such as New York, most of the states generally grant licences to digital asset exchanges through the issuance of a “Money Transmitter License” (MTL).
Each state has different requirements for MTL applications. Some of the main common requirements are:
Filling out the application form, including business address, tax identification number, social security number and statement of net assets of the owneproprietor Paying the relevant fees for the licence application Meeting the minimum net assets requirements stipulated by the state Completing a background check Providing a form of guarantee, such as security bonds
It is worth noting that not all states are explicitly using MTL to handle the issues around operation permission of digital asset exchanges. For instance, New Hampshire passed a new law on 12 March 2017, announcing that trading parties of digital assets in that state would not be bound by MTL. Also, Montana has not yet set up MTL, keeping an open attitude towards the currency trading business.
On top of obtaining the MTL in each state, enterprises are also required to complete the registration of “Money Services Business” (MSB) on the federal level FinCEN (Financial Crimes Enforcement Network of the U.S. Treasury Department) issued the “Application of FinCEN’s Regulations to Persons Administering, Exchanging, or Using Virtual Currencies” on 18 March 2013. On the federal level, the guideline requires any enterprise involved in virtual currency services to complete the MSB registration and perform the corresponding compliance responsibilities. The main responsibility of a registered enterprise is to establish anti-money laundering procedures and reporting systems.
However, California is an exception. Enterprises in California would only need to complete the MSB registration on the federal level and they do not need to apply for the MTL in California.
Any enterprise operating in New York must obtain a virtual currency business license, Bitlicense, issued in New York
Early in July 2014, the New York State Department of Financial Services (NYSDFS) has specially designed and launched the BitLicense, stipulating that any institutions participating in a business relevant to virtual currency (virtual currency transfer, virtual currency trust, provision of virtual currency trading services, issuance or management of virtual currencies) must obtain a BitLicense.
To date, the NYSDFS has issued 19 Bitlicenses. Among them includes exchanges such as Coinbase (January 2017), BitFlyer (July 2017), Genesis Global Trading (May 2018) and Bitstamp (April 2019).
Solely from the perspective of operation permission, Binance has yet to complete the MSB registration of FinCEN (its partner, BAM Trading, has completed the MSB registration). This means that Binance is not eligible to operate a digital asset exchange in the U.S. FinCEN has the rights to prosecute Binance based on its failure to fulfil the relevant ‘anti-money laundering’ regulatory requirements.
Compliance issues relating to online assets
With the further development of the digital asset market, ICO has released loads of “digital assets” that have characteristics of a “security” into the trading markets. The Securities and Exchange Commission (SEC) has proposed more comprehensive compliance requirements for digital asset exchanges. The core of the requirements is reflected in the restrictions of offering digital assets trading service.
In the last two years, the SEC has reiterated on many occasions that digital assets that have characteristics of a security should not be traded on a digital asset exchange
In August 2017, when the development of ICO was at its peak, the SEC issued an investor bulletin “Investor Bulletin: Initial Coin Offerings” on its website and published an investigation report of the DAO. It determined that the DAO tokens were considered ‘marketable securities’, stressing that all digital assets considered ‘marketable securities’ would be incorporated into the SEC regulatory system, bound by the U.S. federal securities law. Soon after, the SEC also declared and stressed that “(if) a platform offers trading of digital assets that are securities and operates as an “exchange,” as defined by the federal securities laws, then the platform must register with the SEC as a national securities exchange or be exempt from registration.”
On 16 November 2018, the SEC issued a “Statement on Digital Asset Securities Issuance and Trading,” in which the SEC used five real case studies to conduct exemplary penalty rulings on the initial offers and sales of digital asset securities, including those issued in ICOs, relevant cryptocurrency exchanges, investment management tools, ICO platforms and so on. The statement further reiterates that exchanges cannot provide trading services for digital assets that have characteristics of a security.
On 3 April 2019, the SEC issued the “Framework for ‘Investment Contract’ Analysis of Digital Assets” to further elucidate the evaluation criteria for determining whether a digital asset is a security and providing guiding opinions on the compliance of the issuance, sales, holding procedures of digital assets.
As of now, only a small number of digital assets, such as BTC, ETH, etc. meet the SEC’s requirement of “non-securities assets.” The potentially “compliant” digital assets are less than 20.
Early in March 2014, the Inland Revenue Service (IRS) has stated that Bitcoin will be treated as a legal property and will be subject to taxes. In September 2015, the U.S. Commodity Futures Trading Commission (CFTC) stated that Bitcoin is a commodity and will be treated as a “property” by the IRS for tax purposes.
On 15 June 2018, William Hinman, Director of the Corporate Finance Division of the SEC, said at the Cryptocurrency Summit held in San Francisco that BTC and ETH are not securities. Nevertheless, many ICO tokens fall under the securities category.
So far, only BTC and ETH have received approval and recognition of the U.S. regulatory authority as a “non-securities asset.”
Since July 2018, the SEC has investigated more than ten types of digital assets, one after another, and ruled that they were securities and had to be incorporated into the SEC regulatory system. It prosecuted and punished those who had contravened the issuance and trading requirements of the securities laws.
Although there are still many digital assets that have yet to be characterised as “securities”, it is extremely difficult to be characterised as a “non-securities asset” based on the evaluation criteria announced by the SEC. As the SEC’s spokesperson has reiterated many times, they believe the majority of ICO tokens are securities.
Under the stipulated requirements of the SEC, Coinbase, a leading U.S. exchange, has withdrawn a batch of digital assets. The assets withdrawn included digital assets that had been characterised as “securities” as well as those that have high risks of being characterised as “securities.” However, it is worth noting that although the risk to be characterised as “securities” for more than ten types of digital assets, which have not been explicitly required by SEC to be withdrawn, is relatively small, they are not entirely safe. With the further escalation of the SEC’s investigations, they could still be characterised as securities and be held accountable for violating their responsibilities. However, this requires further guidance from the SEC.
*Coinbase’s 14 types of digital assets that have yet to be requested for withdrawal
Poloniex announced on 16 May that it would stop providing services for nine digital assets, including Ardor (ARDR), Bytecoin (BCN), etc. under the compliance guidelines of the SEC. On 7 June, Bittrex also announced that it would stop providing trading services to U.S. users for 32 digital assets. The action of the SEC on its regulatory guidance was further reinforced apparently.
In fact, it is not the first time that these two exchanges have withdrawn digital assets under regulatory requirements. Since the rapid development of digital assets driven by ICO in 2017, Poloniex and Bittrex were once leading exchanges for ICO tokens, providing comprehensive trading services for digital assets. However, after the SEC reiterated its compliance requirements, Poloniex and Bittrex have withdrawn a considerable amount of assets in the past year to meet the compliance requirements.
In conclusion, the takeaways that we have got are as follows: Under the existing U.S. regulatory requirements of digital assets, after obtaining the basic entry licences (MSB, MTL), exchanges could either choose the “compliant asset” solution of Coinbase and only list a small number of digital assets that do not have apparent characteristics of a security, and at all times prepare to withdraw any asset later characterised as “securities” by the SECs; or choose to be like OKEx and Huobi and make it clear they would “not provide services to any U.S. users” at the start.
Binance has been providing a large number of digital assets that have characteristics of a security to U.S users without a U.S. securities exchange licence, so it has already contravened the SEC regulatory requirements.
On top of that, it is also worth noting that the rapid development of Binance has been achieved precisely through the behaviours of “contrary to regulations” and “committing crimes.” Amid the blocking of several pioneering exchanges, such as OKCoin, Huobi, etc. providing services to Chinese users in the Chinese market under new laws from the regulatory authorities, Binance leapfrogged the competition and began to dominate the Chinese market. Similarly, Binance’s rapid growth in the U.S. market is mainly due to its domination of the traffic of digital assets withdrawn by Poloniex and Bittrex. One can say that Binance not only has weak awareness of compliance issues, but it is also indeed “playing with fire” with the U.S. regulators.
In April 2018, the New York State Office of Attorney General (OAG) requested 13 digital asset exchanges, including Binance, to prepare for investigations, indicating it would initiate an investigation in relations to company ownership, leadership, operating conditions, service terms, trading volume, relationships with financial institutions, etc. Many exchanges, including Gemini, Bittrex, Poloniex, BitFlyer, Bitfinex, and so on, proactively acknowledged and replied in the first instance upon receipt of the investigation notice. However, Binance had hardly any action.
Binance has been illegally operating in the U.S. for almost two years. It has not yet fulfilled the FinCEN and MSB registration requirements. Moreover, it has also neglected the SEC announcements and OAG investigation summons on several occasions. The ultimate announcement of exiting the U.S. market may be due to the tremendous pressure imposed by the U.S. regulators.
In fact, the SEC executives have recently stressed that “exchanges of IEO in the U.S. market are facing legal risks and the SEC would soon crack down on these illegal activities” on numerous occasions. These were clear indications of imposing pressure on Binance.
Regarding the SEC’s rulings on illegal digital asset exchanges, EtherDelta and investment management platform, Crypto Asset Management, it may not be easy for Binance to “fully exit” from the U.S. market. It may be faced with a hefty penalty. Once there are any compensation claims by the U.S. users for losses incurred in the trading of assets at Binance, it would be dragged into a difficult compensation dilemma. It would undoubtedly be a double blow for Binance that has just been held accountable for the losses incurred in a theft of 7,000 BTC.
Coincidentally, Binance was tossed out of Japan because of compliance issues. In March 2018, the Financial Services Agency of Japan officially issued a stern warning to Binance, which was boldly providing services to Japanese users without registering for a digital asset exchange licence in Japan. Binance was forced to relocate to Malta instead. Binance may have to bear hefty penalties arising from challenging the compliance requirements after it had lost important markets due to consecutive compliance issues.
The rise of Binance was attributed to its bold and valiant style, grasping the opportunity created in the vacuum period of government regulation, breaking compliance requirements and rapidly dominating the market to obtain user traffic. For a while, it gained considerable advantages in the early, barbaric growth stage of the industry. Nonetheless, under the increasingly comprehensive regulatory compliance system for global digital asset markets, Binance, which has constantly been “evading regulation” and “resisting supervision” would undoubtedly face enormous survival challenges, notwithstanding that it would lose far more than 50 per cent of the market share.
submitted by Fun_Judgment to CryptoCurrencyTrading [link] [comments]

Owning and using Bitcoin is not a crime, but that is what FinCEN regulation is attempting to make it.

Bitcoin miner = money transmitter
From FinCEN: "a person that creates units of convertible virtual currency and sells those units to another person for real currency or its equivalent is engaged in transmission to another location and is a money transmitter" In other words, if you mine bitcoins, FinCEN is trying to make you a money transmitter and subject you to all the heavy handed regulations.
Bitcoin exchange = money transmitter
From FinCEN: "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"
money transmitter = $25m bond and onerous regulation
From Jeff Berwick's resignation: "Specifically, in the US and Europe, there are an incredible amount of banking, money and even telecommunications rules and regulations that would have to be adhered to if the company had any hope of survival. Not least of which was a $25 million "insurance bond" necessary as being deemed a "money transmitter" in the US."
Don't be fooled. The FinCEN ruling is veiled attempt at making bitcoin use a crime via arbitrary rules and regulations. It is a natural right to exchange goods and services, and one does not need to beg for permission to engage in such activity. The real criminals in such exchanges would be the ones jailing people for victimless activities.
submitted by BobbyLarken to Bitcoin [link] [comments]

Reddit Block Erupter USB (ASICMiner USB miner) Group Buy!

With the announcement of new USB Mining Hardware from ASICMiner (, I'm sure a lot of people are yelling "SHUTUP AND TAKE MY MONEY" but can't quite afford the minimum purchase of "more than 300 devices." I therefor propose a Reddit group buy.
My Responsibilities:
Within one hour of making this post, I will send friedcat a private message expressing interest in purchasing a group of Block Erupters.
I will keep an encrypted wallet on my computer, with an updated backup of the encrypted wallet.dat on the cloud at all times.
Within 72 hours of receipt of confirmed orders for 301 Block Erupters, I will post on this subreddit that the minimum number of orders has been reached, and, if possible, give everyone 24 hours to get final orders in. I reserve the right to place the order immediately, without the above notice, if, in my judgment, delay would risk an inability to secure an order with ASICMiner.
Upon receiving Block Erupters from ASICMiner, I will ship all units with tracking information within 72 hours.
Upon request, I will provide any of the moderators of this subreddit with my personal information, including full name, address, telephone number, and a copy of state issued ID.
If ASICMiner will not accept my order, or if by May 31, 2013, this groupbuy has not received 301 orders, then within 72 hours I will return all bitcoins sent, less transaction fees.
** Your Responsibilities **
To place an order for (a) Block Erupter(s):
  1. Send 2.04 BTC (or 2.14 BTC if shipping outside the US) per Block Erupter ordered to
  1. Post the transaction ID and bitcoin address to use to return coins to in the event that the group buy fails as a new reply in this thread.
  2. Private message me with your shipping address.
** Other Terms **
All disputes under this agreement shall be governed by the laws of the State of California. Parties agree to submit to the personal and exclusive jurisdiction of the courts located within the county of Santa Clara, California.
No party to this agreement shall be held liable for failure of ASICMiner to ship Block Erupters.
Damages for breach shall be limited to return of bitcoins.
In the event that not all orders by reddit users can be filled, Block Erupters will be sent out on a first ordered, first shipped basis.
So, other stuff (not part of contract). Let me try to answer some of your likely concerns:
This is a scam/Why should I trust you?
Of course, you're welcome not to. That being said, here's a few reasons you might think I'm trustworthy:
Why all the legalese?
Like I just said, I'm a law student ;-)
That being said, this is pretty straight forward.
In the first section, I'm saying I'll keep the coins I receive safe, give the reddit community a last chance to get in on the order, place the order promptly, and ship the order. If I can't do that, I'll refund your bitcoins (none of the BFL bullshit where they take your bitcoins, wait for the market to explode, and refund you in cash).
If you want to order, send me money, post here with proof that you did so, and PM me where to ship your order to.
The other stuff: Don't sue me in timbuktu, don't sue me if ASICMiner does something wrong. If something does go wrong, don't expect anything more than getting your bitcoins back. I will ship out orders first made, first shipped.
I don't have bitcoins - can I use paypal or something?
Nope; that might make me a money transmitter under FinCEN regs, and I'm not bonded for that.
For what it's worth though, I'm in the same boat as you! I'll be using localbitcoins to buy some tomorrow.
submitted by ThebocaJ to BitcoinMining [link] [comments]

Prediction: Coinbase will be shut-down...Do not keep coins or funds in Coinbase (or any other exchange or startup) .

I predict that at some point unless something changes, Coinbase (And many, many other Bitcoin related businesses) will eventually be shut down/investigated just like Mutum Sigillum LLC currently is.
The reason is simple: Almost all of the current wave of bitcoin -related startups (even well-funded ones) seem to be simply ignoring the plain-english wording in the FinCEN and State guidelines for the regulatory environment.
For example: From Coinbase's FAQ:
Coinbase is not a money transmitter. Coinbase assists its users in Bitcoin transactions.
Then, from FinCEN regulations and guidelines:
By contrast, a person that creates units of convertible virtual currency and sells those units to another person for real currency or its equivalent is engaged in transmission to another location and is a money transmitter. 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.
What does coinbase DO if not *accept virtual currency from one person (itself or sellers) and transmit it to others in exchange for USD?
Even if there was no USD involved, EVER, (which it clearly is), then we have
The definition of a money transmitter does not differentiate between real currencies and convertible virtual currencies. Accepting and transmitting anything of value that substitutes for currency makes a person a money transmitter under the regulations implementing the BSA.
The term "money transmission services" means "the acceptance of currency, funds, or other value that substitutes for currency from one person and the transmission of currency, funds, or other value that substitutes for currency to another location or person by any means.
This strongly implies that even if you simply assist users to transfer BTC, or hold BTC, or manage online wallets (like, then you are operating as a money transmitter under the law.
So what do money transmitters have to do to comply?
1) they have to be licenced, in EVERY state which they do business in.
2) They have to register with FinCEN and are subject to FinCEN regulations.
3) In particular, among other things, they must:
Before concluding any transaction with respect to which a report is required under § 1010.311, § 1010.313, § 1020.315, § 1021.311 or § 1021.313 of this chapter, a financial institution shall verify and record the name and address of the individual presenting a transaction, as well as record the identity, account number, and the social security or taxpayer identification number, if any, of any person or entity on whose behalf such transaction is to be effected. Verification of the identity of an individual who indicates that he or she is an alien or is not a resident of the United States must be made by passport, alien identification card, or other official document evidencing nationality or residence ( e.g., a Provincial driver's license with indication of home address). Verification of identity in any other case shall be made by examination of a document, other than a bank signature card, that is normally acceptable within the banking community as a means of identification when cashing checks for nondepositors ( e.g., a driver's license or credit card).
When was the last time you supplied a drivers licence and Photo ID to buy bitcoin? Hell coinbase even says EXPLICITLY that they don't intend on obeying this regulation:
We do not guarantee the identity of any user or other party or ensure that a buyer will complete a transaction.
And this doesn't even cover the dozens of different STATE laws, all of which are significantly more complex and onerous, including minimum-asset requirements and surety bond requirements.
Of course, all of this is absolutely asinine. Its totally useless and causes extreme regulation that stifles innovation.
HOWEVER, unless the bitcoin community and bitcoin startups start lobbying to get some of these rules changed, then you have two options if you want to operate a bitcoin-related business in the US:
1) comply with the (idiotic) regulatory environment of legitimate businesses in the united states.
2) Run a black-market business until you get caught and your assets are seized and your customers get shafted by the Fed.
Since all of the current Bitcoin-related enterprises seem to be aiming for option 2), I strongly recommend that anyone in the community avoid storing or holding any kind of long-term value in these systems until a startup shows up that has an interest in actual regulatory compliance or the asinine laws are changed.
submitted by Steve132 to Bitcoin [link] [comments]

Effects of regulation and some observations (warning: long)

The stiff regulatory headwind which manifestated itself in the SEC investigation letters and FinCEN guidelines FIN-2013-G001 (published in March 2013) followed by this weeks Rulings FIN-2014-R011 and FIN-2014-R012 make it obvious that Bitcoin is fundamentally incompatible with the current financial system at large. It is clear now that FinCEN regards any business which engages in Bitcoin as a money services business (MSB), which means that such business will have to implement an elaborate anti-money laundering program and comply with recordkeeping, reporting and transaction monitoring requirements as set forth by FinCEN[1].
In and of itself, these rulings cannot come as a surprise as it is extending existing legislation to the Bitcoin domain and treats bitcoin as just another asset which can be used to transfer value between entities. In the narrow view of the FinCEN, any value transferred has to use the closed circuit of the current financial system and must play by its rules, and Bitcoin can be no exception.
For Bitcoin to remain viable as a payment option, Bitcoin payment processors such as Bitpay and Vaurum have now started to spend money on compliance - money that will have to be recouped by only small margins on processed bitcoin payments. Current volumes in bitcoin payments likely don't justify these costs, so investing money in compliance therefore speculates on the viability and growth of Bitcoin as a payments system within the USA in the future.
Bitcoin is by design able to operate outside of the current financial system as a fully automated, frictionless and efficient payment system. The FinCEN rulings state that companies engaging in Bitcoin are unsurprisingly subject to existing regulations - and compliance incurs cost and removes at least some of the efficiencies which Bitcoin enjoyed over traditional payment systems. Bitcoin is no longer frictionless - processing bitcoin payments now incurs significant upfront and ongoing costs. Needless to say, this will hurt - perhaps even reverse - its adoption.
Let's speculate a bit on what this might mean for the near and long-term future. It is save to say that a lot will depend on whether payment processors and exchanges will have the resources to survive, comply to MSB regulations and recoup the investments. If so, Bitcoin will likely continue to be gradually adopted by more and more businesses. If not, and if for instance BitPay and other payment processors throw the towel, this would largely reverse merchant adoption and pushes Bitcoin outside the existing closed, legal financial circuit. The third option would be "neither of the above" - new legislation might create exemptions for Bitcoin, for instance.
The cost of compliance clearly acts as a giant hurdle for Bitcoin processors and exchanges. FinCEN regulations seemingly seek to create a closed circuit in which money circulates, and in which every transfer can be tracked. That this has failed miserably has been illustrated by the recent money laundering scandals as well as the fact that criminals continue to use of plain old cash. The effectiveness of anti-money laundering regulations is increasingly questioned. Considering the questionable effectiveness of these regulations, the net effect of these regulations comes down to protecting the established finance industry and make life hard for new contenders such as BitPay, that have nowhere near the resources as for instance a giant such as VISA, for which the cost of compliance can be much smaller because of economies of scale. There is no level playing field and the regulations are benefitting the establishment, while hurting new entrants.
The bigger picture
Financial scandals, crises, as well as perceived terrorist threats fan ever more stringent rules and regulations that have questionable effectiveness but do increase cost, hurt privacy and diminish autonomy over ones own funds. Recent civil asset forfeitures by the IRS under the Civil Asset Forfeiture Reform Act of 2000 are a manifestation of the latter. Cash amounts of over $10,000 are suspicious by default and have to be reported using form 8300 - the justification might be that the pervasive presence of banking does not require the use of large sums of cash, which are therefore suspicious by default. Obviously, this discourages the use of cash and makes it very difficult to do large transactions outside of the closed financial circuit.
The presumptions here are:
It needs no arguing here that each of these presumptions are false.
For the first time in history, Bitcoin offers a way to store value privately, anonymously (if done properly) and such that it is impossible to confiscate. Now this is something new, and it profound. On the shallow practical side, doing a transaction valued more than $10,000 is trivial. Money stored as bitcoin can be accessed anywhere and at all times. Although rules and regulations apply, the ability to fully anonymously access and transfer value (if the proper precautions are taken) make them unenforceable.
The resistance against confiscation gives Bitcoin additional utility. For this to work, Bitcoin must offer a way to be used completely anonymously. Because if a government knows you own bitcoin which they cannot seize, they can seize your car, house or ultimately you yourself instead (as in, put you in jail), until you give up your bitcoin. Full anonymity is therefore not a nice-to-have, it is essential in offering protection against confiscation of wealth.
Another well known avenue to confiscate wealth of an entire nation is by monetary inflation. Simply printing or creating money enriches those close to where the money surfaces first - at the expense of those who receive the money last. In quantitative easing, banks sold illiquid bonds to the Fed, and receive cash in return which they used to prop up their balances or to buy assets. Since bank lending has not much improved, the overall effect on the economy has been low. However, bank stocks are doing great - clearly showing banks gained most from QE, outperforming the Dow Jones industrial average as well as the S&P500 by a margin, a rebound that kicked off in earnest a mere 4 months after the start of QE in November 2008. Since wealth can not be created by the QE magic wand, left or right this gain has been at the expense of everyone else owning dollars.
More extremely, history is full of countries defaulting on their debt - often rendering their currency worthless with obviously devastating effects on most of the population. Another profoundly new property of Bitcoin is the predictability of the rate in which it is created, and the hard limit which is set at 24 million bitcoins ever to be created. This offers owners of bitcoin the peace of mind that the value of bitcoin can not be stolen insidiously by means of inflation - as it can and is done today with fiat.
Clearly, in its design, Bitcoin offers resistance against inflation and confiscation, two privileges misused by governments all over the world and throughout history. This can be one of the reasons why Bitcoin appeals to many as a way to store value safely - the irony here being of course the many Bitcoin related scams and people losing their coins through theft. Nevertheless, Bitcoin is still immature technology but rapidly improving - it is only a matter of time before stolen coins are mostly a thing of the past. No regulation required.
In the mean time, there although economic improvement is reported, this growth is not experienced by consumers. Burdensome regulations, combined with the uncharted territory of QE as well as USA debt being higher than ever except during WW2 will make some people reason to be skeptical towards the current economical and political state of affairs, and this may be an additional factor in the attraction towards bitcoin as an alternative store of value.
So far the focus was on the USA, where Bitcoin adoption is the largest. However the world is a big place and the global nature of Bitcoin as well as the regulatory harassment in the USA might well mean that Bitcoin will prosper elsewhere first. The global nature of Bitcoin and the fact that anyone without a bank account or credit card can now also participate in global commerce was previously impossible and very exciting in itself. Who knows what derivatives built on top of Bitcoin may hold in the future.
In the long term, Bitcoin will just not go away, it will prevail, and grow. Either gradually, or in the event of a new economic crisis or a period of high (USD or EUR) price-inflation, perhaps in a big way.
Note [1] Quoting FIN-2014-R011: When engaging in convertible virtual currency transactions as an exchanger, a person must register with FinCEN as a money transmitter, assess the money laundering risk involved in its non-exempt transactions, and implement an anti-money laundering program to mitigate such risk. In addition, the Company must comply with the recordkeeping, reporting, and transaction monitoring requirements under FinCEN regulations. Examples of such requirements include the filing of Currency Transaction Reports (31 CFR § 1022.310) and Suspicious Activity Reports (31 CFR § 1022.320), whenever applicable, general recordkeeping maintenance (31 CFR § 1010.410), and recordkeeping related to the sale of negotiable instruments (31 CFR § 1010.415). Furthermore, to the extent that any of the Company’s transactions constitute a “transmittal of funds” (31 CFR § 1010.100(ddd)) under FinCEN’s regulations, then the Company must also comply with the “Funds Transfer Rule” (31 CFR § 1010.410(e)) and the “Funds Travel Rule” (31 CFR § 1010.410(f)).
submitted by trilli0nn to Bitcoin [link] [comments]

Coinbase Responds To New York's Recently Proposed BitLicense (from the Coinbase blog)

Coinbase has now completed its formal response to the New York Department of Financial Services on their recently proposed BitLicense Draft.
You can download our formal response here. [PDF]
To summarize the main points of our response:
While we applaud the NYDFS for being forward thinking on virtual currencies, we feel the proposed BitLicense falls short of its stated goal of balancing customer protection and rooting out illegal activity while encouraging innovation. We remain cautiously optimistic that the NYDFS will work to reach a more appropriate balance that recognizes Bitcoin as a rapidly evolving technology.
We dive into each point in a bit more detail below.
The BitLicense Would Be Redundant Given Current Money Transmitter Regulation
A separate BitLicense would create unnecessary inefficiency and expense for both the NYDFS and licensees without reducing risk to consumers or risk of illegal activity.
There is a surprising amount of overlap between the proposed BitLicense and Money Transmitter Licenses. The current money transmitter licensing system already has a great deal of overlap between each state, requiring companies to go through the same processes up to 48 times, including fingerprinting, surety bonds, capital requirements, costly on-site examinations, and reporting obligations. Adding a BitLicense would further duplicate this effort. This is especially true for Bitcoin business that wish to engage in other forms of money transmission (i.e. stored value).
Furthermore, we believe FinCEN put a clear and strong AML policy stake in the ground with their Bitcoin guidance in March of last year. We believe it would be in the best interest of New York residents, the NYDFS, the law enforcement community, and the Bitcoin community if we were all working with a uniform set of AML obligations.
We believe the Department could broaden its interpretation of “money” to include virtual currencies and regulate virtual currency businesses under current money transmitter rules.
The BitLicense As Proposed Could Eliminate The Core Utility Of Bitcoin: An Open Payment Network
Perhaps the greatest feature of Bitcoin, as well as other cryptocurrencies, is the fact that it is an open protocol that anyone can use.
As such, it is possible for a wide range of individuals to develop and utilize different solutions—such as near instantaneous and free remittances, micro-transactions, or other distributed ledger uses—that are capable of worldwide interoperability so long as they are based on the same open protocol.
However, by requiring the collection of information not supported by the protocol (such as the names, account numbers, and physical address of all parties to a transaction), the proposed rule would force licensees to operate closed, proprietary payment networks (similar to Visa or PayPal), effectively eliminating the utility of this feature and stifling innovation.
Regulation Should Apply Only To Companies Holding Customers’ Bitcoin
Finally, the scope of activity captured by the definition of “Virtual Currency Business Activity” in the proposed regulation could include a host of non-financial services businesses. The distributed ledger at the core of many virtual currencies allows for inexpensive, reliable, and public recordkeeping which can be utilized in myriad of innovative ways that are unrelated to money. These uses should not be governed by statutes established to regulate money transmission.
In addition, we feel that only companies who store Bitcoin on behalf of customers should be considered for regulation now or in the future. Coinbase is an example of such a company, and luckily has the resources to work diligently with regulators. But many Bitcoin companies do not store Bitcoin on behalf of their customers or are startups incapable of bearing the cost at their current stage. Regulation that is more targeted would go a long way to benefiting innovation while accomplishing the same goals of consumer protection and rooting out illegal activity. Specifically, it would be highly beneficial to allow companies to operate below certain thresholds before needing a license, with a reasonable onramp to licensure should the business grow. This would greatly reduce the barrier to innovation while maintaining safety for the average consumer.
In closing, we understand the difficulty faced by the Department in developing a framework for the regulation of Virtual Currencies in a manner which takes into account the various participants, complexities and concerns involved, and respectfully request that the Department consider the points discussed above in its development of its final rule. Coinbase remains firmly committed to collaborating with the Department and other regulatory bodies, as we have since inception.
For more details, our full response to the NYDFS can be downloaded here. [PDF]
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Louisiana Money Transmitter License (UPDATED FOR 2020) Bitcoin Foundation is Wrong! BitcoinLaw - FinCEN Registration & Money Transmitter Licenses FinCEN Releases Rules Classifying Bitcoin Exchanges, Buyers And Miners As Money Transmittors Tennessee Money Transmitter License (UPDATED FOR 2020)

Getting your money transmitter bond requires an application to a surety agency. You will need to provide the details of your business and undergo a credit check to ensure you are a good candidate for a bond. Having bad credit does not mean you cannot get a bond, but it does mean you may pay more for your money transmitter bond initially. You can also take a look at our most frequently asked ... Whats a Money Transmitter? Why Every Cryptocurrency User Should Know Mario Costanz 2018-04-10T06:21:40+00:00 Cryptocurrency Federal and state laws require people to be licensed as money transmitters if they transmit funds from one person to another. Over the past few years, a number of individuals and businesses hav FinCEN’s requirements are in fact the easier part of the business registration equation. ... Department of Revenue or other licensing bodies to make sure you that you don’t need to be registered as a money transmitter. Bitcoin Money Transmitter Bond Cost. The cost of your money transmitter bond will depend on the bond amount as well as your personal credit score. Bond cost is a fraction of ... Bitcoin Money Transmitter License Guide. Throughout the world, the idea of using money to pay for goods and services is not a complicated thought for consumers. On the business side of transactions, the movement of money can become more complex, especially for companies that operate as money transmitters. While there is no hard and fast definition of a money transmitter that covers all ... State Money Transmitter Obligations. Once filed, states will not approve all applications for licensure. The application process itself is rigorous and some applications will be rejected. Whereas FinCEN’s federal regulators see themselves as money laundering preventers, state regulators see themselves as consumer protectors. The goal of the ...

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Louisiana Money Transmitter License (UPDATED FOR 2020)

Money Transmitters and other money services businesses are required to comply with the US Bank Secrecy Act as well as state banking laws requiring money transmitter licenses. This is a short video ... Question: Does registration on FinCEN give you a money transmitter license? About Faisal Khan Faisal Khan is a banking / payments consultant specializing in cross-border payment system and a ... Surety Bond is from 50,000 to $800,000. If you are interested in learning more about a Money Transmitter license in Tennessee, please get in touch with Empire Global and one of our dedicated team ... FinCEN released Guidance on March 18, 2013 regarding BSA Regulations to Virtual Currencies. The Bitcoin Foundation issued guidance on March 19, 2013 to the Bitcoin community in s response to ... Everything You Need To Know About Money Transmitter Licensing - Duration: 1:06:22. Around The Coin 2,730 ... Bitcoin Foundation is Wrong! BitcoinLaw - "FinCEN and BitCoin Miners" - Duration: 31 ...