On December 27th, CoinText.com reported that FinCEN has issued a clarification to the income service business rules for Bitcoin miners. Men and women and organizations who mine Bitcoins for their personal accounts will not be considered funds service companies or money transmitters inside the meaning of the Bank Secrecy Act. The clarification was outlined in a letter sent in response to an inquiry on behalf of Atlantic City Bitcoin, LLC, which was reprinted in complete at CoinText’s web site.
Since July of 2011, FinCEN has advised that many firms that deal with Bitcoins, including miners, must register as income service organizations with the Treasury Division and with any state that also regulates MSB’s, even going so far as to send cautionary letters to companies thought to be non-compliant. Although the registration approach itself is not overly burdensome at very first glance, money service organizations are also required to create anti-income laundering, reporting and consumer verification applications which can be prohibitively costly to implement and sustain.
On March 18, 2013, FinCEN clarified its guidance to exclude certain activities that do not, of themselves, indicate the provision of funds solutions: namely, the use of mined Bitcoins to buy goods and solutions or exchange of mined Bitcoins for dollars. This implies that private mining operations that do not sell coins to others or mine coins on behalf of others are not money service businesses and do not need to register. Neither organization as a for-profit corporation nor acceptance of investor funds has bearing on this definition. Although FinCEN’s clarification is nine months old, it does not look to have been generally recognized to the Bitcoin neighborhood prior to the CoinText.com report.
The clarified guidance must come as a considerable relief to Bitcoin miners, numerous of whom have skilled significant difficulties as a result of regulatory uncertainty. In current months, many companies that explicitly deal in Bitcoin or whose names include the words “Bitcoin” or “bit” or some variation thereof have had their accounts frozen or closed or have been turned away whilst attempting to open new accounts at banks across the country. Additional, the possibility of enforcement action and the specter of onerous new regulatory needs have triggered a lot of investors to shy away from otherwise promising startups. While FinCEN’s pronouncement could not place Bitcoin into the mainstream, it goes a long way toward resolving 1 of its most troubling regulatory troubles.
The post FinCEN Issues Money Service Enterprise Clarification appeared 1st on Bitcoin Magazine.
FinCEN Troubles Funds Service Company Clarification
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