04 Jun 2013 FinCEN issues guidance on Bitcoin and virtual currency
FinCEN (the Financial crimes Enforcement Network, a branch of the US Treasury Department) has issued guidance in March, 2013 to clarify the applicability of the Bank Secrecy Act (“BSA”) to persons creating, obtaining, distributing, exchanging, accepting, or transmitting virtual currencies. (http://www.fincen.gov/statutes_regs/guidance/html/FIN-2013-G001.html).
According to the guidance, companies that exchange or transfer virtual currency (such as Bitcoin) are considered money-service business (MSB) so that the companies must provide information to the government in order to prevent money laundering. Any transactions of more than $10,000 must be reported. Accordingly, companies that exchange, transfer, or administrate Bitcoin must register with FinCEN as Money Service Businesses (MSBs) under the Treasury regulations. However, ordinary users of Bitcoin need not register.
The guidance defines “users,” “administrators,” and “exchangers.” A user is a person that obtains virtual currency to purchase goods or services. A user of virtual currency is not a money services business (“MSB”) and therefore is not subject to MSB registration, reporting, and recordkeeping. An exchanger is a person engaged as a business in the exchange of virtual currency for real currency, funds, or other virtual currency. An administrator is a person engaged as a business in issuing (putting into circulation) a virtual currency, and who has the authority to redeem (to withdraw from circulation) such virtual currency. An administrator or exchanger is an MSB under FinCEN’s regulations, specifically, a money transmitter, unless a limitation or exemption applies.Disclaimer: This blog and website are public sources of general information concerning our firm and its lawyers, as well as the information presented. They are intended, but not promised or guaranteed, to be correct, complete, and up-to-date as of the date posted. This blog and website are not intended to be, and are not, sources of legal opinion or advice. The materials, information, and communications on this blog and website do not apply to any particular person, entity, or situation, and do not apply to you or to your specific situation. You will need to consult with an attorney and/or other appropriate professional about your specific situation. Thank you.