digital currency law - bitcoin 2014
DESCRIPTION
TRANSCRIPT
Money Transmission on the Federal Level
FinCEN regulates Money Service Businesses ("MSBs") on the federal level
Goal is to prevent money laundering
MSBs are required to:• register with FinCEN• collect, verify, record report customer information• check identities against watch lists (terrorists, criminals, enemies of
the state)• deny service for some customer• sometimes secretly report transaction activity to FinCEN and
continue servicing the customer
One kind of MSB is a "Money Transmitter”Marco Santori, [email protected]
Money Transmission on the Federal Level
According to FinCEN, you are a money transmitter if you:• Accept value from person A and give it to person B
– Hosted wallets that permits exporting private keys
• Accept value from person A and give it to A at a different time or place– "Storage" services
• Exchange digital currency for government currency– Fiat exchanges
• Exchange one digital currency for another– Crypto exchanges
• Mine and make a payment to a third party on behalf of your customer– For-profit mining services
...as a business.
Marco Santori, [email protected]
Money Transmission on the Federal Level
Still, you are not a money transmitter so long as you:• Merely provide network services to a money transmitter
– White labeled exchanges
• Operate a settlement business between MSBs– Bitcoin "as a protocol" ?
• Act for your own investment– Exercising discretion in your investment strategy
• Merely perform payment processing services (contract with merchant)– Bitpay?
...Suffice it to say, you want to fall into one of these categories. Nobody wants to be an MSB
Marco Santori, [email protected]
Money Transmission on the State Level
The states regulate money transmitters separately from the Federal Government
The states require not mere registration, but full blown licensure
That your business must be licensed in one state does not mean it must be licensed in any other
Not guaranteed to be awarded a license; money transmission is a privilege, not a right
Marco Santori, [email protected]
Money Transmission on the State Level
First Question: Must my business be licensed?
So long as you service or solicit that state's citizens, no matter where in the world you are, you may require a license.
The states have not adopted FinCEN's categories of money transmitter. There is typically only one kind of money transmitter for states:
• accept value from person A and give it to person B• accepts value from person A and give it to A at a different time or
place
Each state has its own (often byzantine) laws on what constitutes:• "money"• "transmission"Marco Santori, Esq.
Money Transmission on the State Level
Second Question: Will my business be granted a license?
Licensing requirements are onerous:• Minimum capitalization• Six-figure bonding• Audited financial statements• Personal financial records of individual owners• Marital, divorce and family records of individual owners• Occupational records for the last 15 years of individual owners
Affectionately known as the “financial colonoscopy”
Marco Santori, [email protected]