Archive for March 2013

Creators of virtual currencies need a money transmitter license

The Financial Crimes Enforcement Network (FinCEN) is a bureau of the United States Department of the Treasury which collects and analyzes information about financial transactions in order to combat domestic and international money laundering, terrorist financing, and other financial crimes. While addressing its actions against the Silk Road FinCEN’s director expressed its mission in November 2013 as “to safeguard the financial system from illicit use, combat money laundering and promote national security.”

On March 18th 2013, FinCEN published an interpretive guidance to clarify the applicability of the regulations implementing the Bank Secrecy Act (“BSA”) to persons creating, obtaining, distributing, exchanging, accepting, or transmitting virtual currencies. Such persons are referred to in this guidance as “users,” “administrators,” and “exchangers,” and are defined in the paper.

A user of virtual currency is not an MSB under FinCEN’s regulations and therefore is not subject to MSB registration, reporting, and recordkeeping regulations. However, an administrator or exchanger is an MSB under FinCEN’s regulations, specifically, a money transmitter, unless a limitation to or exemption from the definition applies to the person.

While FinCen created a new term – and by extension: a new law! – this ‘guidance’ might be used as pretense for future actions in the nascent cryptocurrency space.

More here