Financial Crimes Enforcement Network (FinCEN)

Regulated Exchange Launches in US With Crypto-Backed Visa Card Offering

Regulated Exchange Launches in US With Crypto-Backed Visa Card Offering


A FinCEN-registered crypto exchange has launched with its own debit card that allows holders to pay for goods and services with digital assets.
Utah-based CoinZoom announced Wednesday it would begin onboarding new institutional and retail clients, and will offer a Visa payment card that instantly converts cryptocurrencies into U.S. dollars.
As a registered money service business with FinCEN in most U.S. states and territories, CoinZoom has to comply with local regulations, including those concerning consumer protection and know-your-customer (KYC) requirements. The exchange is also licensed as a money transmitter in the U.S., as well as a digital currency exchange in Australia.
CoinZoom supports most prominent cryptocurrencies, such as bitcoin (BC) or ether (ETH), in pairs with the U.S. dollar, providing a fiat gateway into the asset class. The platform also includes a staking facility for selected proof-of-stake (PoS) coins, which provide rewards for holders.
The exchange, which already has a trading app available for Apple iOS devices, can also be used as a remittance solution, according to CoinZoom founder and CEO Todd Crosland.
“CoinZoom is not only the first U.S. cryptocurrency exchange to provide a Visa card to its customers, but also offers ... industry-first features like ZoomMe, CoinZoom’s free Peer-to-Peer crypto and fiat payment system," he said
Last year, U.S.-based cryptocurrency exchange Coinbase, which is also a registered MSB with FinCEN, released its own Visa-backed debit card, but only for users based in the U.K. and European Union. The exchange announced Tuesday it had newly integrated the Coinbase Card with mobile payment provider Google Pay.
submitted by D010203 to u/D010203 [link] [comments]

What do the new FinCEN rules mean?

From my understanding it means that crypto to crypto exchanges like Cryptsy have to apply for a money transmitter license. Would Bitcoin ATM machine companies also have to acquire licensing as well? Would these rules affect merchants too? I would assume they shouldn't because merchants accepting Bitcoin themselves would be outsourcing that work too companies like Coinbase and BitPay.
submitted by _CapR_ to Bitcoin [link] [comments]

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.
https://www.asiacryptotoday.com/playing-with-fire-with-fincen-and-sec-binance-may-face-a-hefty-penalty-again-after-already-losing-50-percent-of-its-trading-business/
submitted by Fun_Judgment to CryptoCurrencyTrading [link] [comments]

Lightning Network Will Likely Fail Due To Several Possible Reasons

ECONOMIC CASE IS ABSENT FOR MANY TRANSACTIONS
The median Bitcoin (BTC) fee is $14.41 currently. This has gone parabolic in the past few days. So, let’s use a number before this parabolic rise, which was $3.80. Using this number, opening and closing a Lightning Network (LN) channel means that you will pay $7.60 in fees. Most likely, the fee will be much higher for two reasons:
  1. BTC fees have been trending higher all year and will be higher by the time LN is ready
  2. When you are in the shoe store or restaurant, you will likely pay a higher fee so that you are not waiting there for one or more hours for confirmation.
Let’s say hypothetically that Visa or Paypal charges $1 per transaction. This means that Alice and Carol would need to do 8 or more LN transactions, otherwise it would be cheaper to use Visa or Paypal.
But it gets worse. Visa doesn’t charge the customer. To you, Visa and Cash are free. You would have no economic incentive to use BTC and LN.
Also, Visa does not charge $1 per transaction. They charge 3%, which is 60 cents on a $20 widget. Let’s say that merchants discount their widgets by 60 cents for non-Visa purchases, to pass the savings onto the customer. Nevertheless, no one is going to use BTC and LN to buy the widget unless 2 things happen:
  1. they buy more than 13 widgets from the same store ($7.60 divided by 60 cents)
  2. they know ahead of time that they will do this with that same store
This means that if you’re traveling, or want to tip content producers on the internet, you will likely not use BTC and LN. If you and your spouse want to try out a new restaurant, you will not use BTC and LN. If you buy shoes, you will not use BTC and LN.
ROAD BLOCKS FROM INSUFFICIENT FUNDS
Some argue that you do not need to open a channel to everyone, if there’s a route to that merchant. This article explains that if LN is a like a distributed mesh network, then another problem exists:
"third party needs to possess the necessary capital to process the transaction. If Alice and Bob do not have an open channel, and Alice wants to send Bob .5 BTC, they'll both need to be connected to a third party (or a series of 3rd parties). Say if Charles (the third party) only possesses .4 BTC in his respective payment channels with the other users, the transaction will not be able to go through that route. The longer the route, the more likely that a third party does not possess the requisite amount of BTC, thereby making it a useless connection.”
CENTRALIZATION
According to this visualization of LN on testnet, LN will be centralized around major hubs. It might be even more centralized than this visualization if the following are true:
  1. Users will want to connect to large hubs to minimize the number of times they need to open/close channels, which incur fees
  2. LN’s security and usability relies on 100% uptime of relaying parties
  3. Only large hubs with a lot of liquidity will be able to make money
  4. Hubs or intermediary nodes will need to be licensed as money transmitters, centralizing LN to exchanges and banks as large hubs
What will the impact be on censorship-resistance, trust-less and permission-less?
NEED TO BE LICENSED AS MONEY TRANSMITTER
Advocates for LN seem to talk a lot about the technology, but ignore the legalities.
FinCEN defines money transmitters. LN hubs and intermediary nodes seem to satisfy this definition.
Application of FinCEN's Regulations to Persons Administering, Exchanging, or Using Virtual Currencies
“…applicability of the regulations … to persons creating, obtaining, distributing, exchanging, accepting, or transmitting virtual currencies.”
“…an administrator or exchanger is an MSB under FinCEN's regulations, specifically, a money transmitter…”
"An administrator or exchanger that (1) accepts and transmits a convertible virtual currency or (2) buys or sells convertible virtual currency for any reason is a money transmitter under FinCEN's regulations…”
"FinCEN's regulations define the term "money transmitter" as a person that provides money transmission services, or any other person engaged in the transfer of funds. 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.””
"The definition of a money transmitter does not differentiate between real currencies and convertible virtual currencies.”
FinCEN’s regulations for IVTS:
"An “informal value transfer system” refers to any system, mechanism, or network of people that receives money for the purpose of making the funds or an equivalent value payable to a third party in another geographic location, whether or not in the same form.”
“…IVTS… must comply with all BSA registration, recordkeeping, reporting and AML program requirements.
“Money transmitting” occurs when funds are transferred on behalf of the public by any and all means including, but not limited to, transfers within the United States or to locations abroad…regulations require all money transmitting businesses…to register with FinCEN."
Mike Caldwell used to accept and mail bitcoins. Customers sent him bitcoins and he mailed physical bitcoins back or to a designated recipient. There is no exchange from one type of currency to another. FinCEN told him that he needed to be licensed as money transmitter, after which Caldwell stopped mailing out bitcoins.
ARGUMENTS AGAINST NEED FOR LICENSING
Some have argued that LN does not transfer BTC until the channel is closed on the blockchain. This is not a defence, since channels will close on the blockchain.
Some have argued that LN nodes do not take ownership of funds. Is this really true? Is this argument based on a technicality or hoping for a loophole? It seems intuitive that a good prosecutor can easily defeat this argument. Even if this loophole exists, can we count on the government to never close this loophole?
So, will LN hubs and intermediary nodes need to be licensed as money transmitters? If so, then Bob, who is the intermediary between Alice and Carol, will need a license. But Bob won’t have the money nor qualifications. Money transmitters need to pay $25,000 to $1 million, maintain capital levels and are subject to KYC/AML regulations1. In which case, LN will have mainly large hubs, run by financial firms, such as banks and exchanges.
Will the banks want this? Likely. Will they lobby the government to get it? Likely.
Some may be wondering about miners. FinCEN has declared that miners are not money transmitters:
https://coincenter.org/entry/aml-kyc-tokens :
"Subsequent administrative rulings clarified several remaining ambiguities: miners are not money transmitters…"
FinCEN Declares Bitcoin Miners, Investors Aren't Money Transmitters
Some argue that LN nodes will go through Tor and be anonymous. For this to work, will all of the nodes connecting to it, need to run Tor? If so, then how likely will this happen and will all of these people need to run Tor on every device (laptop, phone and tablet)? Furthermore, everyone of these people will be need to be sufficiently tech savvy to download, install and set up Tor. Will the common person be able to do this? Also, will law-abiding nodes, such as retailers or banks, risk their own livelihood by connecting to an illegal node? What is the likelihood of this?
Some argue that unlicensed LN hubs can run in foreign countries. Not true. According to FinCEN: "“Money transmitting” occurs when funds are…transfers within the United States or to locations abroad…” Also, foreign companies are not immune from the laws of other countries which have extradition agreements. The U.S. government has sued European banks over the LIBOR scandal. The U.S. government has charged foreign banks for money laundering and two of those banks pleaded guilty. Furthermore, most countries have similar laws. It is no coincidence that European exchanges comply with KYC/AML.
Will licensed, regulated LN hubs connect to LN nodes behind Tor or in foreign countries? Unlikely. Will Amazon or eBay connect to LN nodes behind Tor or in foreign countries? Unlikely. If you want to buy from Amazon, you’ll likely need to register yourself at a licensed, regulated LN hub, which means you’ll need to provide your identification photo.
Say goodbye to a censorship-resistant, trust-less and permission-less coin.
For a preview of what LN will probably look like, look at Coinbase or other large exchanges. It’s a centralized, regulated and censored hub. Coinbase allows users to send to each other off-chain. Coinbase provides user data to the IRS and disallows users from certain countries to sell BTC. You need to trust that no rogue employee in the exchange will steal your funds, or that a bank will not confiscate your funds as banks did in Cyprus. What if the government provides a list of users, who are late with their tax returns, to Coinbase and tells Coinbase to block those users from making transactions? You need Coinbase’s permission.
This would be the antithesis of why Satoshi created Bitcoin.
NEED TO REPORT TO IRS
The IRS has a definition for “third party settlement organization” and these need to report transactions to the IRS.
Though we do not know for sure yet, it can be argued that LN hubs satisfies this definition. If this is the case, who will be willing to be LN hubs, other than banks and exchanges?
To read about the discussion, go to:
Lightning Hubs Will Need To Report To IRS
COMPLEXITY
All cryptocurrencies are complicated for the common person. You may be tech savvy enough to find a secure wallet and use cryptocurrencies, but the masses are not as tech savvy as you.
LN adds a very complicated and convoluted layer to cryptocurrencies. It is bound to have bugs for years to come and it’s complicated to use. This article provides a good explanation of the complexity. Just from the screenshot of the app, the user now needs to learn additional terms and commands:
“On Chain”
“In Channels”
“In Limbo”
“Your Channel”
“Create Channel”
“CID”
“OPENING”
“PENDING-OPEN”
“Available to Receive”
“PENDING-FORCE-CLOSE”
There are also other things to learn, such as how funds need to be allocated to channels and time locks. Compare this to using your current wallet.
Recently, LN became even more complicated and convoluted. It needs a 3rd layer as well:
Scaling Bitcoin Might Require A Whole 'Nother Layer
How many additional steps does a user need to learn?
ALL COINS PLANNING OFF-CHAIN SCALING ARE AT RISK
Bitcoin Segwit, Litecoin, Vertcoin and possibly others (including Bitcoin Cash) are planning to implement LN or layer 2 scaling. Ethereum is planning to use Raiden Network, which is very similar to LN. If the above is true about LN, then the scaling roadmap for these coins is questionable at best, nullified at worst.
BLOCKSTREAM'S GAME PLAN IS ON TRACK
Blockstream employs several of the lead Bitcoin Core developers. Blockstream has said repeatedly that they want high fees. Quotes and source links can be found here.
Why is Blockstream so adamant on small blocks, high fees and off-chain scaling?
Small blocks, high fees and slow confirmations create demand for off-chain solutions, such as Liquid. Blockstream sells Liquid to exchanges to move Bitcoin quickly on a side-chain. LN will create liquidity hubs, such as exchanges, which will generate traffic and fees for exchanges. With this, exchanges will have a higher need for Liquid. This will be the main way that Blockstream will generate revenue for its investors, who invested $76 million. Otherwise, they can go bankrupt and die.
One of Blockstream’s investors/owners is AXA. AXA’s CEO and Chairman until 2016 was also the Chairman of Bilderberg Group. The Bilderberg Group is run by bankers and politicians (former prime ministers and nation leaders). According to GlobalResearch, Bilderberg Group wants “a One World Government (World Company) with a single, global marketplace…and financially regulated by one ‘World (Central) Bank’ using one global currency.” LN helps Bilderberg Group get one step closer to its goal.
Luke-Jr is one of the lead BTC developers in Core/Blockstream. Regulation of BTC is in-line with his beliefs. He is a big believer in the government, as he believes that the government should tax you and the “State has authority from God”. In fact, he has other radical beliefs as well:
So, having only large, regulated LN hubs is not a failure for Blockstream/Bilderberg. It’s a success. The title of this article should be changed to: "Lightning Will Fail Or Succeed, Depending On Whether You Are Satoshi Or Blockstream/Bilderberg".
SIGNIFICANT ADVANCEMENTS WITH ON-CHAIN SCALING
Meanwhile, some coins such as Ethereum and Bitcoin Cash are pushing ahead with on-chain scaling. Both are looking at Sharding.
Visa handles 2,000 transactions per second on average. Blockstream said that on-chain scaling will not work. The development teams for Bitcoin Cash have shown significant on-chain scaling:
1 GB block running on testnet demonstrates over 10,000 transactions per second:
"we are not going from 1MB to 1GB tomorrow — The purpose of going so high is to prove that it can be done — no second layer is necessary”
"Preliminary Findings Demonstrate Over 10,000 Transactions Per Second"
"Gigablock testnet initiative will likely be implemented first on Bitcoin Cash”
Peter Rizun, Andrew Stone -- 1 GB Block Tests -- Scaling Bitcoin Stanford At 13:55 in this video, Rizun said that he thinks that Visa level can be achieved with a 4-core/16GB machine with better implementations (modifying the code to take advantage of parallelization.)
Bitcoin Cash plans to fix malleability and enable layer 2 solutions:
The Future of “Bitcoin Cash:” An Interview with Bitcoin ABC lead developer Amaury Séchet:
"fixing malleability and enabling Layer 2 solutions will happen”
However, it is questionable if layer 2 will work or is needed.
GOING FORWARD
The four year scaling debate and in-fighting is what caused small blockers (Blockstream) to fork Bitcoin by adding Segwit and big blockers to fork Bitcoin into Bitcoin Cash. Read:
Bitcoin Divorce - Bitcoin [Legacy] vs Bitcoin Cash Explained
It will be interesting to see how they scale going forward.
Scaling will be instrumental in getting network effect and to be widely adopted as a currency. Whichever Coin Has The Most Network Effect Will Take All (Or Most) (BTC has little network effect, and it's shrinking.)
The ability to scale will be key to the long term success of any coin.
submitted by curt00 to btc [link] [comments]

Lightning Network Will Likely Fail Due To Several Possible Reasons

ECONOMIC CASE IS ABSENT FOR MANY TRANSACTIONS
The median Bitcoin (BTC) fee is $14.41 currently. This has gone parabolic in the past few days. So, let’s use a number before this parabolic rise, which was $3.80. Using this number, opening and closing a Lightning Network (LN) channel means that you will pay $7.60 in fees. Most likely, the fee will be much higher for two reasons:
  1. BTC fees have been trending higher all year and will be higher by the time LN is ready
  2. When you are in the shoe store or restaurant, you will likely pay a higher fee so that you are not waiting there for one or more hours for confirmation.
Let’s say hypothetically that Visa or Paypal charges $1 per transaction. This means that Alice and Carol would need to do 8 or more LN transactions, otherwise it would be cheaper to use Visa or Paypal.
But it gets worse. Visa doesn’t charge the customer. To you, Visa and Cash are free. You would have no economic incentive to use BTC and LN.
Also, Visa does not charge $1 per transaction. They charge 3%, which is 60 cents on a $20 widget. Let’s say that merchants discount their widgets by 60 cents for non-Visa purchases, to pass the savings onto the customer. Nevertheless, no one is going to use BTC and LN to buy the widget unless 2 things happen:
  1. they buy more than 13 widgets from the same store ($7.60 divided by 60 cents)
  2. they know ahead of time that they will do this with that same store
This means that if you’re traveling, or want to tip content producers on the internet, you will likely not use BTC and LN. If you and your spouse want to try out a new restaurant, you will not use BTC and LN. If you buy shoes, you will not use BTC and LN.
ROAD BLOCKS FROM INSUFFICIENT FUNDS
Some argue that you do not need to open a channel to everyone, if there’s a route to that merchant. This article explains that if LN is like a distributed mesh network, then another problem exists:
"third party needs to possess the necessary capital to process the transaction. If Alice and Bob do not have an open channel, and Alice wants to send Bob .5 BTC, they'll both need to be connected to a third party (or a series of 3rd parties). Say if Charles (the third party) only possesses .4 BTC in his respective payment channels with the other users, the transaction will not be able to go through that route. The longer the route, the more likely that a third party does not possess the requisite amount of BTC, thereby making it a useless connection.”
CENTRALIZATION
According to this visualization of LN on testnet, LN will be centralized around major hubs. It might be even more centralized than this visualization if the following are true:
  1. Users will want to connect to large hubs to minimize the number of times they need to open/close channels, which incur fees
  2. LN’s security and usability relies on 100% uptime of relaying parties
  3. Only large hubs with a lot of liquidity will be able to make money
  4. Hubs or intermediary nodes will need to be licensed as money transmitters, centralizing LN to exchanges and banks as large hubs
What will the impact be on censorship-resistance, trust-less and permission-less?
NEED TO BE LICENSED AS MONEY TRANSMITTER
Advocates for LN seem to talk a lot about the technology, but ignore the legalities.
FinCEN defines money transmitters. LN hubs and intermediary nodes seem to satisfy this definition.
Application of FinCEN's Regulations to Persons Administering, Exchanging, or Using Virtual Currencies
“…applicability of the regulations … to persons creating, obtaining, distributing, exchanging, accepting, or transmitting virtual currencies.”
“…an administrator or exchanger is an MSB under FinCEN's regulations, specifically, a money transmitter…”
"An administrator or exchanger that (1) accepts and transmits a convertible virtual currency or (2) buys or sells convertible virtual currency for any reason is a money transmitter under FinCEN's regulations…”
"FinCEN's regulations define the term "money transmitter" as a person that provides money transmission services, or any other person engaged in the transfer of funds. 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.””
"The definition of a money transmitter does not differentiate between real currencies and convertible virtual currencies.”
FinCEN’s regulations for IVTS:
"An “informal value transfer system” refers to any system, mechanism, or network of people that receives money for the purpose of making the funds or an equivalent value payable to a third party in another geographic location, whether or not in the same form.”
“…IVTS… must comply with all BSA registration, recordkeeping, reporting and AML program requirements.
“Money transmitting” occurs when funds are transferred on behalf of the public by any and all means including, but not limited to, transfers within the United States or to locations abroad…regulations require all money transmitting businesses…to register with FinCEN."
Mike Caldwell used to accept and mail bitcoins. Customers sent him bitcoins and he mailed physical bitcoins back or to a designated recipient. There is no exchange from one type of currency to another. FinCEN told him that he needed to be licensed as money transmitter, after which Caldwell stopped mailing out bitcoins.
ARGUMENTS AGAINST NEED FOR LICENSING
Some have argued that LN does not transfer BTC until the channel is closed on the blockchain. This is not a defence, since channels will close on the blockchain.
Some have argued that LN nodes do not take ownership of funds. Is this really true? Is this argument based on a technicality or hoping for a loophole? It seems intuitive that a good prosecutor can easily defeat this argument. Even if this loophole exists, can we count on the government to never close this loophole?
So, will LN hubs and intermediary nodes need to be licensed as money transmitters? If so, then Bob, who is the intermediary between Alice and Carol, will need a license. But Bob won’t have the money nor qualifications. Money transmitters need to pay $25,000 to $1 million, maintain capital levels and are subject to KYC/AML regulations1. In which case, LN will have mainly large hubs, run by financial firms, such as banks and exchanges.
Will the banks want this? Likely. Will they lobby the government to get it? Likely.
Some may be wondering about miners. FinCEN has declared that miners are not money transmitters:
https://coincenter.org/entry/aml-kyc-tokens :
"Subsequent administrative rulings clarified several remaining ambiguities: miners are not money transmitters…"
FinCEN Declares Bitcoin Miners, Investors Aren't Money Transmitters
Some argue that LN nodes will go through Tor and be anonymous. For this to work, will all of the nodes connecting to it, need to run Tor? If so, then how likely will this happen and will all of these people need to run Tor on every device (laptop, phone and tablet)? Furthermore, everyone of these people will be need to be sufficiently tech savvy to download, install and set up Tor. Will the common person be able to do this? Also, will law-abiding nodes, such as retailers or banks, risk their own livelihood by connecting to an illegal node? What is the likelihood of this?
Some argue that unlicensed LN hubs can run in foreign countries. Not true. According to FinCEN: "“Money transmitting” occurs when funds are…transfers within the United States or to locations abroad…” Also, foreign companies are not immune from the laws of other countries which have extradition agreements. The U.S. government has sued European banks over the LIBOR scandal. The U.S. government has charged foreign banks for money laundering and two of those banks pleaded guilty. Furthermore, most countries have similar laws. It is no coincidence that European exchanges comply with KYC/AML.
Will licensed, regulated LN hubs connect to LN nodes behind Tor or in foreign countries? Unlikely. Will Amazon or eBay connect to LN nodes behind Tor or in foreign countries? Unlikely. If you want to buy from Amazon, you’ll likely need to register yourself at a licensed, regulated LN hub, which means you’ll need to provide your identification photo.
Say goodbye to a censorship-resistant, trust-less and permission-less coin.
For a preview of what LN will probably look like, look at Coinbase or other large exchanges. It’s a centralized, regulated and censored hub. Coinbase allows users to send to each other off-chain. Coinbase provides user data to the IRS and disallows users from certain countries to sell BTC. You need to trust that no rogue employee in the exchange will steal your funds, or that a bank will not confiscate your funds as banks did in Cyprus. What if the government provides a list of users, who are late with their tax returns, to Coinbase and tells Coinbase to block those users from making transactions? You need Coinbase’s permission.
This would be the antithesis of why Satoshi created Bitcoin.
NEED TO REPORT TO IRS
The IRS has a definition for “third party settlement organization” and these need to report transactions to the IRS.
Though we do not know for sure yet, it can be argued that LN hubs satisfies this definition. If this is the case, who will be willing to be LN hubs, other than banks and exchanges?
To read about the discussion, go to:
Lightning Hubs Will Need To Report To IRS
COMPLEXITY
All cryptocurrencies are complicated for the common person. You may be tech savvy enough to find a secure wallet and use cryptocurrencies, but the masses are not as tech savvy as you.
LN adds a very complicated and convoluted layer to cryptocurrencies. It is bound to have bugs for years to come and it’s complicated to use. This article provides a good explanation of the complexity. Just from the screenshot of the app, the user now needs to learn additional terms and commands:
“On Chain”
“In Channels”
“In Limbo”
“Your Channel”
“Create Channel”
“CID”
“OPENING”
“PENDING-OPEN”
“Available to Receive”
“PENDING-FORCE-CLOSE”
There are also other things to learn, such as how funds need to be allocated to channels and time locks. Compare this to using your current wallet.
Recently, LN became even more complicated and convoluted. It needs a 3rd layer as well:
Scaling Bitcoin Might Require A Whole 'Nother Layer
How many additional steps does a user need to learn?
ALL COINS PLANNING OFF-CHAIN SCALING ARE AT RISK
Bitcoin Segwit, Litecoin, Vertcoin and possibly others (including Bitcoin Cash) are planning to implement LN or layer 2 scaling. Ethereum is planning to use Raiden Network, which is very similar to LN. If the above is true about LN, then the scaling roadmap for these coins is questionable at best, nullified at worst.
BLOCKSTREAM'S GAME PLAN IS ON TRACK
Blockstream employs several of the lead Bitcoin Core developers. Blockstream has said repeatedly that they want high fees. Quotes and source links can be found here.
Why is Blockstream so adamant on small blocks, high fees and off-chain scaling?
Small blocks, high fees and slow confirmations create demand for off-chain solutions, such as Liquid. Blockstream sells Liquid to exchanges to move Bitcoin quickly on a side-chain. LN will create liquidity hubs, such as exchanges, which will generate traffic and fees for exchanges. With this, exchanges will have a higher need for Liquid. This will be the main way that Blockstream will generate revenue for its investors, who invested $76 million. Otherwise, they can go bankrupt and die.
One of Blockstream’s investors/owners is AXA. AXA’s CEO and Chairman until 2016 was also the Chairman of Bilderberg Group. The Bilderberg Group is run by bankers and politicians (former prime ministers and nation leaders). According to GlobalResearch, Bilderberg Group wants “a One World Government (World Company) with a single, global marketplace…and financially regulated by one ‘World (Central) Bank’ using one global currency.” LN helps Bilderberg Group get one step closer to its goal.
Luke-Jr is one of the lead BTC developers in Core/Blockstream. Regulation of BTC is in-line with his beliefs. He is a big believer in the government, as he believes that the government should tax you and the “State has authority from God”. In fact, he has other radical beliefs as well:
So, having only large, regulated LN hubs is not a failure for Blockstream/Bilderberg. It’s a success. The title of this article should be changed to: "Lightning Will Fail Or Succeed, Depending On Whether You Are Satoshi Or Blockstream/Bilderberg".
SIGNIFICANT ADVANCEMENTS WITH ON-CHAIN SCALING
Meanwhile, some coins such as Ethereum and Bitcoin Cash are pushing ahead with on-chain scaling. Both are looking at Sharding.
Visa handles 2,000 transactions per second on average. Blockstream said that on-chain scaling will not work. The development teams for Bitcoin Cash have shown significant on-chain scaling:
1 GB block running on testnet demonstrates over 10,000 transactions per second:
"we are not going from 1MB to 1GB tomorrow — The purpose of going so high is to prove that it can be done — no second layer is necessary”
"Preliminary Findings Demonstrate Over 10,000 Transactions Per Second"
"Gigablock testnet initiative will likely be implemented first on Bitcoin Cash”
Peter Rizun, Andrew Stone -- 1 GB Block Tests -- Scaling Bitcoin Stanford At 13:55 in this video, Rizun said that he thinks that Visa level can be achieved with a 4-core/16GB machine with better implementations (modifying the code to take advantage of parallelization.)
Bitcoin Cash plans to fix malleability and enable layer 2 solutions:
The Future of “Bitcoin Cash:” An Interview with Bitcoin ABC lead developer Amaury Séchet:
"fixing malleability and enabling Layer 2 solutions will happen”
However, it is questionable if layer 2 will work or is needed.
GOING FORWARD
The four year scaling debate and in-fighting is what caused small blockers (Blockstream) to fork Bitcoin by adding Segwit and big blockers to fork Bitcoin into Bitcoin Cash. Read:
Bitcoin Divorce - Bitcoin [Legacy] vs Bitcoin Cash Explained
It will be interesting to see how they scale going forward.
Scaling will be instrumental in getting network effect and to be widely adopted as a currency. Whichever Coin Has The Most Network Effect Will Take All (Or Most) (BTC has little network effect, and it's shrinking.)
The ability to scale will be key to the long term success of any coin.
submitted by curt00 to Bitcoincash [link] [comments]

Warning: Don't sell your Coinbase-purchased bitcoins through BitQuick

I've used Coinbase for more than a year to buy bitcoin and make purchases with the same. I recently checked out BitQuick and the possibility of selling coins there. Having previously read stories of Coinbase shutting down customer accounts that sold coins on LocalBitcoins, I wanted to know if Coinbase would have the same problem if I chose to sell through BitQuick. They would.
I wrote their support about this and here I quote from the response of their compliance team:
Based on our understanding of the functionality of their service, this service matches perspective bitcoin buyers and sellers, similar to other websites such as “Localbitcoins.com”. If you are purchasing bitcoin on Coinbase, and re-selling it to other individuals through these types of services for USD, this would classify you as a money transmitter and require MSB licensing and AML/BSA policies in order to operate legally, per FinCEN-guidelines. Please see our “Prohibited Businesses” list, Item 1 (https://www.coinbase.com/legal/prohibited). An MSB license is not required to purchase bitcoin using these services.
If you are not properly licensed, and do not have adequate AML/BSA policies in place at this time, we respectfully request that you do not re-sell bitcoin purchased on Coinbase, using services such as “Bitquick.co” or “Localbitcoins.com”. We appreciate your understanding with our User Agreement.
I followed up asking them about using Purse.IO. Here I quote from their response on that:
“Purse.io” functions as an “Amazon.com”-oriented marketplace, where bitcoin “sellers” are purchasing Amazon products, and bitcoin “buyers” are purchasing the Amazon orders on behalf of the “buyer”, in exchange for bitcoin. This is different than services such as “Bitquick.co” and “Localbitcoins.com”, as the buyers and sellers in these services are directly exchanging bitcoin for USD, and visa versa (the bitcoin sellers in this case would be classified as money transmitters, per FinCEN guidelines).
submitted by allgoodthings1 to Bitcoin [link] [comments]

We have at least several more years of regulatory hell ahead of us

Fincen says it's a currency. So we have to register as a money services business and do KYC/AML whenever we exchange it. Oh, and two people in a room exchanging one digital currency for another digital currency is "money transmission" so you need 40+ money transmitter licenses for that. Oh, and the CFTC says it's a commodity so they can make you get a commodities trading license. The IRS says it's a commodity for tax purposes because, of course, if it were a currency, you'd pay less in taxes. Oh, you thought bitcoin-denominated shares and colored coins were revolutionary? Wait until you hear what the SEC thinks. Ask Voorhees. And now we have the pleasure of waiting for 40+ more states to pass their own bitcoin licenses.
I wish we had a smart federal judge who could interpret these laws and tell the federal government what bitcoin actually is and what laws apply to it. Several cases have come to light which would have given a judge an opportunity to do so. But because the defendants were facing such heavy fines and jailtime, they all agreed to plea guilty for deals instead of going to trial. Can't blame them.
Another option is for the federal government to pass a federal framework (trumping state laws) that say how bitcoin must be treated. Fat chance of that happening any time soon. It would take years.
Another option might be for one of these bitcoin businesses to try to get a declaratory judgment from the American courts. They would essentially say that they are experiencing a harm in the form of regulatory interference with their businesses because the CFTC, Fincen, Etc. are all defining bitcoin as different things and the exchange wants the courts to say exactly what it is and what regulations apply to it. That would probably take at least a year or two.
Conclusion: There's at minimum a 2 year window of time ahead of us where various government agencies and jurisdictions (like Lawsky's NYDFS) are going to have free reign to basically pile on and suck the blood from bitcoin. This will make running any bitcoin business or using bitcoin in any way a semi-legal affair.
tl;dr we're fucked in the short-term on the regulation front
submitted by slowmoon to Bitcoin [link] [comments]

Banking & Finance law: How "insured" are FDIC insured cryptocurrency exchanges?

My attempts are proving futile to find concrete answers to my concern about the claim made by cryptocurrency exchanges that customer USD balances are fully backed by the FDIC.
Please see this post about the subject: https://www.reddit.com/personalfinance/comments/7h276w/fdic_insurance_do_crypto_exchanges_really_have_it/?st=japofflj&sh=090e68ce
Basically, three big cryptocurrency exchanges claim that customer USD balances are fully backed by the FDIC. For those unfamiliar, the exchanges are named Coinbase, Gemini, and ItBit. Information provided in this article provides evidence that the exchanges my be engaging in deceptive marketing. Important to note that the three exchanges raised and spent substantial capital to obtain FinCen and Money Transmitter Licenses, they are by no means bucket shops run out of a virtual office in Taiwan.
The most pertinent section of the article is quoted below:
"To obtain the charter, itBit had to meet the very strict requirements of ordinary New York chartered commercial banks and subject itself to ongoing oversight.
However, itBit is not required to obtain insurance from the Federal Deposit Insurance Corporation (FDIC), and it is subject to a much lower level of minimum capital – $2m – versus at least $50m for a commercial bank.
Despite being organized under New York's banking law, itBit is not a bank in the ordinary sense and it not regulated by any federal banking authority such as the Federal Reserve or the FDIC. Being regulated as a bank would be too expensive and require a level of regulation and oversight ill-suited for a digital currency exchange.
ItBit does, however, indirectly provide FDIC insurance to its clients' dollars by holding them at a separate FDIC-insured bank. It might be subject to some degree of FDIC oversight or compliance obligations indirectly, but that depends on how closely itBit and its banking partner work together. Bitcoin firms Coinbase and Circle similarly provide FDIC insurance to their customers' dollar accounts."
submitted by cacamalaca to legaladvice [link] [comments]

The ticking time bomb of crypto exchanges and compliance

I believe the next "black swan" event for bitcoin is when the US comes down hard on almost all the exchanges out there which are brazenly flouting the regulations.
Some common fallacies:
Fallacy 1: Exchange is based in [some remote country], so they don't have to worry about US laws.
Fact 1. Most people don't realise, it's not sufficient to be based outside of the US to be free of their jurisdiction. If an exchange is serving US citizens they must comply with the regulations, regardless of which country their exchange is based in.
Fallacy 2: Exchange XYZ doesn't accept fiat and it's crypto to crypto only. Therefore it doesn't need a money transmission license.
Fact 2. Fincen has issued multiple statements very clearly stating that a business which exchanges a virtual currency in exchange for another virtual currency is a money transmitter and thus requires a money transmission licence. Similarly for fiat to crypto. Some sources: (http://fincen.gov/statutes_regs/guidance/html/FIN-2013-G001.html http://globalcryptonews.com/fincen-ruling-on-cryptocurrency-exchanges-explained-part-1-definition-of-money-transmitter-and-msb/). Here fincen publishes a redacted letter to a crypto exchange telling them they are a money transmitter: http://www.fincen.gov/news_room/rp/rulings/pdf/FIN-2014-R011.pdf
Fallacy 3: Exchange XYZ is a money service business and is therefore compliant
Fact 3. It's actually a piece of piss to get registered as a money service business and I wish people wouldn't look at it as a symbol of authenticity. If the exchange doesn't have the money transmission licenses and is serving customers in most states of america it's only a matter of time until they get a knock on the door.
Fallacy 4: Most other exchanges aren't compliant so we have safety in numbers.
Fact 4. That is not a robust legal defense.
Exchanges which aren't compliant and therefore are NOT safe places to leave your money at:
And probably almost all of the others! I've listed the above as they are exchanges which qualify as money transmitters and are operating without the correct licenses. An exchange I am fairly certain has no licenses is:
If someone can prove me wrong, let me know.
Exchanges that are doing things by the book:
tldr: Use Coinbase or Kraken if you don't want to run the risk of an exchanges funds being seized.
submitted by blackcoinprophet to Bitcoin [link] [comments]

Marco Santori (Reg Affairs Committee Chair at the Bitcoin Foundation) breaks down the BitLicense

Note: This is NOT the Foundation's official response, just Marco's gut reactions...
http://two-bit-idiot.tumblr.com/post/92075292699/todays-bit-marco-santori-on-the-bitlicense
"Breaking Down the BitLicense" | Marco Santori, Regulatory Affairs Committee Chairman, The Bitcoin Foundation
Hi everyone. I’m Marco Santori. For those of you who don’t know me, I’m a lawyer here in New York City. About 90% of my practice is digital currency clients. My team represents some of the biggest names in crypto, and even more of the littlest names I hope you’ll all have to learn one day. I am also Chairman of the Bitcoin Foundation’s Regulatory Affairs Committee, but the thoughts in this post are my own, not those of the Foundation. Believe me, those are forthcoming.
You’ve likely felt the shockwaves of today’s seismic news: New York’s Department of Financial Services (DFS) has released proposed “BitLicense” regulations. Here is a quick rundown of some of the more interesting terms, along with my gut reactions – in no particular order and with very little filter.
Definition of Virtual Currency: “Virtual Currency” seems to include bitcoin and other convertible currencies, but specifically exclude WOW [World of Warcraft] gold and customer affinity points. Expectedly, there is no carve-out for coins used to track digital assets and there is no specific treatment of branded coins that are quasi-convertible.
Who Requires a License: Surprise! Everyone does. Direct purchasers and sellers, multi-sig wallet providers, merchant payment processors, custodial exchanges, hell, even local wallet software providers probably need one. Payment processors and payment networks all need licenses. Anyone who receives or transmits crypto as a business needs one. This is because the BitLicense language is even broader than the federal language, which only regulates those receiving and transmitting funds.
Identity Verification: If a BitLicense holder “opens an account” for a customer, then that firm must collect and retain the customer’s name and address, check the names against the OFAC SDN lists and retain that information for ten years. It’s difficult to know what “opens an account” means. Even if we figured that out, this is more than even traditional money transmitters are required to do.
Crypto is not a “Permissible Investment”: A BitLicense holder can only invest its earnings in: government securities, money market funds, insured CDs. No investing in Bitcoin. Strange – Moneygram is permitted to invest in dollars…
Full Reserve: A BitLicense holder may not lend or spend bitcoins that it is holding on its customers’ behalf. Those bitcoin “banks” out there promising returns on your “deposits” are going to be “felons”.
State-level AML Reporting: I’ve saved the best for last. NY is taking the first steps to create yet another anti-money laundering program. FinCEN – the federal regulator - already requires reporting cash transactions over $10k. Now, NY is requiring reporting to it for any crypto transactions over $10k. BitLicense holders must also file state Suspicious Activity Reports with NY, not just the ones required to file with FinCEN. I wonder how the boys at FinCEN feel about this.
There will be a 45-day comment period beginning on July 23rd. If you disagree with any of these proposals, you should submit comments. If there is anything you agree with, and are happy to see, you should submit comments. If there is anything you don’t understand, and so aren’t sure if you agree or disagree, guess what? You should submit comments. DFS is giving the industry an opportunity to engage in a dialogue that never existed when FinCEN and IRS published their famous virtual currency guidance. We should not ignore that opportunity.
If you’re looking for assistance or just want to talk crypto law, you can reach me at [email protected].
(Back to TBI)
There is much work to be done with this BitLicense proposal. It will be a defining bit of regulation for the industry, which means that the amount of constructive feedback and proactive effort needed from everyone in this industry must be nothing short of herculean if bitcoin is to evolve unencumbered in the US. This proposal simply cannot survive as is. So if you are an entrepreneur, investor or just general enthusiast, you better step up this summer. If we can make our case effectively, we should be able to keep the sane, legitimizing parts and scrap the stifling, unnecessary parts of the proposal.
Many more of my organized thoughts tomorrow…
Cheers, TBI
eepurl.com/JgGy5
submitted by twobitidiot to Bitcoin [link] [comments]

Money Service Business Registration Explained

https://youtu.be/-I26zU8XPqI

Cryptocurrency and payments attorney Adam S. Tracy explains money service business registrations and the requirements of FINCEN money service businesses.

---
A former competitive rugby player, serial entrepreneur and, trader attorney, Adam S. Tracy offers over 17 years of progressive legal and compliance experience in the areas of corporate, commodities, cryptocurrency, litigation, payments and securities law. Adam's experience ranges from commodities trader for oil giant BP, initial public offerings, M&A, to initial coin offerings, having represented both startups to NASDAQ-listed entities. As an early Bitcoin adapter, Adam has promoted growth of cryptocurrency and offers a unique approach to representing crypto-clients. Based in Chicago, IL, Adam graduated from the University of Notre Dame with dual degrees in Finance and Computer Applications and would later obtain his J.D. and M.B.A. from DePaul University. Adam lives outside Chicago with his six animals, which is illegal where he lives.
Bitcoin website: http://www.bitcoin-lawyer.org
Primary website: http://www.tracyfirm.com
Twitter: https://twitter.com/TracyFirm
Youtube: https://www.youtube.com/channel/UCVOa8Iy_RIkmRPwuQliPKfw
Linkedin: https://www.linkedin.com/in/adamtracy/
Facebook: https://www.facebook.com/thetracyfirm/
Instagram: @adamtracyattorney
Telegram: @adam_tracy
Skype: @adamtracyesq
Email me: [[email protected]](mailto:[email protected])

TRANSCRIPTION:

Hey am I a money service business? I get that question about like three or four times a week. Okay. So let's read this, all right? Money transmitter includes any person who engages as a business in accepting currency or funds denominated in currency, and transmits the currency or funds or the value of the currency or funds by any means through financial agency institution, or any other person engaged as a business in the transfer of funds. So right off the bat, okay, your money transmitters, right, which are your exchanges are money service businesses, right? And that includes Bittrex. Okay a lot of questions - well, if I don't accept Fiat, do I have to get a license. Bittrex has all their licenses. Just because they don't accept USD, doesn't mean that they don't need the license because they're engaged in the transfer of funds denominated in currency, right? So they denominate things in Bitcoin and they denominated as a like a quotient of $1.00. Right? So, you know, out of an abundance of caution, and you can make the arguments that Bittrex started out not having the license - you can make the argument that you don't need the license, but out of an abundance of caution, like poorly-dressed lawyers and bad tweet suits will tell you like when you're writing a will or something like that, you need the license. You need the license, and that's not me trying to help the, you know, community of lawyers with fees. It's just the best route to go, especially in this environment. And, I think clearly the money service business aspect of it denominates that you are money service business, and if you sort of look at it transitively then you are, in fact, acting as a money transmitter and we need the state level license.

Now, if you're providing some sort of service with respect to going in and out of a particular coin, that may be a different dog altogether. So, let's say you develop tokens for your platform, and people can go in and out of that token for purposes of utilizing that platform like, think of a ICO utility token, that wouldn't be a money service business, right? That wouldn't be money service business, because you're not engaged in the transfer those funds - that's just an antecedent to what you're trying to do with your particular platform, right, whether it's a mobile app or software game or whatever it is. You're actively engaged, right, when those transfer from Fiat to token and back are antecedent or connected with the transferred money between individuals, right, even if you're using just the token as a medium of exchange, then you are a money service business. You may not be a money transmitter because you may not be charging a fee for it, right? You may not be actively engaged in that, but if you're providing that service where people are able to effectively transfer money through you, right, and whether you're using token or using USD to do it, then I believe you are a money service business, and the process for registering as money service business isn't inherently complex. Right? It's a registration. It's not necessarily an application, right? Your money transmitter applications, if you wanted to get in all 50 states, may cost you about $85,000 right? There's 48 jurisdictions, when you include the District of Columbia, that have some sort of money transmitter sale of checks type license, right? And so you need to be wary of that cost.

But, you know, when it comes to registering as a money service business, the process itself isn't terribly difficult. You don't necessarily need assistance to even do it, you know, through an attorney - you can probably do it yourself. What the key implication is, obviously, then you have to embrace and develop a pretty robust AML/KYC program for who you're dealing with, which, you know, there's a lot of misconception amongst regulators as to whether that's possible in crypto. Of course it is possible, right? If you know anything about crypto, it's very possible to do KYC/AML, and there's a lot of good third parties, myself included, that do that service and provide that service to third parties.

So, as it relates to money service businesses, obviously, if you're an exchange accepting fiat currency, absolutely, you are money service business. If you're adopting the Bittrex license, and you're still doing dollar-denominated business, then I believe you're still a money service business. If you are, you know, a singular token or a de facto currency and you're allowing for transmission, then I think, you know, you start to look like a money service business, and I think you have to consider the implication of not being a money service business, which can be criminal. And you see that example in all the cases brought against users of local bitcoins, right? So, something to definitely consider. Check me out Bitcoin lawyer (bitcoin-lawyer.org) if you have any questions. I'll talk to you later. Thanks.
submitted by bitattorney to u/bitattorney [link] [comments]

Selling Bitcoin (USA)

I have been selling small amounts of BTC locally (cash).
Please advise, is there a threshold I can adhere to?
Assuming fincen.gov says it correctly, then I can operate at or below $1,000 per day per customer. This would be best considering my state requires at least $100,000 net worth to register.
Ultimately I would like to buy a BTC ATM or two, but the possibility of needing to register as a money transmitter is looming over this prospect. It would make more sense to grow the business now and apply for a money transmitter licence once it becomes needed for additional growth.
Keep in mind that at this point in the game I move less than $2,500 a week for buyers and profit at this level is less than $5,000 in a year. I work a regular job AND have another business that profits ~$25,000 a year, this business is artificially kept under $30k/y profit due to legislation. I would like to grow a BTC business so I can say goodbye to the regular job, and the BTC business would need to profit at least $30k per year to make this happen, but a money transmitter licence would destroy any hope for early profit and force me to find an investor, which would destroy my ownership if I am required to do so this early in the game.
note: don't bother saying "don't take legal advice from /bitcoin", I get it, I am looking for people with personal experience growing a small BTC business in their home states.
submitted by BTC-Maine to Bitcoin [link] [comments]

Understanding USA Crypto/Cash Exchanges

Let this post serve to inform those who buy/sell Dogecoin [from other individuals], in order to protect yourselves as well as others.
Update: Title says USA, but someone asked about UK. I don't live there, but laws are meant to be read. Added UK section.
USA Section
The USA has been very helpful in regards to understanding the rising Crypto currency markets, and has provided updated guidances in regards to money exchanges, as well as mining. It's tough to cover all the points, but I'll try to make a few.
Common Questions:
What happens if I'm not "trading", but "gifting" my "friend" $10,0000?
Nothing. And everything. You see, when it comes to the "guidance", it really is just that: A guidance. Where it comes to hurt you is when the FBI knocks on your door, asking you why you transmitted $10,000 to a known terrorist. Ok, that example is a bit extreme, but the fact stays that the guidance is there to protect you until subsequent formal laws are put in place.
So I can trade $999.99 worth of Dogecoin in a day?
You can trade up to $1000 in a 24 hour period. This mean $1000, not a penny more. You'll give yourself a headache trying to keep it at exactly "$999.99".
How does this guidance and current law effect Dogecoin?
All virtual currencies are effected by this law, and does not "nail down" or target any one specific virtual currency.
What if I don't mine Dogecoin, but have bought some and want to use them for goods/services, what then?
You are then a "user" of Dogecoin, and are subject to all regular laws and limitations. Essentially, you can use the coin for all goods/services that are of a legal nature. Use it to buy coffee, hire someone to mow your lawn, or give out freely as you like.
What's the deal with USA taxes?
As it stands, no clear precedents have been set, and though the IRS is aware of the massive amount of earnings many Bitcoin'ers have, this is the first year that users are making a substantial sum of money from crytpo-currencies. Because of this, dealing with taxes has been a much heated debate. Link 1Link 2
More then likely, we'll be getting guidances later in the year in order better understand what to claim and how to claim it. From what I've seen (do NOT take this as legal advice), many users are claiming any gains as Short-term gains on their taxes. Link #2 above is a link to a user claiming to be a tax attorney, and is worth a read (it's LOOONG).
So the people buying $1k+ for doge are actually breaking the law?
No. The buyer is considered a "user" as part of the guidance: "A user is a person that obtains virtual currency to purchase goods or services.". A seller is listed in the guidance as "An exchanger is a person engaged as a business in the exchange of virtual currency for real currency...[etc]".
A good example of this is when you go to an international airport, and go to the currency exchange station. The station must be licensed in order to perform the transaction, but the "buyer" (you) does not need to be licensed.
UK Section
Note that all the requirements below must be met in order to NOT have to register as a Money Service Business; It's not that you are not allowed to perform services if you do not meet all the requirements, but that you must register if you want to perform such actions legally. Since I do not live in the UK and additionally am not aware of any guidances as related to virtual currency, I cannot faithfully interpret the laws as they pertain to Dogecoin.
  • You cannot make more then £64,000 a year total in exchange services
  • Turnover (anything you gain after losses are calculated) cannot be more then 5% of your total annual turnover
  • Currency exchange worth more than 1,000 euros must be limited to one per customer - This is both for one single large transaction and multiple small transactions to a single individual
  • Your primary business cannot be solely performing monetary transactions, it must be secondary to your main business. This is hard to interpret, so let's put it this way: You can't just exchange money as a business. You would need to sell lemons at your lemon stand, and do money exchange on the side. It's very hard to do this without seeming like a front for a money laundering service though.
  • You cannot perform an exchange for just anyone: They have to be your customer. For example, if you go to a private bank, they cannot exchange money for you unless you open an account with them (just an example). (Note: This is a very weird portion of the law.)
After reading and interpreting the current UK laws to the best of my understanding, all I can say is that until the UK provides guidance for cryptocurrency, be VERY CAUTIOUS about performing ANY transactions, to the point where if I was living in the UK, I would not try selling any crypto with a 10ft (3M) pole. Buying seems fine though.
Common questions:
Note: Please check the USA section prior to asking a question. Since many countries have not pushed official laws, many of the general principles are the same between countries when it comes to money exchange services.
No questions at this time
I'll try to answer more questions as they come along, as well as glean any better answers from comments below.
submitted by GuideZ to dogecoin [link] [comments]

FinCEN logic effectively shuts down all Internet commerce. Heck, Doesn't it shut everyone down!?!

But, clearly, that’s not how the federal government sees things. If he doesn’t verify or have a way of knowing whether the owner of the bitcoins is the same person he’s sending the coins to, that’s a problem, says Faisal Islam, the director of compliance advisory services with Centra Payments Solutions, a company that advises corporations on financial compliance.
http://www.wired.com/wiredenterprise/2013/12/casascius/
Combine this with:
Any person, whether or not licensed or required to be licensed, who engages as a business in accepting currency, or funds denominated in currency, and transmits the currency or funds, or the value of the currency or funds, by any means through a financial agency or institution, a Federal Reserve Bank or other facility of one or more Federal Reserve Banks, the Board of Governors of the Federal Reserve System, or both, or an electronic funds transfer network
31 CFR § 1010.100(ff)(5)(i)(A) http://www.law.cornell.edu/cftext/31/1010.100
Now the reasoning here is that someone buying a Casascius bitcoin and having it shipped to some address may put Mike Caldwell in the position of "Transmitting value" from one person to another. After all, how can you prove the person paying is exactly the same as the person that ends up receiving the coin through the mail?
Jennifer Shasky Calvery, Director of FinCEN said in her testimony several times that FinCEN doesn't need to know if Bitcoin is a currency or a commodity or something else. That the fact that it has value is enough for them to regulate Bitcoin.
So if we are going to use their logic consistently, eBay without question must register as a Money Transmitting service. They clearly and unambiguously act as a facilitating third party in the exchange "value" between individuals and/or entities.
Do they comply with all Know Your Customer (KYC) processes? Does Amazon? Does NewEgg?
What about Walmart? When someone pays for a product at even the brick and mortar store, how can Walmart be sure that the person carrying out the product was exactly the same person that paid?
How can anyone exchange anything of "value" without complying fully by registering as Money Transmitters and collecting and filing full KYC reports with the government?
In this Christmas season, Financial crime and the transmission of value between parties without full KYC reports is literally out of control... Surely the government can jail everyone, and stop all Internet commerce, and all catalog sales, and put a stop to all of this facilitation of value between parties!
submitted by alanX to Bitcoin [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 blockchain.info), 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]

The new FinCEN rules is actually a huge win for Bitcoin

Hi Guys
I see lots of questions regarding the new FinCen rules but no-one focusing on just what a huge win this is for Bitcoin. Until yesterday, anyone with good programming skills could set up something like Bitpay. Nothing stopped criminals from doing the same thing. The FinCen rules (which I noticed, requires about $7mil to licence in every state http://www.grimeslawaz.com/technology-and-licensing/money-transmitter-licensing/) mean:
Yes it is true that we don't have that "wild west" complete freedom like we had in the past, but we wont see nasty surprises like MtGox. The "work from your basement" success stories will still happen in other parts of the world and this will only put a small dent in innovation.
Bitcoin is all grown up now. Basically the gov is saying "You guys are so good at what you do that we had to take note and make a law just for you". That's the highest compliment that any gov can give any system.
Well done Satoshi.
submitted by CryptoNucleus to Bitcoin [link] [comments]

Taking bitcoin is too damn hard

I'm starting a new company that is going to make games (such as CastleChaosGame.com, which is my new one) and I'm planning on doing some mining. So I needed a bank account , so I came here and asked where I should get one at. I found out IACFU is supporting of the bitcoin community and I applied for an account.
So as it turns out, to simply take bitcoin and convert it to USD I need the following:
Seriously? I want to take payments for a dollar for micro purchases. This is crazy. Is there any way to avoid this hassle?
submitted by radique to Bitcoin [link] [comments]

Is FinCEN ruling and Bitlicense delay destroying Bitcoin's price?

The FinCEN ruling puts a crazy burden on exchange operators. Now unless you're a BitPay or Coinbase with venture funding and a team of lawyers (and even then you may have problems in some states), you cannot operate without the fear of being raided like some scumbag.
This ruling means Bitcoin and all alt currencies revolving around it are now far less decentralized than before: your money having value is now way more dependent on Coinbase, Circle, Bitpay, and individuals like Barry Silbert and Tim Draper.
Also, the "end of summer" and early Fall institutional money that was supposed to flood into Bitcoin never did: when I ask around, the only reason why this didn't happen is that the Bitlicense uncertainty completely cooled big money interest in NYC: no one wants to go to jail for buying some bits.
I personally think we should fight back. Is it appropriate for FinCEN to tell exchange operators, good and bad, they must have money transmitter licenses in all 50 states? That's like saying to send an email you'll need your postal tariff fees paid in all states and cities your message passes through over the Internet. They're trying to kill this thing by treating it as a brick and mortar financial institution, when it was designed specifically to kill off those brick and mortar institutions. We don't need skyscrapers filled with bureaucrats to keep our ledger operating, as a bank or true money transmitter (i.e. Western Union) does, yet they are treating us as one.
And does anyone think the Bitlicense is anything other than regulatory capture, and a way to kick Bitcoin down the road another few months? I keep asking around, and it seems like the thing was a Trojan horse.
submitted by CryptoDonDraper to Bitcoin [link] [comments]

What licenses are necessary to operate an electronic currency exchange in the state of Illionis

I'm trying to determine what licenses are necessary (federal and state) for operating an electronic currency exchange in the state of Illinois. The main things I could deduce was that it requires registering with FinCEN and obtaining a Money Transmitter License.
I spoke with a lawyer in New York, and he indicated that if I want to operate an exchange which has a limited number of seats, I will need federal licensing, there is a 3 year waiting period and it costs upwards of $20 million. The electronic currency market that our exchange will attempt to provide service for is quite small, about $1.5 billion in circulation; A very optimistic estimate is that the exchange may hit $10 million in transaction volume per day with a profit of no more than $50k per day, so paying $20 million is simply not practical at this stage. Quoting these numbers made me feel like he was trying to shake me off because he had no interested in dealing with this. Any truth to them?
Any advice on the topic will be greatly appreciated. In addition, I would also be very thankful if people can suggest a knowledgeable lawyer (preferably in Illinois) who may be able to provide guidance.
[Edit:] The currency I'm referring to is indeed Bitcoin. Updated the $1.5 billion figure too, it was a bit misleading.
submitted by btcthinker to legaladvice [link] [comments]

Assistance requested on Letter to congress to overrule FENCen declaration that bitcoin purchase businesses should be moneychangers.

This was just an arbitrary declaration by FINCen with no legal legislation or direction from Congress.
We can get this reversed in two seconds with enough constituent reaction.
Letter to congress
Work in progress
We need the source of the quote from fincen when they originally declared bitcoin purchase avenues should fall under money changer rules.
Letter to congress
Thanks guys. You just let FINCen chase the new internet to China costing America AND Americans future Trillions.
. From wikipedia: "The Financial Crimes Enforcement Network (FinCEN) of the U.S. Treasury Department requires MSBs to register.[9] It is also a felony to engage in money transmission without a license in any state that require a license to operate.[10] Internet and mobile-based payment services are also required to seek a state money transmitter license to offer services to individuals residing in the state."
Bitcoin pioneer based in the USA , OkPay, now refusing US business http://i.imgur.com/die4lU0.png
Also they have this on their signup page: "Unfortunately we are not able to provide financial services to USA residents due to bank restrictions at the moment. Please feel free to complete your account registration - there is no fees associated with it. As soon as the limitation is removed we will announce it in our news and inform our clients accordingly."
Thanks guys. You just let FiNCen chase the new internet to China costing America AND Americans future Trillions.
submitted by georedd to Bitcoin [link] [comments]

FinCen "Guidance" and Ripple...

According to a recent FINCEN guidance (see http://cryptome.org/2013/03/fincen-bitcoin.htm), people who "create" virtual currencies and redeem them are considered "administrators" and administrators are money transmitters. Money transmitters must be licensed (amongst other things).
Here are the relevant parts:
"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 that (1) accepts and transmits a convertible virtual currency or (2) buys or sells convertible virtual currency for any reason is a money transmitter under FinCEN's regulations, unless a limitation to or exemption from the definition applies to the person.10 FinCEN's regulations define the term "money transmitter" as a person that provides money transmission services, or any other person engaged in the transfer of funds. 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."11
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.12 FinCEN has reviewed different activities involving virtual currency and has made determinations regarding the appropriate regulatory treatment of administrators and exchangers under three scenarios: brokers and dealers of e-currencies and e-precious metals; centralized convertible virtual currencies; and de-centralized convertible virtual currencies."
This brings up some big questions regarding Ripple. Anyone in the USA who creates a virtual currency they redeem (even IOUS to your friends) is considered an administrator according to this guidance by FinCen. Am I missing something or would this put a serious damper on Ripple, leaving only major licensed exchanges as players?
submitted by bitaccumulation to ripplers [link] [comments]

eCurrencyTrader makes it easy for new users to buy Bitcoins with their credit card

We just launched a new website designed to make it easy for people new to Bitcoins to try them out. We've tried to make it as convenient as possible by accepting credit cards and making the verification process simple and quick. All you have to do is upload a photo of yourself holding your driver's license.
We do charge a premium for our service since this is a new venture for us and we don't know how much fraud and chargebacks we'll encounter. As we ensure that we can cover our expenses, our rates will likely go down.
Since we're a private party selling our own Bitcoins, so we only had to register with FinCEN as a Money Services Business (which we've done), rather than as a money transmitter if we were an exchange.
Check us out at: https://ecurrencytrader.com
submitted by ecthampton to Bitcoin [link] [comments]

Fintech Podcast - Episode 2 – Why do you need a money transmitter license if you are outside the US? Money Transmitter Basics 01 Bitcoin Foundation is Wrong! BitcoinLaw - FinCEN Registration & Money Transmitter Licenses What is MONEY TRANSMITTER? What does MONEY TRANSMITTER mean? MONEY TRANSMITTER meaning

Address. 3300 N Ashton Blvd, Ste 200 Lehi, UT 84043 USA. Our Phone +1 (801) 705-4900. Toll-Free Phone. Office Hours. 9AM - 5PM MST FinCEN’s requirements are in fact the easier part of the business registration equation. ... State Bitcoin Money Transmitter License Requirements. Currently, a handful of states have definitive legislation which requires businesses dealing in cryptocurrencies or exchanging such currencies for fiat money to become licensed and bonded. The license that such businesses need to obtain typically ... Describes Circumstances Where "Money Transmitter" Definition Applies VIENNA, Va. - To provide clarity and regulatory certainty for businesses and individuals engaged in an expanding field of financial activity, the Financial Crimes Enforcement Network (FinCEN) today issued the following guidance, Application of FinCEN's Regulations to Persons Administering, Exchanging, or Using Virtual Currencies. Whether a person is a money transmitter under FinCEN’s regulations is a matter of facts and circumstances. 4. 4. 31 CFR § 1010.100(ff)(5)(ii). Within the context of this guidance, “business model” refers to the subset of key facts and circumstances relevant to FinCEN’s determination of (a) whether the specific person meets the definition of a particular type of financial institution ... To secure a cryptocurrency money transmitter license, businesses need to follow the steps detailed further down to ensure they are in compliance with state and federal laws. FinCEN vs Crypto Money Transmitters. After years of legal and regulatory ambiguity, FinCEN finally extended this requirement to the virtual currency industry. In its guidance the Application of FinCEN’s Regulations to ...

[index] [30620] [6779] [17727] [10631] [11537] [7076] [9778] [2783] [37627] [20760]

Fintech Podcast - Episode 2 – Why do you need a money transmitter license if you are outside the US?

Louisiana Money Transmitter License (UPDATED FOR 2020) ... • Registration with FinCEN as a Money Services Business • Surety bond Initial License Fee is $800 (Non-refundable) plus $25 for each ... We discuss why the firm moved into blockchain services and the regulations regarding Bitcoin ATMs, including FinCEN and money transmitter licenses. WHERE TO FIND THE SHOW → My website: https ... FINCEN has also ruled that Informal Value Transfer Systems (IVTS) are considered money transmitters for the purposes of registration and licensing. FINCEN defines an IVTS as "any system, mechanism ... • Registration with FinCEN as a Money Services Business • Surety bond The Application Fee is $250 for 4 or fewer locations, Renewal Fee is $50. Surety Bond is from 50,000 to $800,000. If you ... 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 ...

#