Money Transmission on the
Federal Level
FinCEN regulates Money Service Businesses ("MSBs") on the federal
level
Goal is to...
Money Transmission on the
Federal Level
According to FinCEN, you are a money transmitter if you:
• Accept value from perso...
Money Transmission on the
Federal Level
Still, you are not a money transmitter so long as you:
• Merely provide network se...
Money Transmission on the State
Level
The states regulate money transmitters separately from the Federal
Government
The st...
Money Transmission on the State
Level
First Question: Must my business be licensed?

So long as you service or solicit tha...
Money Transmission on the State
Level
Second Question: Will my business be granted a license?

Licensing requirements are ...
Digital Currency Law - Bitcoin 2014
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Digital Currency Law - Bitcoin 2014

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Digital Currency Law - Bitcoin 2014

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

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