Brian Kelly [Brian Kelly] - The Bitcoin Big Bang: How Alternative Currencies Are About to Change the World

• Safari Home Icon Safari Home
• recommendations icon Recommended
• icon_Playlist_smlCreated with Sketch. Playlists
• search icon Search
• navigation arrow Expand Nav
  • recent items icon History
  • topics icon Topics
  • tutorials icon Tutorials
  • offers icon Offers & Deals
    • Newsletters
  • highlights icon Highlights
  • settings icon Settings
  • Support

  • settings icon Settings days left in your trial..
  • Support

Find answers on the fly, or master something new. Subscribe today.

The Financial Crimes Enforcement Network (FinCEN) is issuing this interpretive guidance to clarify the applicability of the regulations implementing the Bank Secrecy Act (BSA) to persons creating, obtaining, distributing, exchanging, accepting, or transmitting virtual currencies. A user of virtual currency is not an MSB under FinCEN's regulations and therefore is not subject to MSB registration, reporting, and recordkeeping regulations. However, an administrator or exchanger is an MSB under FinCEN's regulations, specifically, a money transmitter, unless a limitation to or exemption from the definition applies to the person. An administrator or exchanger is not a provider or seller of prepaid access, or a dealer in foreign exchange, under FinCEN's regulations.

FinCEN's regulations define currency (also referred to as real currency) as the coin and paper money of the United States or of any other country that [i] is designated as legal tender and that [ii] circulates and [iii] is customarily used and accepted as a medium of exchange in the country of issuance. In contrast to real currency, virtual currency is a medium of exchange that operates like a currency in some environments, but does not have all the attributes of real currency. In particular, virtual currency does not have legal tender status in any jurisdiction. This guidance addresses convertible virtual currency. This type of virtual currency either has an equivalent value in real currency, or acts as a substitute for real currency.

On July 21, 2011, FinCEN published a Final Rule amending definitions and other regulations relating to money services businesses (MSBs). This guidance explains the regulatory treatment under these definitions of persons engaged in virtual currency transactions.

This guidance refers to the participants in generic virtual currency arrangements, using the terms user, exchanger, and administrator. An exchanger is a person engaged as a business in the exchange of virtual currency for real currency, funds, or other virtual currency. An administrator is a person engaged as a business in issuing (putting into circulation) a virtual currency, and who has the authority to redeem (to withdraw from circulation) such virtual currency.

A user who obtains convertible virtual currency and uses it to purchase real or virtual goods or services is not an MSB under FinCEN's regulations. Such activity, in and of itself, does not fit within the definition of money transmission services and therefore is not subject to FinCEN's registration, reporting, and recordkeeping regulations for MSBs.