The scenario I described to them on a previous call was starting a business that offered a website accepting credit card payments in exchange for bitcoins. It took about an hour to explain what bitcoins were, why people would be interested in the business, and what bitcoins are used for. I agree that the reply message was vague as to the reasoning, but, I don't really care to challenge their lawyers on the matter. I really just wanted a yes or no answer. And I got it. So, if you are going to sell bitcoins for dollars -- register as a MSB. It's actually not that difficult. Being a money transmitter (different than MSB) is on a state by state basis and it seems to have a large cost of entry.
Worst advice ever.
Based on what the agent told you registering as an MSB would be insufficient. He stated that you need to register as an MSB
BECAUSE YOU WOULD BE A MONEY TRANSMITTER. The bottom line answer for the scenario you describe to us you would be a Money Service Business. That is because you would be a money transmitter purchasing a valuable and using it as money and doing it by means of transmission. So, if that is enough I hope that helps you. In any case, feel free to call us back. Have a good day.
When you register as an MSB you need to indicate the regulated activities you will be engaging in. It is the agents opinion (based on the unknown circumstances and details you provided) that the reason for MSB registration is that you would be a "money transmitter".
Simply registering as an MSB (stating the reason for registration is Money Transmitter) and then not complying with state laws & requirements would be the worst possible scenario. Your registration would indicate you understand AND AGREE that you are a money transmitter you simply are choosing to willfully violate the law.
You do realize there is no such thing as a generic "MSB registration" right? I linked to a screenshot of the form upthread.
The MSB registration requires you to state EXPLICITLY what MSB ACTIVITY (such as money transmitter) you will be engaging in.