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. Registration as an MSB (selecting the activity of Money Transmitter) would then open one up to the state requirements for Money Transmitter. Not meeting those requirements would result in penalties (possibly even jail time). One couldn't even argue they believe they aren't a money transmitter as they registered as one with the federal government.
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.You get what you pay for. Free advice on the forums should be taken as just that.
Money transmitter as defined by FinCEN is not the same as money transmitter as define by the state of x. They have different standards. FinCEN only updated their rules in the last 2 years with the "informal value transfer system" bit at the end of 5(A). This was not in my state regulations. But, I don't have an official answer from the state.