Quote from: Malophor on October 23, 2012, 05:22:00 PM

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, now it's time for the OP to tell us what scenario he *actually* described to them. Because this doesn't at all sound like "selling Bitcoins on my website."

Once again, the legal position of Bitcoin is very simple. "Money" is that which has future value. "Currency" is that which has current value. Bitcoin is a currency, with no guarantee of future value.

Money is actually a very rare thing, because it's pretty difficult to guarantee that something (anything) will have value in the future. The usual method is via counter-parties who guarantee, through force, that their issued money will have future value. These issuers tend to be governments, who have regional monopolies on the use of force. But there are other issuers as well. Banks, for instance, that hold the debt of a substantial number of members of a community can use this leverage to issue money, backed by the implied force of calling in that debt. The mafia, also, has its own complex monetary systems, again based on counter-parties and the transmission of force.

Bitcoin has none of that. Bitcoin is a currency, because it only has current, market value, and because no one guarantees Bitcoin's future value as money.

Money is regulated because it is force. Money transmission is further regulated because it is a service which comes with the risk of the money losing value during "transmission". Between the time that you purchase a MtGox code from BitInstant, and redeem that code, MtGox could go out of business. You would have bought "money" or "stored value" with the implication that it has future value and can be redeemed by the money issuer. You would have been defrauded if that turns out not to have been the case. And BitInstant would have been defrauded as well, which is the reason money transmitters actually seek out the protection of governments via regulation.

This has nothing to do with Bitcoin. Bitcoins can't be regulated, because they come with no implied guarantees of future value, no backing and thus no counter-party risk to regulate.

In fact, the protection that regulation would provide to the OP in the scenario described in this thread is protection against counter-party risk in the traditional banking system, not Bitcoin. The risk of the fraud of credit card chargebacks has been discussed to death on this forum. It's the reason no one sells Bitcoins for credit cards. Not regulation.