Yes, are under this law. They are saying: "We are a US-based cryptocurrency exchange". More than that, USA reserves the right to go after any company who is doing businesses with US citizens if they don't have financial license in US. See the example with Mtgox and Dwolla. US gov seized the Mt gox funds from Dwolla even MT Gox was registered in Japan because MtGox was doing exchanges with US citizens.
Yes, this is the law
because of DOLLAR deposits..Yes, this is the law
Paypal is a payment service provider based on real currency while the exchangers are virtual currency exchanges. Both of these businesses follow to the same MSB law. Virtual money is a commodity(like gold) and you need a financial license to make transactions between fiat and ANY e-currency (like Bitcoin).
no.. now your trying to redefine virtual currency.. gold is not a virtual currency. its a commodity. and has separate laws.
pawn brokers for instance follow 13 different federal laws. rather then being MSB
gold is not a direct substitute for dollars.
apples and pears are not a direct substitute for dollars.
cars are not a direct substitute for dollars.
jewelry and antiques are not a direct substitute for dollars
a euro is actually not a direct substitute for dollars. thats why american MSB does not apply to foreign currency that never touches the dollar
but a paypal "dollar" is not a real FIAT dollar. its just a mysql database balance to substitute a real dollar held in a real bank account in another location.
credit cards are not real dollars either.. they are credit. that is then separately settled with real dollars in a bank account..
as i said you cannot use paypal to pay court fines or other 'legal tender' tasks. even though its a direct substitute. but not the exact same thing.
even stuff like IRS and courts dont like you using credit cards to pay off fines. it normally has to be a debit card or physical cash.
but with all that said it just reveals how lacking the terminology is that it can be left open to many interpretations. and any good lawyer can rip apart the fallacy that bitcoin is 'money'.. because its not.. 'money' is the fiat world stuff.. currency can be anything. and bitcoin is an asset currency.