Quote from: frott on June 03, 2013, 09:25:11 PM

Quote from: acoindr on June 03, 2013, 08:28:03 PM

Quote from: BitCoinNewGuy on June 03, 2013, 08:21:49 PM

I actually called the IRS and asked about having to be registered as a money transmitter.

There response was that ANYONE who buys, then re-sells, etc IS A MONEY TRANSMITTER AND MUST FILE IF EXCHANGE OVER $1,000.

If you report your BitCoin income, then audited, and not registered you will be in trouble.

You're talking about something different. The IRS is not FinCEN.

Registering as a money transmitter is necessary to comply with anti-money laundering and other regulations.

Income and capital gains taxes is another matter.

I believe the point was that if you report your income, then you get audited, that audit includes seeing if you were acting as a transmitter.

aka - you can't only be "partially legal" in a worst case scenario.

A lot of this hinges on the semantics of things, but one thing is clear: fincen has considered it a "convertible virtual currency" which means anyone on either end of the cash <-> bitcoin exchange was acting as a transmitter via:

"An administrator or exchanger that ... (2) buys or sells convertible virtual currency for any reason is a money transmitter under FinCEN's regulations, unless a limitation to or exemption from the definition applies to the person."

They're using the terms administrator, exchanger and person interchangeably here. Are they? Everyone in the US that bought or sold bitcoins at all, directly or indirectly, is being considered? BUT the semantic issue is what are those "limitations to or exemptions from?" in that case?

TC states "If FinCEN wants to define regulation then they are obligated to provide clear and exact lines. Regulation which is vague, arbitrary, capricious, and overbroad is generally overtuned. "

That's what's bizarre about the current wording. Last I checked someone going to a bank or currency exchange to exchange currency isn't considered a "money transmitter." Why would bitcoiners be now?

In a recent speech, Fincen Director Jennifer Shasky Calvery said the new guidance aims "to protect [digitial currency] systems from abuse and to aid law enforcement in ensuring that they are getting the leads and information they need to prosecute the criminal actors." She reiterated that the guidance does not apply to everyday users who pay or accept bitcoin for goods and services.

But what about paying bitcoin to buy a good, then selling the good for some other currency? And so on...

It's right there in the guidance, near the beginning, in clear language:

"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.8 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.9"

Perhaps folks are only aware of parts of the guidance for some reason, so here it the link to the entire document:

http://fincen.gov/statutes_regs/guidance/html/FIN-2013-G001.html

Some definitions have exemptions. It is easy to get the wrong impression if you only read parts of the guidance. The guidance should be read and understood in it's totality.