Bitcoin Targeted By Latest FinCEN Ruling? – Implications Are Profound

Pay close attention to this ruling.  It could be the beginning of a war on Bitcoin.

Zero Hedge reports:

The Long Arm Of Uncle Sam Just Got Longer

This one’s hot off the presses. Just yesterday, our friends at the Financial Crimes Enforcement Network (FinCEN) issued a press release on its latest ruling related to foreign ‘money service businesses (MSBs).’

An MSB is a private company that provides certain financial services like check cashing, money orders, title pawn, payday loans, travelers’ checks, prepaid stored value cards, tax refund payments, etc.

Frequently, traditional MSB clients tended to be individuals without bank accounts or access to credit.  But increasingly, the US government is looking at companies engaged in electronic payments, crowdsourced funding, and even microcredit finance as money service businesses.

The implication? They should all be regulated. Even if they’re not even US companies.

That’s right. FinCEN’s latest ruling suggests a foreign MSB may now be subject to US regulations AND CRIMINAL PENALTIES “even if none of its agents, agencies, branches or offices are physically located in the United States.”

FinCEN goes on to say that foreign-located MSBs must also comply with US anti-money laundering regulations and submit ‘suspicious activity reports’, i.e. assimilate into the US financial system and become yet another unpaid spy of the US government.

Further, foreign MSBs must register with FinCEN AND appoint a person residing in the United States as a legal representative in matters of compliance. If not, foreign MSBs risk severe civil and criminal penalties.

In other words, FinCEN thinks it has the authority to go after entities such as Mt. Gox that are located in Japan.  Mt. Gox, along with all the other related institutions, such as that exchange Bitcoins for gift cards, or VirWox which exchange Second Life “Linden dollars” for Bitcoins would be subject to criminal sanction by FinCEN even if they have no physical presence in the US at all.

It should be noted that these are dictatorial decrees by FinCEN.  No legislation has been passed that says FinCEN should be allowed to go after foreign businesses around the globe. FinCEN decided on its own that it has this authority.

I’m not sure if FinCEN is directly targeting Bitcoin with this latest fascist power-grab, but it certainly appears that way.  FinCEN doesn’t like it when people buy and sell things without it being privy to every detail of the transaction.   People might attempt to keep their own money! – gasp!  People might buy evil drugs! – gasp!  THE HORROR!

The relevant regulations:

Foreign-Located Money Services Businesses:

On July 21, 2011, the Financial Crimes Enforcement Network (FinCEN) published in the Federal Register a final rule on definitions and other regulations relating to money services businesses (Final Rule).1 The Final Rule amended the definition of “money services business” at 31 CFR 1010.100(ff). An entity may now qualify as a money services business (MSB) under the Bank Secrecy Act (BSA) regulations based on its activities within the United States, even if none of its agents, agencies, branches or offices are physically located in the United States. The Final Rule arose in part from the recognition that the Internet and other technological advances make it increasingly possible for persons to offer MSB services in the United States from foreign locations.2 FinCEN seeks to ensure that the BSA rules apply to all persons engaging in covered activities within the United States, regardless of the person’s physical location.

Money Services Business:

 The term “money services business” includes any person doing business, whether or not on a regular basis or as an organized business concern, in one or more of the following capacities:

(1) Currency dealer or exchanger.
(2) Check casher.
(3) Issuer of traveler’s checks, money orders or stored value.
(4) Seller or redeemer of traveler’s checks, money orders or stored value.
(5) Money transmitter.
(6) U.S. Postal Service.

An activity threshold of greater than $1,000 per person per day in one or more transactions applies to the definitions of: currency dealer or exchanger; check casher; issuer of traveler’s checks, money orders or stored value; and seller or redeemer of travelers’ checks, money orders or stored value. The threshold applies separately to each activity — if the threshold is not met for the specific activity, the person engaged in that activity is not an MSB on the basis of that activity.

No activity threshold applies to the definition of money transmitter. Thus, a person who engages as a business in the transfer of funds is an MSB as a money transmitter, regardless of the amount of money transmission activity.

  • Then add the latest from the new FATF recommendations:


    Money or value Money or value transfer services (MVTS) refers to financial services that involve transfer service the acceptance of cash, cheques, other monetary instruments or other stores of value and the payment of a corresponding sum in cash or other form to a beneficiary by means of a communication, message, transfer, or through a clearing network to which the MVTS provider belongs.

    Transactions performed by such services can involve one or more intermediaries and a final payment to a third party, and may include any new payment methods.

    Sometimes these services have ties to particular geographic regions and are described using a variety of specific terms, including hawala, hundi, and fei-chen.

    “and may include any new payment methods”

  • Freak

    Hmmm, maybe I should start up a bitcoin postcard art store online that sells “art” that has a USD value and includes a BTC points incentive program.

  • There needs to exist decentralized exchanges. The way to break the stranglehold of the current system is to route around it, not base critical aspects on systems under control of the state. The problem with Bitcoin is trust. The problem with Ripple Pay is currency. Ripple Pay running on Bitcoin and providing the social trust layer on the secure currency layer could provide a solution.

    I proposed the ability for many people to run cheap bitcoin/ripple nodes as internet appliances by using Raspberry Pi’s. ( )

  • Author of this news post is paranoid. There is no way to deduce this from the FinCEN press release…

    “To qualify as an MSB, a person, wherever located, … is
    providing services to customers located in the United States.”

    As expected FinCEN has authority to rule over all transactions held in USA… so Mt.Gox has under AML obligation to report any suspicious transactions held by US citizens… What is so revolutionary in this post? Didn’t we know that before? Its just about US transactions… You can’t deduce that FinCEN has any authority or control over Mt.Gox as a whole or fantasy about “targetting” Bitcoin.. Words like “war” are way out of mind… Its just too paranoid…

    • “What is so revolutionary in this post? Didn’t we know that before?”

      I thought I was pretty clear about it.

      FinCEN has just declared that they have jurisdiction over foreign exchanges, which previously they did not.

      • Anony Mouse

        And let’s say you wanted to not do business with U.S. customers so as to not end up in Guantanamo …  you’ld have to get identity from all your customers, which means you can no longer do trade anonymously.

        • That means nothing…

          When there is suspicious withdrawal of USD to US account it IS and SHOULD BE AML compliant…

          That doesn’t mean any control of BTC or need to identify BTC users.. Its just USD users…

          So please stop this FUD

          • onewhocansee

            As long as the dollar is the reserve unit of the world, these foreign entities will do the US Gov’t’s bidding because all the governments of the world are in bed with them.  If you don’t think that this will not apply to you, then you are naive.  The US Gov’t will rule wherever they want because they can.  Government is force and the US government uses it in spades.  The law has nothing to do with it.

  • Brill Galt

    ____Weak Government______

    The government is WEAK because it responds with FORCE to non-violent acts;  it is too stupid to think of peaceful means for achieving its goals.  Responding to a headache with a hammer is not only foolish, it is evil.

    Guess what?  You may no longer recognize the U.S. government as having any legitimate authority over yourself as you never consented to it.  By initiating force against persons for non-violent acts, they have forfeited their powers.  


    Government — 0
    Bitcoin — +100

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  • Dana Shetterly

    Lol , How can you be “within the US” but not be physically located here?
    Is it because “within the US” doesn’t mean what people think it means?

    • I’m reading this as e.g. withdrawing US Dollars from Mt.Gox  (located in Japan) to US bank account (bank account physically located in US).

  • Mark Herpel

    The new regs that were proposed like two+ years ago have ALWAYS been very clear on this subject. Any MSB located anywhere in the world that is “engaged in business with U.S. clients” is the same as being located in the US and falls under their regulations as of this month, March 2012. That’s digital currency companies and independent agents transacting in digital currency exchange with U.S. located clients.  Want to avoid the law (and it is now a U.S. law) you MUST drop all U.S. customers or block U.S. IPs so that you are not engaged in business “IN” the U.S. This is why GoldMoney just dropped all of it’s account-2-account payments and “banking” type business, because they did not want to be an MSB. The company that patented the digital gold payment process just got out of that business because of these new regs. That was not the profitable part of their company so to avoid the MSB stuff, they dropped that part of their model. This is also why WebMoney is blocking all U.S. IPs. It’s pretty clear and bitcoin was NOT the reason for the new regs, they were proposed many years back. Yes, to comply, Mt Gox should be out of the US market completely or risk having their accounts seized or closed, the US is dead to this business and now you see banks pumping out new products for nonbank customers.

    • This latest ruling was not “proposed two years ago” 

      FIN-2012-A001 Issued:February 15, 2012

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  • Regulator

    Just to educate those that are uneducated about what FinCEN is talking about with this ruling. That is requiring any entity which meets the definition of an MSB, foreign or domestic, who BANKs (has a transaction account) or conducts transactions WITHIN the United States to be registered MSBs and comply with all BSA/AML (Bank Secrecy Act / Anti Money Laundering and Terrorist Financing) regulations. FinCEN is NOT saying that they are going to go out after a foreign entity that falls under the definition of an MSB who conducts no transactions or does not bank with an institution located or branched in the US. Y’all just need to calm down.