FinCEN Issues Additional Clarifications Regarding Bitcoin and other Convertible Virtual Currency Activities

On January 30, 2014, the Financial Crimes Enforcement Network (“FinCEN”) issued two administrative rulings that address the application of Bank Secrecy Act (“BSA”) regulations to convertible virtual currency-related activities. FinCEN is the bureau within the Department of the Treasury that administers Regulation X, the regulation which implements the BSA requirements, including regulatory requirements applicable to “money transmitters” and other types of money services businesses (“MSBs”).

The administrative rulings were issued in response to written requests from companies for guidance on the applicability of Regulation X to different activities in the virtual currency ecosystem. The first ruling states that to the extent a person creates or “mines” a convertible virtual currency solely for the person’s own use, and not the benefit of another, the person is not a money transmitter under the BSA. The second ruling states that a person is not a money transmitter if that person: (i) produces or distributes software that facilitates the purchase and/or sale of virtual currency; or (ii) buys and sells convertible virtual currency solely for the person’s own investment purposes.

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Topics:  Bank Secrecy Act, Bitcoins, FinCEN, Money Services Business, Regulation X, U.S. Treasury, Virtual Currency

Published In: Finance & Banking Updates, Science, Computers & Technology Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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