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Fincen's March 2013 report defines:

  • A user is a person that obtains virtual currency to purchase goods or services.
  • An exchanger is a person engaged as a business in the exchange of virtual currency for real currency, funds, or other virtual currency.
  • An administrator is a person engaged as a business in issuing (putting into circulation) a virtual currency, and who has the authority to redeem (to withdraw from circulation) such virtual currency.

Note that to in order be considered an exchanger or administrator by the above definition, a person must be "engaged as a business".

So, is it true that a private person who mines at home, or a private person that sells Bitcoins in exchange for fiat, isn't in fact considered an exchanger or administrator, but rather a user (and is therefore not a Money Service Business and is exempt from regulation)?

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The short answer is, it is complicated. Below are some resources that may helpful.

As a disclaimer none of the below statements constitute legal advice and they should not be relied on.

I recently co-authored an article that contains some background information to your question. William B. Fleming and Joseph Evans, Bitcoiners in the Courtroom Part I: Government Oversight, Ford. Corp. L. Forum (Aug. 20, 2013).

TXT

PDF

The relevant portion is below. Though, admittedly, it may not answer your question in full. An argument can be made that the Guidance may have left room for a distinction between a miner who uses his Bitcoin for goods and services, and a miner who sells his Bitcoin for fiat.

"Notably, according to the Guidance, “users” are not subject to these registration requirements. “A ‘user’ is a person that obtains virtual currency to purchase goods or services.” Miners, too, are not subject to these registration requirements since “a person that creates units of this convertible virtual currency and uses it to purchase real or virtual goods and services is a user of the convertible virtual currency and not subject to regulation as a money transmitter.”

The most interesting part of your question really raises the issue of the scope of the definition for a "money transmitter." Specifically: "are miners who sell their Bitcoin for fiat money transmitters?"

Page 5 of the Guidance offers an explanation that you may find helpful:

"A person that creates units of this convertible virtual currency and uses it to purchase real or virtual goods and services is a user of the convertible virtual currency and not subject to regulation as a money transmitter. By contrast, a person that creates units of convertible virtual currency and sells those units to another person for real currency or its equivalent is engaged in transmission to another location and is a money transmitter."

Another helpful piece of information is located in footnote 10: "whether a person is a money transmitter is a matter of facts and circumstances. The regulations identify six circumstances under which a person is not a money transmitter, despite accepting and transmitting currency, funds, or value that substitutes for currency." 31 CFR § 1010.100(ff)(5)(ii)(A)-(F).

This is the relevant portion of that statute:

(5) Money transmitter —(i) In general.

(A) A person that provides money transmission services. The term “money transmission services” means the acceptance of currency, funds, or other value that substitutes for currency from one person and the transmission of currency, funds, or other value that substitutes for currency to another location or person by any means. “Any means” includes, but is not limited to, through a financial agency or institution; a Federal Reserve Bank or other facility of one or more Federal Reserve Banks, the Board of Governors of the Federal Reserve System, or both; an electronic funds transfer network; or an informal value transfer system; or

(B) Any other person engaged in the transfer of funds.

(ii) Facts and circumstances; Limitations. Whether a person is a money transmitter as described in this section is a matter of facts and circumstances. The term “money transmitter” shall not include a person that only:

(A) Provides the delivery, communication, or network access services used by a money transmitter to support money transmission services; (B) Acts as a payment processor to facilitate the purchase of, or payment of a bill for, a good or service through a clearance and settlement system by agreement with the creditor or seller; (C) Operates a clearance and settlement system or otherwise acts as an intermediary solely between BSA regulated institutions. This includes but is not limited to the Fedwire system, electronic funds transfer networks, certain registered clearing agencies regulated by the Securities and Exchange Commission (“SEC”), and derivatives clearing organizations, or other clearinghouse arrangements established by a financial agency or institution; (D) Physically transports currency, other monetary instruments, other commercial paper, or other value that substitutes for currency as a person primarily engaged in such business, such as an armored car, from one person to the same person at another location or to an account belonging to the same person at a financial institution, provided that the person engaged in physical transportation has no more than a custodial interest in the currency, other monetary instruments, other commercial paper, or other value at any point during the transportation; (E) Provides prepaid access; or (F) Accepts and transmits funds only integral to the sale of goods or the provision of services, other than money transmission services, by the person who is accepting and transmitting the funds.

These definitions can be found here: 31 CFR § 10.10.100

I hope that you find these resources helpful.

Joe

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