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I'm wondering what the practical / legal limits are on selling Bitcoin as an individual using Craigslist and LocalBitcoins. Will I run into legal issues / frozen bank accounts as I scale this? Right now I'm doing about $1K of selling per month, but I could see that expanding to $1K - $3K per week.

I take all the payments in cash, so this will be 1-3K per week in cash going into my credit union ATM.

  • It's sound like, what a legal limit on selling potatoes. In otc, e.g. irc channel, p2p selling can't be limited anyhow, while you can find person who buys. – user6203 Aug 7 '13 at 19:01
  • Thanks for the feedback I've updated my question title to reflect my concerns – David Silva Smith Aug 10 '13 at 14:09
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Note: This is a US-centric answer. Other countries may differ. I'll add other countries as people leave comments.

  • There is an arbitrary limit of $1,000 per person per day that triggers the necessity to register as a money service business. Stay under that FinCEN is unlikely to care about you, although you still may legally need to register for smaller transactions.
  • As long as a single transaction does not exceed $10,000, your financial institution should not file a Suspicious Activity Report.
  • You are best opening an account at an institution separate from your personal, general use accounts.
  • Try to keep cash liquid. Buy local, sell local. If you've got enough volume, use money orders to get fiat into your exchange of choice. It'll cut into your profits a little, but it reduces the number of parties privy to your transactions. Do not fraudulently fill out money orders.
  • Keep solid books that include the fiat price at the time you purchased your bitcoin and the price of sale. This will help you calculate capital gains taxes.
  • Pay taxes. Assuming you're in the US, this means paying taxes quarterly instead of yearly, unless you expect to owe less than $1,000.
  • If you do register with FinCEN, please document the process and broadcast here, on BitcoinTalk, and on /r/bitcoin.
  • Be truthful, upfront, and, most of all, careful. When in doubt, talk to a lawyer.
  • Are you aware of the workings of other major countries like England etc? – Pacerier Aug 15 '13 at 14:40
  • @Pacerier: I am not, but the basics not involving the government are likely similar. It's safe to assume that every country has some kind of financial crimes watchdog like FinCEN. – Colin Dean Aug 18 '13 at 19:48
  • You should clarify who your answer applies to. It seems very specific to the United States. – zkilnbqi Nov 24 '13 at 7:35
  • Sorry, I perhaps erroneously assumed that FinCEN was more well-known than it is. – Colin Dean Nov 24 '13 at 15:26
  • You should clarify your particular experience/expertise/qualification(s) in the field(s) that you answer applies to. – Willtech Apr 29 '18 at 3:20

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