Tradehill was shutdown for various regulation issues, including not having the required money transmission licenses.
What were the money transmission licenses that were required?
What other compliance rules should be followed?
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Tradehill got shutdown because it went bankrupt when Dwolla started reversing money transfers made to them despite their terms of service stating that no chargebacks could occur (at the time). There is currently a lawsuit pending.
The required licenses will vary depending on the legal context and the interpretation of the business, made by the relevant legal authorities.
There is a lot of legal uncertainty surrounding Bitcoin, but there is one thing that is pretty certain : in all jursidictions you need a license to maintain fiat-denominated balances on behalf of third-parties.
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)
Tradehill was not shut down due to a lack of money transmission license.
But to the point of your question of what is required to maintain compliance, no one can really answer that as it depends greatly upon jurisdiction.
Now, IMNAL, but I would say that a general rule is that if you are operating an exchange, you probably are playing with fire in a legal sense. There are a lot of organizations worldwide that will claim authority over that type of business.
However, a company like BitInstant and Coinbase are probably more in a safety zone for the simple reason that they are buying and selling their own stock of Bitcoins rather than doing so on behalf of a third party. This falls much more under local jurisdictions and licensing requirements would vary greatly. Does it require a money transmission license to operate this type of business? Maybe. It depends if the jurisdiction considers Bitcoin to be money or commodity. If it considers Bitcoins to be a digital commodity, then you probably just need a business license, and perhaps a sales tax license. If it considers Bitcoin to be money, then you likely will need a money transmission license, currency exchange license, or even potentially a banking license.
Again IMNAL, and you should certainly consult one before starting any type of business, let alone one in the Bitcoin arena.
FinCEN is still looking at what regulations if any will be pushed on to bitcoin industry. Like it or not and folks can stomp their feet, hold their breath until they are blue in their face but there is no doubt regulatory authority will be pushed on Bitcoin Industry.
OR- They could make it illegal. Going back to the civil war the US has outlawed alternative currency (my term)
To answer your question the Money Transmitter Regulatory Association and State regulations should be your guide. Different types of transactions fall under MSB rules/regs. In general there are likely going to be around 45 states that will require some type of regulatory oversight and licensing. Some will only care if the transaction means funds will be held in a balance or stored value account. some will say only the exchanges will need to be licensed.
Our company is working on that stuff now plus ways to monitor coins to prove it is not the proceed of a crime.
For a bitcoin to be relevant in the coming months and years it will unfortunately need to be regulated. Banks, businesses etc. don't want to be put in the position of accepting bitcoin that was received for selling drugs, illegal weapons, child porn etc. Because that puts them in the position of helping to launder funds.
So WE the People need to come to terms with some things. We need to work hard to ensure that any regulatory authority is correct and not too cumbersome.
I believe with every fiber of my being that the bitcoin community/industry can make bitcoin FAR (as in light years) ahead of cash as far as ensuring illicit use doesn't become the major factor. Cash is a low tech piece of paper. Bitcoin has everything I need as a compliance officer to ensure that when Cathy wants to buy something with her coins that the btc involved were not the proceeds of crime.
And make no mistake- the criminal element is there and they are some of the loudest voices (or their proxies) calling to resist any kind of regulatory oversight.
It is my hope that the btc community starts to reach out to their political representatives and news media to present the case that btc is safe. VERY safe. People may scoff but they'll listen. We just need to voice our concerns politely and factually.
BTC and be more revolutionary than anyone thought possible. We just need to make sure we all do the right thing.