Accepting and transmitting anything of value that substitutes for currency makes a person a money transmitter under the regulations implementing the BSA. The definition of a money transmitter does not differentiate between real currencies and convertible virtual currencies. 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." 11 10 FinCEN's regulations define the term "money transmitter" as a person that provides money transmission services, or any other person engaged in the transfer of funds. 9Administrators and Exchangers of Virtual CurrencyĪn administrator or exchanger that (1) accepts and transmits a convertible virtual currency or (2) buys or sells convertible virtual currency for any reason is a money transmitter under FinCEN's regulations, unless a limitation to or exemption from the definition applies to the person. 8 Such activity, in and of itself, does not fit within the definition of "money transmission services" and therefore is not subject to FinCEN's registration, reporting, and recordkeeping regulations for MSBs. 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.Users of Virtual CurrencyĪ user who obtains convertible virtual currency and uses it to purchase real or virtual goods or services is not an MSB under FinCEN's regulations. 7 An exchanger is a person engaged as a business in the exchange of virtual currency for real currency, funds, or other virtual currency. This guidance refers to the participants in generic virtual currency arrangements, using the terms "user," "exchanger," and "administrator." 6 A user is a person that obtains virtual currency to purchase goods or services. Definitions of User, Exchanger, and Administrator 5 This guidance explains the regulatory treatment under these definitions of persons engaged in virtual currency transactions. On July 29, 2011, FinCEN published a Final Rule on Definitions and Other Regulations Relating to Prepaid Access (the "Prepaid Access Rule"). 4 Among other things, the MSB Rule amends the definitions of dealers in foreign exchange (formerly referred to as "currency dealers and exchangers") and money transmitters. On July 21, 2011, FinCEN published a Final Rule amending definitions and other regulations relating to money services businesses ("MSBs"). This type of virtual currency either has an equivalent value in real currency, or acts as a substitute for real currency. This guidance addresses "convertible" virtual currency. In particular, virtual currency does not have legal tender status in any jurisdiction. Virtual CurrencyįinCEN's regulations define currency (also referred to as "real" currency) as "the coin and paper money of the United States or of any other country that is designated as legal tender and that circulates and is customarily used and accepted as a medium of exchange in the country of issuance." 3 In contrast to real currency, "virtual" currency is a medium of exchange that operates like a currency in some environments, but does not have all the attributes of real currency. An administrator or exchanger is not a provider or seller of prepaid access, or a dealer in foreign exchange, under FinCEN's regulations.Currency vs. However, an administrator or exchanger is an MSB under FinCEN's regulations, specifically, a money transmitter, unless a limitation to or exemption from the definition applies to the person. 2 A user of virtual currency is not an MSB under FinCEN's regulations and therefore is not subject to MSB registration, reporting, and recordkeeping regulations. 1 Such persons are referred to in this guidance as "users," "administrators," and "exchangers," all as defined below. The Financial Crimes Enforcement Network ("FinCEN") is issuing this interpretive guidance to clarify the applicability of the regulations implementing the Bank Secrecy Act ("BSA") to persons creating, obtaining, distributing, exchanging, accepting, or transmitting virtual currencies.
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