BITCOIN – 2015 & BEYOND презентация

213-488-7320

on the federal level
Goal is to prevent money laundering and provide law enforcement with records and data
MSBs, in general, are required to:
register with FinCEN
collect, verify, record report customer information
check identities against watch lists (terrorists, criminals, enemies of the state)
deny service for some customer
file suspicious activity reports with FinCEN if there are unusual or suspicious activity. The threshold amount for filing is $2,000 (or above) on an aggregate basis
One kind of MSB is a “Money Transmitter”

| BITCOIN – 2015 & BEYOND

money transmitter if, among other things, you:
Accept value from person A and give it to person B
Hosted wallets that permits exporting private keys
Accept value from person A and give it to A at a different time or place
“Storage” services
Exchange digital currency for government currency
Fiat exchanges
Exchange one digital currency for another
Crypto exchanges
Mine and make a payment to a third party on behalf of your customer
For-profit mining services

| BITCOIN – 2015 & BEYOND

“money transmitter” so long as you:
Only provide the delivery, communication, or network access services used by a money transmitter to support money transmission services;
Act only for your own investment
Exercising discretion in your investment strategy
But if you make payments to 3rd parties at their direction you may be an MSB
Merely perform certain limited payment processing services

| BITCOIN – 2015 & BEYOND

...Suffice it to say, you want to fall into one of these categories; however, certain other types of financial services can qualify you as an MSB subject to the extensive reporting and recordkeeping under the BSA, so you need to make sure none of your activities/services are within the scope of the definition of MSB

from the Federal Government
The states require not mere registration, but full blown licensure
That your business must be licensed in one state does not mean it must be licensed in any other
Not guaranteed to be awarded a license; money transmission is a privilege, not a right

| BITCOIN – 2015 & BEYOND

licensed?
So long as you service or solicit that state's citizens or businesses, no matter where in the world you are, a license may be required.

Each state has its own laws on what constitutes:
“money”
“transmission”

| BITCOIN – 2015 & BEYOND

granted a license?
Licensing requirements are onerous; they often include, but are not limited to:
Minimum capitalization
Six-figure bonding
Audited financial statements
Personal financial and other records of certain individual owners and executes and directions
Appropriate policies and procedures for compliance with applicable laws and regulations

| BITCOIN – 2015 & BEYOND

guidance on digital currency regulation:
Only dealings in money and monetary value are regulated.
Pure decentralized digital currency transactions are unregulated.
Exchange of Bitcoin for Litecoin? Unregulated.
Direct exchange of bitcoins for dollars between two parties? Unregulated.
Exchanges that hold dollars until customer orders are matched? Regulated.
New York recently proposed a digital currency-specific “BitLicense”
First comprehensive state-level AML program
Still only a proposal, expected effective in Q1 2015
Poorly-received criticized by the industry as overbroad and unduly restrictive

| BITCOIN – 2015 & BEYOND

a license? Those who:
Convert digital currency to fiat currency or another digital currency
Receive digital currency for transmission
Transmit, secure, store, hold or take control of digital currency
Some specifics:
No statutory limitation on the bonding requirement – broad discretion to DFS
Maintain “full reserve” (no bank-style lending permitted; only vaulting)
For all transactions over $10k: must collect and report names of both parties (difficult to satisfy, since sender need not know identity of recipient to send)
Prohibition on investing in Bitcoin

| BITCOIN – 2015 & BEYOND

plans to develop its own digital currency.
Bangladesh: All digital currency transactions banned. All digital currency education also banned.
China: Banks banned from offering digital currency services and from pricing services in digital currency.
England: HMRC taking a “wait and see” approach. Bank of England announced desire to make UK a global hub for digital currency businesses.

| BITCOIN – 2015 & BEYOND