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How do MSBs and virtual currency relate?

An administrator or exchanger of virtual currency is an MSB, specifically, a money transmitter, if they either: (1) accept and transmit a convertible virtual currency or (2) buy or sell convertible virtual currency, unless a limitation or exemption applies. The definition of a money transmitter does not differentiate between real currencies and convertible virtual currencies. Accepting and transmitting anything of value that substitutes for currency makes a person a money transmitter under the regulations implementing the BSA, and thus an MSB.

Real Currency – The U.S. Department of Treasury’s Financial Crimes Enforcement Network (“FinCEN”) defines currency (also referred to as “real” currency) as “the coin and paper money of the United States or of any other country that [i] is designated as legal tender and that [ii] circulates and [iii] is customarily used and accepted as a medium of exchange in the country of issuance.

Virtual Currency – 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. In particular, virtual currency does not have legal tender status in any jurisdiction.

Convertible Virtual Currency – Convertible virtual currency is virtual currency that either has an equivalent value in real currency, or acts as a substitute for real currency. Bitcoin is the best-known convertible virtual currency.

Administrator – 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) the virtual currency.

Exchanger – An exchanger is a person engaged as a business in the exchange of virtual currency for real currency, funds, or other virtual currency.

Application of FinCEN’s Regulations to Persons Administering, Exchanging, or Using Virtual Currencies

CryptoCompliance is a regulatory consulting firm and does not provide legal advice, opinion, or services. Our services cannot and should not be relied upon as legal advice or opinion. We recommend you consult a lawyer if you want legal advice, opinion, or services.