Silk Road forums

Discussion => Legal => Topic started by: buckaroo0987 on September 04, 2013, 02:18 am

Title: How many BTC are legal?
Post by: buckaroo0987 on September 04, 2013, 02:18 am
This isn't quite as silly of a question as it sounds (hopefully).

I'm curious what the US laws are. How much BTC can you buy and sell before you're considered a "Money Services Business' and then have to obey all the federal regs to stay legit.
Title: Re: How many BTC are legal?
Post by: Jack N Hoff on September 04, 2013, 02:28 am
If you sell more than $1,000 worth a day then you need to register as a MSB.
Title: Re: How many BTC are legal?
Post by: LibertyCoin on September 04, 2013, 02:44 am
In the US, Any persons who receive more than $10,000 in one transaction or a series of related transactions, while conducting their trade or business, must file a Form 8300. Meaning, you cannot receive $5k in one transaction, then another $5k soon after, or it could be considered related and equal $10k. Keep in mind this is cash deposits only. The form includes the buyers SSN and personal info also. So decide how you'd like to proceed. $9,999 needs no reporting :/
Title: Re: How many BTC are legal?
Post by: Jack N Hoff on September 04, 2013, 03:01 am
In the US, Any persons who receive more than $10,000 in one transaction or a series of related transactions, while conducting their trade or business, must file a Form 8300. Meaning, you cannot receive $5k in one transaction, then another $5k soon after, or it could be considered related and equal $10k. Keep in mind this is cash deposits only. The form includes the buyers SSN and personal info also. So decide how you'd like to proceed. $9,999 needs no reporting :/

We are talking about two different things here.  Look into the laws of money service businesses.  You can not exchange more than $1,000 a day without being a registered money service business.  You have to register in each state that you do business in.
Title: Re: How many BTC are legal?
Post by: LibertyCoin on September 04, 2013, 03:07 am
as well, you should look into the most recent FinCen regulations that came out, which may provide clarification on whether you need to register as a MSB, or if you qualify as just an individual utilizing bitcoins.
Title: Re: How many BTC are legal?
Post by: buckaroo0987 on September 04, 2013, 03:37 am
Thanks guys. It'd be great to get one more person to way in. We've got 2 different and opposing views, so one more person to way in would be great.
Title: Re: How many BTC are legal?
Post by: LibertyCoin on September 04, 2013, 12:07 pm
March 18, 2013, FinCen came out with new guidelines on virtual currency. Here's part of the reg:
Definitions of User, Exchanger, and Administrator

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

            A 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.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.9

Administrators and Exchangers of Virtual Currency

            An 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.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. 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

            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.12 FinCEN has reviewed different activities involving virtual currency and has made determinations regarding the appropriate regulatory treatment of administrators and exchangers under three scenarios: brokers and dealers of e-currencies and e-precious metals; centralized convertible virtual currencies; and de-centralized convertible virtual currencies.

I didn't see anything about the 1k per day, but that does not mean you're wrong. I just haven't seen that in my personal research.
Title: Re: How many BTC are legal?
Post by: buckaroo0987 on September 04, 2013, 07:56 pm
That's what I just read too..

From my understanding of it; if you buy BTC just to sell it - you're a money transmitter... no matter how much or how little you buy and sell.
Title: Re: How many BTC are legal?
Post by: Dickens018 on September 05, 2013, 01:29 am
Assume an investor moves $5000 to Mt.Gox to invest in Bitcoins. 
Price drops to $100, so he buys 500 Bitcoins,  and two days later,
he sales them at $120 for $6000. 

Assuming that the person buys and sales bitcoins for next 3 months,
is he a Money Service Business(MSB)?  I submit no. 

However, if our friend buys 500 bitcoins from Mt.Gox, and sells them to his
friends, then he is a MSB.   

Thoughts????
 
Title: Re: How many BTC are legal?
Post by: Jack N Hoff on September 05, 2013, 01:36 am
Assume an investor moves $5000 to Mt.Gox to invest in Bitcoins. 
Price drops to $100, so he buys 500 Bitcoins,  and two days later,
he sales them at $120 for $6000. 

Assuming that the person buys and sales bitcoins for next 3 months,
is he a Money Service Business(MSB)?  I submit no. 

However, if our friend buys 500 bitcoins from Mt.Gox, and sells them to his
friends, then he is a MSB.   

Thoughts????

Correct.  In your first scenario you would have to pay 20% tax on the capitol gains made.  In the second scenario you are operating as an MSB.
Title: Re: How many BTC are legal?
Post by: LibertyCoin on September 05, 2013, 02:57 am
With the new regulations that came out and will come out, you really need to figure out where you (or your "friend") fall in their regulations. The most recent regs are quite vague, so you could most likely move the coins to show that you are not a MSB, however, if you're continually buying/selling, most likely you will have to register. **Note: you can register as MSB as an individual and as an institution.
Title: Re: How many BTC are legal?
Post by: buckaroo0987 on September 05, 2013, 03:12 am
What is the difference between the two? Does an individual have lower fees or less regulations?
Title: Re: How many BTC are legal?
Post by: Dickens018 on September 05, 2013, 03:50 am
What is the difference between the two? Does an individual have lower fees or less regulations?

IANAL, but in the first case,  you are buying and selling with a MSB (eg:Mt.Gox),  similar to what you do with stocks or commodities. 

In the second case,  you are trading money for Bitcoins,  which the US-NSA defines as a Money Service Business,  and it definitely has much more regulations.  It seems to be the preferred way of attacking Bitcoin Business, and is why you are unlikely to find Bitcoin ATMs anytime soon that anyone can insert money, and get Bitcoins.

Big question will be whether your activities could facilitate money laundering.  The Bitcoin ATM is called a "laundry machine."

BTW, investing a bit of money in Bitcoins is a smart investment, and provides a reason for possession of significant number of Bitcoins.

My question:
  If person sends $5000 to MtGox, trades back and forth until end of year.  Sometimes he is up $3000, sometimes he is down $2000,  but at end of year he has $5100 in account.
Does US person only owe taxes on the  $100 profit,  or would he have to pay for money he "made" but then lost??
Title: Re: How many BTC are legal?
Post by: LibertyCoin on September 06, 2013, 03:01 am
Bitcoin ATMs may need be too far off, as all you have to do is own that ATM by/under a business entity, which is registered as a MSB. Just as a company owns a website that would sell bitcoin automatically. But anyway, hopefully we'll see some bitcoin ATMs soon.

Without the SEC regulations that define bitcoin, so much like Germany does currently, the question of reporting your capital gains and proving that you owned those exact bitcoin for more than a year, is vague in the US.

Bitcoin is volatile, but if you are investing, you're right - it's a good investment. Meaning if you try to play the market, you could reap high benefits, but you could get burned short term. If you invest long(ish) term and use bitcoin to diversify your portfolio, that is a good idea - to me, but I'm no Charles Schwab financial analyst...lol

Lastly, Dickens, I'm not 100%, but I believe you only have to pay the $100 (capital gains over the one year period). 
Title: Re: How many BTC are legal?
Post by: buckaroo0987 on September 06, 2013, 03:45 am

IANAL, but in the first case,  you are buying and selling with a MSB (eg:Mt.Gox),  similar to what you do with stocks or commodities. 


This isn't always the case. Especially if we're talking about an MSB.

Take LocalBitcoin for example. You can buy and sell BTC without ever using Mt.Gox.

That's more the type of business I'm talking about. The people who help you get money in and out of BTC using alternative systems then the regular exchanges.
Title: Re: How many BTC are legal?
Post by: virmo_vendor on September 06, 2013, 04:31 am
Congratz jack. You are a successful chinese or whatever guy who managed to play bulk and gain a lot and come along my topic and take away the few coins we could make with selling ether...

I am proud of you...

Send trippinmonkey a pm and offer free product or leave us alone and feel ashamed....
Title: Re: How many BTC are legal?
Post by: LibertyCoin on September 09, 2013, 02:42 am
Bottom line, if ever get investigated, you will need to report where you got the bitcoins from, if you didn't mine them or purchase them form a an exchange. Therefore, if you are planning on "generating" coins, then selling, you need to be ware of the regs (if you're i the US). However, if you're planning on being a localbitcoin dealer/broker, I cannot guarantee what legal paperwork needs to be done.