Trading Bitcoin Online in the United States

[bmfinancial]

Jurisdiction

Other

The company's business plan is to make profit from bitcoin arbitrage. The company buys bitcoin in large quantities on a centralized cryptocurrency exchange. It, then, resells bitcoin on the peer-to-peer bitcoin exchange, localbitcoins.com. The company submits advertisements on localbitcoins.com to which buyers can respond. The buyer pays for the bitcoin by depositing cash into the bank account of the company at a local branch of the bank where the buyer is located, or pays via MoneyGram or Western Union. All communication and actual release of bitcoin happens online, digitally.

The management of the company is aware that they are required to register as a Money Services Business (MSB) with the federal Financial Crimes Enforcement Network (FinCEN) of the Department of the Treasury and to comply with all Anti-Money Laundering (AML) and Bank Secrecy Act (BSA) rules and regulations.

The company displays a disclaimer to its prospective buyer before the initiation of each trade which states that it is the buyer's responsibility to know their respective state's laws regarding buying and selling cryptocurrencies and that the seller (the company) is legally not responsible for the actions of the buyer in this regard ("Services provided by the company might not be legally allowed in certain jurisdictions without state level money transmitter licensure. By initiating this trade, you accept these terms and conditions and confirm that you are not a resident of a such jurisdiction, including, but not limited to, the States of New York and Washington).

The company is unsure about whether it can legally buy/sell bitcoin in each state of the United States (i.e. to residents of a state or a state where the buyer sends the payment from) if it operates online (from a state where it is fully licensed and complies with local Money Transmitter laws) without the need to register with the respective state of the buyer for a Money Transmitter license. This is what the company would like to know.

 

[zddoodah]

The company should hire an attorney to provide a written legal opinion.

 

[Michael Wechsler]

My research work involves cryptocurrency, blockchain, DLT (distributed ledger technologies), etc. and most recently with remittances dealing with FinCEN, the BSA, AML/CFT. An MSB is what you call them in the US. There are many companies that have tried to use bitcoin not only for remittances but also for forex / foreign currency exchanges - it's a fascinating area.

As I'm suspecting you know, you can put up a library of disclaimers and it isn't going to make any difference as to your potentially liability to the state. Those disclaimers might only be good as against claims by users.

It's clear you've done some homework regarding states and their attempts to regulate cryptocurrencies, such as bitcoin. This is an area of substantial scrutiny and much movement. We don't know the location of your company or the details. There are plenty of articles online that have information, including articles written by attorneys at big law firms as well as some I've read at Coindesk. But what is here today may be gone tomorrow. And the only way to obtain reliable information is to have a proper legal consultation with an attorney who specializes in law surrounding cryptocurrencies such as bitcoin.

The company's business plan is to make profit from bitcoin arbitrage. The company buys bitcoin in large quantities on a centralized cryptocurrency exchange. It, then, resells bitcoin on the peer-to-peer bitcoin exchange, localbitcoins.com. The company submits advertisements on localbitcoins.com to which buyers can respond. The buyer pays for the bitcoin by depositing cash into the bank account of the company at a local branch of the bank where the buyer is located, or pays via MoneyGram or Western Union. All communication and actual release of bitcoin happens online, digitally.

The management of the company is aware that they are required to register as a Money Services Business (MSB) with the federal Financial Crimes Enforcement Network (FinCEN) of the Department of the Treasury and to comply with all Anti-Money Laundering (AML) and Bank Secrecy Act (BSA) rules and regulations.

The company displays a disclaimer to its prospective buyer before the initiation of each trade which states that it is the buyer's responsibility to know their respective state's laws regarding buying and selling cryptocurrencies and that the seller (the company) is legally not responsible for the actions of the buyer in this regard ("Services provided by the company might not be legally allowed in certain jurisdictions without state level money transmitter licensure. By initiating this trade, you accept these terms and conditions and confirm that you are not a resident of a such jurisdiction, including, but not limited to, the States of New York and Washington).

The company is unsure about whether it can legally buy/sell bitcoin in each state of the United States (i.e. to residents of a state or a state where the buyer sends the payment from) if it operates online (from a state where it is fully licensed and complies with local Money Transmitter laws) without the need to register with the respective state of the buyer for a Money Transmitter license. This is what the company would like to know.