The Financial Crimes Enforcement Network (FinCEN), part of the United States Department of Treasury, has recently issued a set of rules regarding Bitcoin mining.
According to Cointext, the new piece of regulation refers to a specific issue: whether who mines Bitcoins for personal use can trade them for fiat currency at an exchange or spend them directly without being classified as a Money Services Business (MSB). This would also mean having to register with FinCEN.
So far, several miners were concerned that they would have to become compliant with extensive and complex regulations. Such obligations would render impossible for individuals to mine Bitcoins within the law.
But Atlantic City Bitcoin, which operates several ASICs miners in New Jersey, has recently asked FinCEN to clarify the rules. And the answer was quite mining-friendly. According to the formal Administrative Ruling now released, miners don’t have to register with FinCEN as long as they mine for themselves:
To the extent that a user mines Bitcoin and uses the Bitcoin solely for the user’s own purposes and not for the benefit of another, the user is not an MSB under FinCEN’s regulations, because these activities involve neither “acceptance” nor “transmission” of the convertible virtual currency and are not the transmission of funds within the meaning of the Rule. This is the case whether the user mining and using the Bitcoin is an individual or a corporation, and whether the user is purchasing goods or services for the user’s own use, paying debts previously incurred in the ordinary course of business, or (in the case of a corporate user) making distributions to shareholders. Activities that, in and of themselves, do not constitute accepting and transmitting currency, funds or the value of funds, are activities that do not fit within the definition of “money transmission services” and therefore are not subject to FinCEN’s registration, reporting, and recordkeeping regulations for MSBs…
FinCEN therefore concludes that, under the facts you have provided, Atlantic would be a user of Bitcoin, and not an MSB, to the extent that it uses Bitcoin it has mined: (a) to pay for the purchase of goods or services, pay debts it has previously incurred (including debts to its owner(s)), or make distributions to owners; or (b) to purchase real currency or another convertible virtual currency, so long as the real currency or other convertible virtual currency is used solely in order to make payments (as set forth above) or for Atlantic’s own investment purposes.
However, mining contracts where mining is done on behalf of another party may be classified as a Money Services Business. FinCEN claims it all depends on the circumstances.
The complete ruling will soon be published on FinCEN’s website.