The United States Department of Treasury Financial Crimes Enforcement Network (“FinCEN”) supplemented its March 18, 2013 guidance on the applicability of federal money transmission regulations to virtual currency “miners” and investors with two letter rulings on January 30, 2014. Both rulings are fact specific, but provide information and insight into FinCEN’s views on regulation of various participants in the virtual currency ecosystem under the Bank Secrecy Act (“BSA”). The rulings establish that:
- “miners” of convertible virtual currency will not transform from unregulated users of convertible virtual currency into regulated exchangers of virtual currency merely because they use the mined virtual currency in a transaction that does not strictly qualify as the purchase of goods and services, so long as the transaction is undertaken for their own benefit and not the benefit of others; and similarly,
- a company “converting” virtual currency into legal tender or other virtual currency exclusively for its own benefit will not be deemed to be a money transmitter either.
The rulings provide important guidance on the possible treatment of participants in the virtual currency ecosystem beyond the miners and investment company who initiated these requests for clarification. For further analysis in this regard, please see our recent update at: http://www.perkinscoie.com/New-FinCEN-Guidance-on-Virtual-Currency-Transactions-02-11-2014. The text of the administrative rulings can be found here: http://www.fincen.gov/news_room/rp/rulings/pdf/FIN-2014-R001.pdf and http://www.fincen.gov/news_room/rp/rulings/pdf/FIN-2014-R002.pdf.