FinCEN Publishes Two Rulings on Virtual Currency Miners and Investors (with Lofchie Comment)

The Financial Crimes Enforcement Network ("FinCEN") published two administrative rulings, providing additional information on whether a person's conduct related to convertible virtual currency brings them within the Bank Secrecy Act's ("BSA") definition of a money transmitter. The first ruling concludes the following:

• to the extent a user creates or "mines" a convertible virtual currency solely for a user's own purposes, the user is not a money transmitter under the BSA.

The second states:

• a company purchasing and selling convertible virtual currency as an investment exclusively for the company's benefit is not a money transmitter.

The rulings further interpret FinCEN's March 18, 2013 Guidance to address these business models.

Lofchie Comment: The use of the term "mining" in relation to Bitcoins is both funny (the notion of digging virtual coins of the ground) and sad (the history of actual mining work is pretty bleak).