FinCEN Rules Bitcoin Miners (Mostly) Exempt from Money Transmitter Law

The Financial Crimes Enforcement Network, a branch of the U.S. Treasury focused on national security and stopping money laundering has issued a ruling that many bitcoin miners are relieved to hear.

According to CoinText, FinCEN discussed an issue revolving around registering as money transmitters with Atlantic City Bitcoin, miners based out of New Jersey.

The digital currency bitcoin has recently made the news for reaching new highs in pricing then falling, demonstrating the dangers of speculation, volatility, and the effects of government regulation.

To put it simply, bitcoins are “mined” by people or groups of people who have powerful computers capable of solving difficult mathematical problems. To prevent inflation, the difficulty of mining increases proportional to how many bitcoins are actually in existence, up to a limit of 21 million coins.

This has created something of a gold rush with people investing in better (much more expensive) hardware in hopes of cashing in on bitcoin’s rising prices.

FinCEN took notice of bitcoin, and issued guidance earlier in March of 2013. It stated that “persons creating, obtaining, distributing, exchanging, accepting, or transmitting virtual currencies” would fall under the regulatory requirements of the Bank Secrecy Act. This broad statement meant that any use of bitcoin, including mining would require compliance.

Thankfully, FinCEN’s clarification exempts personal and corporate bitcoin miners from having to comply, which would be an expensive rule to follow and bar most if not all miners from participating.

In some cases, mining does fall under money transmission laws, such as contract work that would then classify the miner as a Money Services Business.

The U.S. has been relatively friendly to digital currencies especially in comparison to the more heavy-handed enforcement actions of China.