FinCEN Guidance On Virtual Currencies: Users, Administrators, And Exchangers.pdf

On March 18, 2013, FinCEN issued guidance (FIN-2013-G001) clarifying the application of its regulations under the Bank Secrecy Act to those involved with virtual currencies. The guidance defines "users," "administrators," and "exchangers" in relation to virtual currency activities. Users are not considered money services businesses (MSBs) and thus are exempt from MSB registration, reporting, and recordkeeping requirements. However, administrators or exchangers qualify as MSBs, specifically as money transmitters, unless certain exemptions apply.

Virtual currencies differ from real currencies as they lack legal tender status but can be convertible to real currency or act as a substitute for it. The guidance focuses on "convertible" virtual currencies and outlines the regulatory treatment of participants in these transactions under FinCEN's definitions.

Users who obtain and use convertible virtual currency are not classified as MSBs, as their activities do not constitute money transmission services. Conversely, administrators or exchangers involved in accepting, transmitting, buying, or selling convertible virtual currency are considered money transmitters unless exempted by specific limitations.

The guidance also reviews different scenarios involving virtual currencies, including e-currencies and e-precious metals, centralized and decentralized convertible virtual currencies, to determine appropriate regulatory treatment.