Regulatory Alerts2014-01-30
Application of FinCEN’s Regulations to Virtual Currency Software Development and Certain Investment Activity
The Financial Crimes Enforcement Network issued an administrative ruling determining that a company developing proprietary software for its own virtual currency investments and engaging in such investments for its own account is not a money services business. The agency clarified that producing and distributing software does not constitute money transmission, and acting as an investor using virtual currency for one's own benefit falls under the 'user' exemption rather than the definition of a money transmitter. However, the ruling warns that providing services to others involving the acceptance and transmission of virtual currency, or exchanging it for legal tender on behalf of third parties, would trigger money transmitter obligations including registration and anti-money laundering compliance.