FinCEN issued interpretive guidance on the application of its regulations implementing the Bank Secrecy Act to "users," "exchangers" and "administrators" of convertible virtual currency. The guidance, Application of FinCEN’s Regulations to Persons Administering, Exchanging, or Using Virtual Currencies, clarifies that FinCEN regulations—particularly the requirement to register as a money services business—applies to "exchangers" and "administrators" of virtual currency, unless a limitation or exemption applies. Virtual currency, according to FinCEN, is a medium of exchange that operates like currency in some environments, but does not have all the attributes of real currency (e.g., legal tender status in any jurisdiction). "Convertible" virtual currency either has an equivalent value in real currency or acts as a substitute for real currency. While "users"—persons that obtain virtual currency to purchase goods or services—are not an MSB under FinCEN’s regulations and, therefore, not subject to MSB registration, "exchangers"—persons engaged as a business in the exchange of virtual currency for real currency, funds or other virtual currency—and "administrators"—persons engaged as a business in issuing (i.e., putting into circulation) virtual currency and having the authority to redeem virtual currency—are MSBs and are generally subject to registration.
The guidance sets forth three scenarios in which FinCEN has determined that administrators and exchangers are subject to the BSA regulations: (1) brokers and dealers of e-currencies and e-precious metals, (2) centralized convertible virtual currencies and (3) de-centralized convertible virtual currencies. For example, under the third scenario, a person that creates units of convertible virtual currency and sells the units to another person for real currency or its equivalent is a money transmitter, and any person that accepts convertible virtual currency from one person and transmits it to another person as part of the acceptance and transfer of currency, funds, or other value that substitutes for currency, is a money transmitter. The guidance also clarifies that accepting real currency in exchange for virtual currency, or vice versa, does not make a person a dealer in foreign exchange because virtual currency is not “currency” under the BSA.