Mike Caldwell, the man who designed a set of collectible coins with Bitcoin keys hidden inside, has shut down his business after receiving a letter from the government.
The Financial Crimes Enforcement Network (FinCEN), a branch of the Treasury Department, informed him last month that minting physical bitcoins qualifies him as a money transmitter business, which means he needs to register at the federal level and probably get state licenses too.
Caldwell hasn't decided what to do yet. If he wants to continue doing business without fear of breaking the still-ambiguous law, he'd have to spend up to millions of dollars getting licensed in all 47 states that regulate money transmission.
For now, Caldwell has shuttered his business, Casascius Coins, until further notice. As regulators crack down on the largely shadowy virtual currency, smaller players are being driven out in favor of venture-backed companies.
Comments
It is logical, if these coins actually have bitcoin value then yea sure he should get the license. Sounds like he has not decided if he will shut down or apply for the license, though.
But if these are meant to just be “commemorative” and have no real value, all he can do is keep making them without the hidden bitcoin key inside. He could also take his business to a country that has no such regulations.
By Miku on 12.13.13 12:01pm
There is no value in the coin. The bitcoin is the value. The physical coin is a container that holds the crypto key for the actual bitcoin itself.
By chesterharry on 12.13.13 12:02pm
Is the “hidden” key inside these accessible though? Because if it is (and note I’m not sure how you transfer a bitcoin without “keeping” a copy) then it would count like having value.
By Miku on 12.13.13 12:09pm
You need to see the key to get the bitcoins. It basically just points to an address that holds the bitcoins.
It’s basically like a gift card. If you were to spend the Bitcoins at that address, the balance would be empty, and the coin worthless.
This is just proof that the finCEN doesn’t even understand how Bitcoin works.
By dsp4 on 12.13.13 12:23pm
Actually, it sounds like a pre-loaded Visa card, and those too are regulated.
By Miku on 12.13.13 12:40pm
hey, remember when gov’ts went after torrent sites that didnt actually host content?
technology is hard.
By Vellion on 12.13.13 12:54pm
hey, remember when all torrent sites were going down one by one? can’t remember? let me help you. Mininova, demonoid, …
By Hadi Farnoud on 12.13.13 3:59pm
Isohunt…
By AstroPop on 12.13.13 10:50pm
That’s his point exactly. Government agencies love shutting down stuff they don’t get.
By dsp4 on 12.15.13 3:24pm
If a mint is given silver to turn them into coins for a small portion of the silver, does that make the mint a “money transmitter”.
By HobGobblin on 12.13.13 12:53pm
If they’re coins you can use as currency, yes.
That’s why all these shady outfits like the Franklin Mint only mint “collectable” coins, or they register in places like Liberia and follow their laws and mint their currency. But Bitcoin doesn’t have a home country that would allow someone to do that.
By badasscat1 on 12.13.13 1:15pm
It’s just fancy gift cards.
By 72dpi on 12.16.13 3:26am
What is the issue that these coins address? The transactional nature of Bitcoin makes it suited for not needing a physical representation.
That being said once the coins are not actual currency. I don’t see how this is any different than putting them on a pretty paid card such as a gift card.
By chesterharry on 12.13.13 12:01pm
There are regulations and licenses involved there too.
This is a simple instance of someone starting a business without involving a lawyer first. And that’s just a dumb move.
By VoxMediaUser604384 on 12.13.13 12:06pm
What a sad world we live in.
By Bro! on 12.13.13 1:35pm
Not really. There needs to be a base level of regulation to keep people from starting sham companies and fleecing people. Well, reducing the rate at least.
By VoxMediaUser604384 on 12.13.13 1:57pm
A lawyer doesn’t prevent a new company from fleecing people. It’s another wall put in the way of people with an idea.
Besides, a lawyer would probably be better for making sure the fleecing was legal.
By ForYourHealth on 12.14.13 6:27am
A better analogy is a silver mint that takes silver bars and turns them into coins for a small portion of the silver (as payment). This has been legal for years and is the best analogy, because it is how coins were made in the first place.
The attempt to apply money transmission laws to Casascius is silly, because bitcoin by its very nature transient, and making bitcoin physical makes it just the opposite (non transient and more difficult to “transmit”). Basically, the money transmission laws have no moral force and are a joke of justice.
By HobGobblin on 12.13.13 1:01pm
They don’t address any issue. They’re a novelty. It’s essentially just a fancy themed box for storing your bitcoins in.
By notatoad on 12.13.13 3:16pm
The finCen definition makes no sense. "In particular, virtual currency does not have legal tender status in any jurisdiction. This guidance addresses “convertible” virtual currency. This type of virtual currency either has an equivalent value in real currency, or acts as a substitute for real currency."
So what they’re saying that anything that’s fungible and not legal tender is a virtual currency. Welcome to 2013, almost everything is fungible to an extent. What about a coin dealer? Art dealer? Used car dealer?
More reading: http://www.fincen.gov/statutes_regs/guidance/html/FIN-2013-G001.html
By mannyvel on 12.13.13 12:10pm
Usually there are good reasons for laws, and they have a “moral force”, but in this case the law has no moral force and is only a use of force with no morality behind it.
By HobGobblin on 12.13.13 1:06pm
Would like to get my paws on a “real” bit coin
By tomcat.50 on 12.13.13 12:45pm
Wait, remind me again how bitcoin is “largely shadowy”?
By Vellion on 12.13.13 12:53pm
For starters, it is not known who invented it.
By AstroPop on 12.13.13 10:52pm
Well no. Illegitimate players are being driven out in favor of companies that are willing to actually get the appropriate licenses. This is, in fact, what should happen if bitcoin ever really wants to be taken seriously as a currency. Nobody’s really going to start investing in it and using it until people have the confidence that it’s well regulated and that everybody involved is following some sort of standard that can be (and is) enforced.
You guys should be cheering stuff like this if you want bitcoin to be an ultimate success. This is part of the maturing of the currency.
By badasscat1 on 12.13.13 1:19pm