It appears that FinCEN has, at least to some extent, clarified the status of Bitcoin miners as Money Service Businesses (MSBs) under the federal Bank Secrecy Act (BSA). has posted the text of an unpublished administrative ruling from FinCEN responding to a request for clarification filed by Atlantic City Bitcoin LLC in June of this year.  While we have not yet been able to confirm it with FinCEN, the ruling appears to be genuine.  According to the text of the ruling posted on, Atlantic City Bitcoin would not be engaged in money transmission (and thus required to register with FinCEN as an MSB) if it (1) uses mined bitcoins to purchase goods or services from, or pay debts due to, others on its own behalf, (2) converts mined bitcoins into legal tender or other virtual currencies, or (3) transfers mined bitcoins to its owners.

Status of Mining Left Unclear by FinCEN’s Guidance on Virtual Currency

This clarification answers one of the questions left unaddressed by FinCEN’s March 18, 2013 Guidance concerning Bitcoin and other similar virtual currencies that have “real world” value (“convertible” virtual currencies in FinCEN’s parlance).  The Guidance defined the concepts of “exchangers,” “administrators,” and “users” of convertible virtual currency.  According to the Guidance, an administrator or exchanger that (1) accepts and transmits a convertible virtual currency or (2) buys or sells convertible virtual currency for any reason is a money transmitter under FinCEN’s regulations, unless one of several exemptions apply.  By contrast, a “user who obtains convertible virtual currency and uses it to purchase real or virtual goods or services” is not a money transmitter.  The open—and much debated—question was whether miners fall into the category of unregulated users or are money transmitters.

The Atlantic City Bitcoin Ruling

At least under the circumstances addressed by the Atlantic City Bitcoin ruling, we now know that miners spending or selling mined bitcoins are users are users and therefore are not subject to federal regulation as money transmitters.  FinCEN’s regulations define money transmission as “the acceptance of currency, funds, or other value that substitutes for currency from one person and the transmission of currency, funds, or other value that substitutes for currency to another location or person by any means.”  Applying that definition, the Atlantic City Bitcoin ruling holds that

To the extent that a user mines Bitcoin and uses the Bitcoin solely for the user’s own purposes and not for the benefit of another, the user is not an MSB under FinCEN’s regulations, because these activities involve neither “acceptance” nor “transmission” of the convertible virtual currency and are not the transmission of funds within the meaning of the Rule.  This is the case whether . . . the user is purchasing goods or services for the user’s own use, paying debts previously incurred in the ordinary course of business, or (in the case of a corporate user) making distributions to shareholders.

The ruling goes on to address the conversion of bitcoins into legal tender or other virtual currencies and holds that

In undertaking such a conversion transaction, the user is not acting as an exchanger, notwithstanding the fact that the user is accepting a real currency or another convertible virtual currency and transmitting Bitcoin, so long as the user is undertaking the transaction solely for the user’s own purposes and not as a business service performed for the benefit of another.  

That caveat that the sale of bitcoins by a user must be for the user’s “own purpose,” and not be “a business service performed for the benefit of another” bears emphasis as it is a potentially significant limitation on the scope of the ruling.  It suggests that the outcome may well be different if the seller of bitcoins was in the business of providing currency conversion services on behalf of its customers, e.g. selling bitcoins to its customers for dollars or other legal tender.  The ruling similarly emphasizes that in order to clearly fall outside of money transmission, the sale or transfer must be between the user/miner and the counter-party.  “Any transfers to third parties at the behest of sellers, creditors, owners, or counterparties involved in these transactions should be closely scrutinized, as they may constitute money transmission.”  Thus, while the ruling seems to fairly definitively resolve the status of individual miners selling or converting their mined bitcoins, there still may be room for further clarification.  For example, some observers have suggested that the ruling leaves open questions about the status of more complex arrangements such as hosted mining and mining pools.

One other aspect of the ruling is worth noting.  While the specific facts on which FinCEN ruled involved the use of mined Bitcoins, FinCEN was clear that its analysis did not turn on the bitcoins in question having been obtained by mining.  According to FinCEN, it doesn’t matter whether a miner/user obtains virtual currency by “earning,” “harvesting,” “mining,” “creating,” “auto-generating,” “manufacturing,” or “purchasing.”  Instead, FinCEN said, what matters is “what the person uses the convertible virtual currency for, and for whose benefit.”  This arguably goes a step past what FinCEN said the Guidance.  While FinCEN noted in the Guidance the same laundry-list of alternative methods of obtaining virtual currency, it wasn’t quite as definitive on the “how” not mattering.  This aspect of the ruling warrants further analysis.  It may in some cases beg more questions than it answers about the line between users and administrators or exchangers.

Caution Should Be Taken in Relying on the Ruling

In any case, caution should be taken in relying on the ruling.  As an unpublished decision it is in not binding on FinCEN, and it has no direct bearing on the status of mining and the sale and conversion of mined virtual currency under the various state money transmission statutes.   More generally, whether a particular transaction constitutes money transmission is a highly fact-specific analysis.  Anyone with questions about the ruling and how it affects their business should consult with a lawyer.