By Julian Hattem - 01/31/14 12:40 PM EST
The Treasury Department has decided that people who mint or invest bitcoins do not need to register as money transmitters with the government.
The decision from the Financial Crimes Enforcement Network (FinCEN) helps clarify its previous statements about the government's regulation of virtual currency under the Bank Secrecy Act.
Bitcoins only exist virtually, but they can be exchanged for cash or used to buy goods and services at some stores.
Last year, FinCEN issued its first guidance on bitcoins declaring that bitcoin exchangers needed to register with the agency, like all other money transmitters do. The release was the government’s first attempt to regulate the currency and define how it should be viewed.
Bitcoins are created, or “mined,” by performing complex algorithms on a computer or system of computers.
According to FinCEN, someone who mines a virtual currency solely for their own use does not count as a money transmitter and does not need to register with the government. Neither does a company that buys and sells virtual currency as an investment for their own profits.
“Activities that, in and of themselves, do not constitute accepting and transmitting currency, funds or the value of funds, are activities that do not fit within the definition of 'money transmission services' and therefore are not subject to FinCEN’s registration, reporting, and recordkeeping regulations for [money service businesses],” Jamal El-Hindi, associate director for FinCEN’s policy division, wrote in the rulings.
Homeland Security and Governmental Affairs Committee Chairman Tom Carper (D-Del.), who has spent time studying bitcoins, said he was “encouraged” by the FinCEN decisions.
“These administrative rulings underscore the fact that this technology is evolving and that there is growing interest in utilizing it for a number of purposes,” he said in a statement to The Hill.
The rulings, he added, mean “those interested in virtual currencies can continue to explore business opportunities this technology offers while also adhering to federal law.”
-- This post was updated with comments from Carper at 1:29.p.m.