According to the FinCEN letter, penned by Associate Policy Division Director Jamal El-Hindi, as long as the escrow service “played no active part in arranging, monitoring, verifying or endorsing the transactions that it processed” it was not acting as a transmitter, but rather as a discrete part of a larger money transmission process. Under the new rulings, bitcoin escrow services like LocalBitcoins and CoSign Coin would not be required to meet the strict, and often expensive requirements to secure a money transmitter license in every state in which they do business.
In a second letter, also written by El-Hindi, FinCEN addressed a relatively new trend in bitcoin law: Cloud-based mining. In a cloud-mining arrangement, a customer “rents” mining hardware for a contracted period of time, and claims all mining rewards during the duration. According to the agency, the rental of a computer system does not fit the definition of a money services business under the Bank Secrecy Act.
All virtual currency mined by the third party remains the third party’s property, and the Company has no access to the third party wallet, nor receives or pays virtual currency on the third party’s behalf.”
El-Hindi appears to be the de facto cryptocurrency expert at FinCEN, and further rulings on specific topics from him may be forthcoming as the bitcoin ecosystem continues to develop.