Bitcoin Cloud Mining Services Are Not Considered Money Transmitters 

In a press release that came in a response after businesses requested a clearer understanding of FinCEN policies regarding Bitcoin cloud mining, it says that the US Department of the Treasury’s Financial Crimes Enforcement Network is clear that Bitcoin cloud mining services and Escrow services are not considered money transmitters.

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Cloud mining which consists of a customer leasing mining hardware capabilities through a cloud based service needed a greater clarity from FinCEN as here customers pay providers for the service through set contracts, which are usually monthly or yearly and there was a lot of misunderstanding whether the providers are money transmitters.

Now that FinCEN feels this type of business is not labeled under their Bank Secrecy Act, renting of mining computer systems to third parties does not make the Company a money transmitter under BSA regulations. The FinCEN said that this ruling is provided in accordance with the procedures set forth at 31 CFR Part 1010 Sub part G.

All virtual currency mined by the third party remains the third party’s property

The FinCEN also clarified that in terms of digital currencies being treated as property, 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. Thus, FinCEN finds that the Company is not functioning as an administrator of virtual currency.

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The question is also important as at various points of time some financial institution voiced for regulating the digital currency miners and investors under money transmission laws. However, now that it is clear that Bitcoin cloud mining services and Escrow services are not considered money transmitters, and they won’t be taxed.

Though Bitcoin mining has been rampant in the US, it was only in January of this year that FinCEN recognized it; however, it was unclear as to which ruling the digital mining space would fall under. Some Bitcoin miners then asked for clarity from FinCEN which has now made it clear that they are not money transmitters.

Nonetheless, the latest announcement is also to correct the misunderstanding that was created by FinCEN’s announcement from March 2013 wherein it had indicated that businesses took responsibility in having to comply with anti-money laundering, keeping records and reporting under FinCEN regulations.

Crypto Currency Crime Fighting

One of the barriers to Bitcoin becoming a sustainable digital or virtual currency has been its association with criminal or terrorist-related activity.

The anonymous nature of Bitcoin transactions meant that it quickly became the currency of choice for illegal or black-market activities that operated in the hidden zone known as the dark web.

So it has been interesting to read in recent news reports that Interpol, the international crime-fighting agency, is taking an active interest in crypto-currencies in its latest initiative to tackle crime around the world.

Fighting fire with fire

In an interesting move, Interpol has created its own crypto-currency and also developed a simulated version of a dark web market place similar to the notorious Silk Road website that was shut down by the FBI.

It seems as if these moves are part of a training exercise to help Interpol better understand the role that cryptocurrencies might play in illegal or black market transactions, a move to penetrate the secrecy of the dark web.

Understanding the technical nature of the Tor network of the dark web is essential if law enforcement agencies such as Interpol are to have any success in taking down online marketplaces that rely on the dark web to conceal their activities.

Does the dark web really exist?

It may sound like something out of science fiction, but the dark web isn’t quite as mysterious as it sounds. Essentially the dark web is part of the general internet, but to access it you need some specialist tools or software. A specialist Tor browser is really the starting point. The dark web was initially designed to protect the privacy of users (from such prying eyes as government agencies) but its anonymity has made it attractive to people seeking to keep their activities out of the reach of law enforcement agencies. The dark web is different to another part of the internet called the deep web. The deep web comprises about 95% of internet content which is not indexed by search engines – making it almost impossible to find unless you have a direct link to the relevant content.

Why is Bitcoin used on the dark web?

As a virtual, digital crypto-currency, Bitcoin is unregulated by any national bank or government agency. It is essentially self-regulated. But what makes it attractive as an online payment method for dark web transactions is that it helps to maintain the anonymity of the parties to the transaction. Even if law enforcement agencies are able to penetrate the secrecy of the dark web, they will still find it difficult to prove who has been responsible for the relevant transactions, thereby making it almost impossible to secure convictions.

The benefit of all of this scrutiny for Bitcoin holders is that it helps to demonstrate that the crypto-currency can play a legitimate role in the financial affairs of the world, increasing its acceptance as a valid payment method with a real value. The more that Bitcoin is accepted as a valid, mainstream payment method then the more sustainable the currency becomes and it’s a Guaranteed Fair on

Cryptographic money is advanced cash. That implies there’s no actual coin or bill — it’s all on the web. You can move digital currency to somebody online without a go-between, similar to a bank. Bitcoin and Ether are notable cryptographic forms of money, yet new digital currencies keep on being made.