The US Securities and Exchange Commission (SEC) and the Financial Crimes Enforcement Network (FinCEN) have come down with serious regulatory decisions that will impact every Bitcoin-related business from exchanges like Coinbase, payment processors like BitPay, to even the Reddit tip bot you got Dogecoins from.
FinCEN’s two rulings say that despite trying to pass virtual currencies of as “not money” in order to escape regulation, they’re still money, and therefore a business that trades them is a Money Services Business (MSB) and requires a money transmitter license. What this means is now even *coin tipbots, which transfer money, have to register with FinCEN, implement an Anti-Money Laundering (AML) program, and a whole host of federal rules for recordkeeping and reporting suspicious activity that might look like money laundering or funding terrorism.
The SEC has been sending out inquiry letters to “hundreds of Bitcoin companies” that sold unregistered shares, or securities on crypto-exchanges like Counterparty or Crypto-stocks. Following similar reasoning as FinCEN’s ruling, just because you don’t call them “securities” doesn’t mean they’re not securities and will be regulated as such. Which means these hundreds of Bitcoin, Dogecoin, and other altcoin companies must now register with the SEC, turn over huge piles of documents, and issue financial statements for investors who wish to invest in them.
While some argue that Bitcoin, Dogecoin, and other altcoins thrive in these lawless environments, history says otherwise. The list of failed exchanges and markets, scam businesses, grows every day. In just these past 2 weeks, major altcoin exchange Justcoin was hacked and has collapsed, Bitcoin and altcoin exchange Moolah and Mintpay collapsed after revelations that its CEO is a serial con-artist, and the management of the bitcoin investment firm, Bitcoin Trader, has disappeared with all the invested money.
There’s no big government conspiracy. Regulators like FinCEN, the SEC, and the FTC only step in when consumer complaints reach them in large numbers. It’s the individual investors who have been screwed out of millions by these various cons that have complained. If the cryptocurrency market actually wants legitimacy, they have to stop playing word games, grow up, fill out the paperwork, and buy a tie.