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Comment by axefrog | Hacker News Reader

How is he a money transmitter? His business is buying a product (Starbucks gift cards) and paying for them with Bitcoin. By your definition, a used car dealership that buys cars from the public and pays for them with cash is also a money transmitter.

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Gift cards are more like cash than goods. That is why "Federal tax law does not view giving an employee a turkey or a ham as the equivalent of giving an employee a gift card to purchase a turkey or a ham" [1].

[1] http://www.irs.gov/pub/irs-tege/p_4090_fed_0305_text.pdf

His definition isn't what's relevant--it's the legal definition of "money transmitter" that matters. Under the legal definition, the money transmitter rules can apply to businesses that exchange cash or cash-equivalent goods like gift cards.

Starbucks gift cards are relatively anonymous, can store varying amounts of money without being suspicious and are easily transferred and sold. They are a fantastic vector for transfering dirty cash

Anyway why worry? If bitcoin is anonymous, just host in 3rd world and work through ToR.

Yeah because the "third world" has better legal protection than the USA....

http://fincen.gov/statutes_regs/guidance/pdf/FIN-2013-G001.p...

That link is for "virtual currencies" and here's one for "prepaid access".

http://www.fincen.gov/statutes_regs/frn/pdf/Prepaid_Final_7-...

In summary, in the US you must know your customer, have anti-money-laundering procedures, file suspicious activity reports, keep records for law enforcement, etc. Highly regulated.

That was my thought too, but this is a common reaction so I'm definitely seeking clarification.

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