Just before the start of a New Year's Eve party for Bitcoin enthusiasts, Andre De Castro, a Bitcoin entrepreneur, opened a long-awaited letter from the Financial Crimes Enforcement Network.

Under Fincen's March 2013 guidance, companies that transmit virtual currency must register as money services businesses. De Castro was unsure whether his investment company would be treated the same way. According to the letter from Fincen, its rules are not meant to apply to De Castro's business.

"To the extent that the company purchases and sells convertible virtual currency paying and receiving the equivalent value in currency of legal tender to and from counterparties, all exclusively as investments for its own account, it is not engaged in the business of exchanging convertible virtual currency for currency of legal tender for other persons," the letter to De Castro says.

De Castro wrote to Fincen in May, asking for an administrative ruling on his company, RightClick LLC. The investment company will use its eCoin Cashier software to buy bitcoins and other virtual currencies. RightClick offers to pay the bitcoin seller in U.S. dollars that can be delivered directly into the seller's bank account via automated clearing house (ACH) or transferred to a credit, debit or prepaid card account.

In August, he received a subpoena from the New York Department of Financial Services as part of a batch sent to 22 emerging payments companies, many of which handled digital currency.

"I'm happy to see Fincen clarifying guidance for companies that have very targeted approaches to dealing with purchases and sales of virtual currency for investment purposes," says De Castro. "This doesn't give [any company] the green light just to position itself as an investor. You must be very, very cautious."

Fincen did not respond to an inquiry by deadline.

The March guidance categorized exchangers and administrators as money services businesses (MSBs), mandating that the businesses register as such with the agency and create compliance programs for Know Your Customer and Anti-Money Laundering rules.

The guidance outlined how states could regulate virtual currency players as money transmitters needing to obtain a license in states that require it. Some Bitcoin businesses have had to suspend operations as they invest the time and money to obtain the proper licensing.

According to the letter to RightClick, because the company is working as an investor, Fincen does not see it as subject to MSB requirements. De Castro can resell the virtual currency, but for investment purposes only, the letter says.

"However, any transfers to third parties at the behest of the company's counterparties, creditors or owners entitled to direct payments should be closely scrutinized, as they may constitute as money transmission," says the Fincen letter.

RightClick will not be able to buy and sell as an exchange and cannot provide brokerage or other financial services for a commission, says the letter.

The letter ends with a note that Fincen could change its mind at any time and reach another conclusion.

"There's a lot of fear that regulation is going to be stifling and there's someone behind the scenes out to get Bitcoin," says Gil Luria, an analyst with Wedbush Securities. "This is a new distinction; regulators are trying to figure out where to draw the lines and so far they're drawing these lines in an accommodating way."

While the line seems thin, Luria says investors tend to hold onto the bitcoins they buy and wouldn't be transacting frequently. By comparison, the transactions of a money transmitter would be far more frequent and there would be both a sender and recipient with the third-party exchanger in the middle, he says.

Investors could also be governed by the Securities and Exchange Commission, which has rules for both short-term and long-term securities holdings, Luria says. This will also matter for tax purposes as short-term holdings are taxed on ordinary income rates while long-term holdings are taxed as capital gains, Luria says. 

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