Thread by @bharathrao

0/FinCEN guidance summary thread:
WARNING: I'm not a lawyer and this is not legal advice.
systems.cs.cornell.edu/docs/fincen-cv…

1/Software developers are not money transmitters unless ... they use the software to engage in a money transmission business. Protocols are not MSBs

Money transmission is accepting someone else's monetary value and sending to another person or place

2/MSB rules apply to Money TransmittERs. TransmittOR = person who sends. TransmittER = executes the send. (not the suffix OR vs ER)

3/Hierarchy of regulation: SEC first, CFTC next, FinCEN last (this is well-understood and not new). So derivatives contracts are regulated by CFTC unless they are under SEC jurisdiction such as single stock futures. And anything not regulated by either agencies is by FinCEN.

4/Issuers, buyers and sellers of securities and futures are outside scope of BSA. (They are covered by SEA, CEA etc. SEC and CFTC territory.) Note: you need to be registered and regulated by SEC/CFTC.

5/Infrequent and not-for-profit transactions that would otherwise be money transmission does not make one a money transmitter (ie, money transmission must be done as a business)

6/Transmission of tokens that represent money or ownership of commodity, future or security is money transmission. All fiat on/off ramps are money transmission. Crypto payment processors like Bitpay are MSBs

7/All centralized exchanges (crypto to crypto or crypto to fiat), escrow services and conditional exchange of value is money transmission. Dapps, mixers, privacy coin exchanger, and reserve based exchanges such as bancor & kyber. Crypto ATMs are MSBs.

9/Hosted (custodial) wallets: where host has total independent control of the value has obligations under BSA. User conducting a transaction through the unhosted wallet is doing so to purchase goods or services on the user’s own behalf, they are **NOT A money transmitter**

10/Resale of tokens by original buyer does not create BSA obligations.

All-in-all, sensible guidelines.

"the parties themselves settle any matched transactions through an outside venue (either through individual wallets or other wallets not hosted by the trading platform), the trading platform does not qualify as a money transmitter under FinCEN regulations"

On leverj, users settle themselves on the plasma chain, by providing their signatures on their orders.