FIN-2014-R007: Application of MSB regulations to the rental of computer systems for mining virtual currency
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Research, not advice. Part of the Bitcoin research archive (October 2026). Claims labelled unverified, contested or fringe are reported, not endorsed; statuses of bills and rules are as of the date checked. Government, court and patent records are public domain; the research notes are CC BY 4.0.
FIN-2014-R007
Issued: April 29, 2014
Subject: Application of Money Services Business regulations to the
rental of computer systems for mining virtual currency
Dear [ ]:
This responds to your letter mailed to us on February 26, 2014, seeking an
administrative ruling from the Financial Crimes Enforcement Network (“FinCEN”)
regarding the status of [ ] (the “Company”) as a money services business (“MSB”) under
the Bank Secrecy Act (“BSA”). Specifically, you ask whether the rental of computer
systems for mining virtual currency would make the Company an administrator of virtual
currency or a money transmitter under the BSA. Based on the following analysis of the
facts and circumstances described in your letter, FinCEN finds that the Company is not
functioning as an administrator of virtual currency and that the Company’s renting of
mining computer systems to third parties does not make the Company a money
transmitter under BSA regulations.
You state that the Company has developed a computer system that mines crypto
currencies. At times, the company rents this system to third parties in exchange for a
payment based on the rental period, which may extend from 24 hours to 30 days. The
third party will furnish the Company with limited information about its mining pool,
which the Company will enter into the system so the third party benefits directly and
exclusively from the mining work. 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.
On July 21, 2011, FinCEN published a Final Rule amending definitions and other
regulations relating to MSBs (the “Rule”).1 The amended regulations define an MSB as
“a person wherever located doing business, whether or not on a regular basis or as an
organized business concern, wholly or in substantial part within the United States, in one
or more of the capacities listed in paragraphs (ff)(1) through (ff)(6) of this section. This
includes but is not limited to maintenance of any agent, agency, branch, or office within
the United States.”2
BSA regulations, as amended, define the term “money transmitter” to include a
person that provides money transmission services, or any other person engaged in the
transfer of funds. The term “money transmission services” means the acceptance of
1
Bank Secrecy Act Regulations – Definitions and Other Regulations Relating to Money Services
Businesses, 76 FR 43585 (July 21, 2011).
2
31 CFR § 1010.100(ff).
currency, funds, or other value that substitutes for currency from one person and the
transmission of currency, funds, or other value that substitutes for currency to another
location or person by any means.3
On March 18, 2013, FinCEN issued guidance on the application of FinCEN’s
regulations to transactions in virtual currencies (the “guidance”).4 FinCEN's regulations
define currency (also referred to as "real" currency) as “the coin and paper money of the
United States or of any other country that [i] is designated as legal tender and that [ii]
circulates and [iii] is customarily used and accepted as a medium of exchange in the
country of issuance.”5 In contrast to real currency, “virtual” currency is a medium of
exchange that operates like a currency in some environments, but does not have all the
attributes of real currency. In particular, virtual currency does not have legal tender
status in any jurisdiction. The guidance addresses “convertible” virtual currency. This
type of virtual currency either has an equivalent value in real currency, or acts as a
substitute for real currency.
For purposes of the guidance, FinCEN refers to the participants in generic virtual
currency arrangements, using the terms “user,” “exchanger,” and “administrator.” A user
is a person that obtains virtual currency to purchase goods or services on the user’s own
behalf. FinCEN has determined that users are not money transmitters. An exchanger is a
person engaged as a business in the exchange of virtual currency for real currency, funds,
or other virtual currency. An administrator is a person engaged as a business in issuing
(putting into circulation) a virtual currency, and who has the authority to redeem (to
withdraw from circulation) such virtual currency. Both exchangers and administrators
may operate as money transmitters depending on the specific facts and circumstances.
According to your letter, the Company does not engage in the activities of an exchanger
or administrator. Instead, the Company provides a rental service to those interested in
using your computer system for mining virtual currencies administered by other entities.
As such, FinCEN finds that the Company is not functioning as an administrator of virtual
currency.
Further, FinCEN regulations stipulate that whether a person is a money
transmitter is a matter of facts and circumstances, and identifies circumstances under
which a person’s activities would not make such person a money transmitter. The rental
of computer systems to third parties is not an activity covered by FinCEN regulations.
The regulations specifically exempt from money transmitter status a person that only
provides the delivery, communication, or network data access services used by a money
transmitter to supply money transmission services.6 Based on this exemption, and on the
description of the service offered by the Company, we find that, even if the Company
rents a computer system to third parties that will use it to obtain convertible virtual
3
31 CFR § 1010.100(ff)(5)(i)(A) and (B).
4
FIN-2013-G001, “Application of FinCEN’s Regulations to Persons Administering, Exchanging, or Using
Virtual Currencies,” March 18, 2013.
5
31 CFR § 1010.100(m).
6
31 CFR § 1010.100(ff)(5)(ii)(A).
currency to fund their activities as exchangers, such rental activity, in and of itself, would
not make the Company a money transmitter subject to BSA regulation.7
This ruling is provided in accordance with the procedures set forth at 31 CFR Part
1010 Subpart G. In arriving at the conclusions in this administrative ruling, we have
relied upon the accuracy and completeness of the representations you made in your
communications with us. Nothing precludes FinCEN from arriving at a different
conclusion or from taking other action should circumstances change or should any of the
information you have provided prove inaccurate or incomplete. We reserve the right,
after redacting your name and address, and similar identifying information for your
clients, to publish this letter as guidance to financial institutions in accordance with our
regulations.8 You have fourteen days from the date of this letter to identify any other
information you believe should be redacted and the legal basis for redaction.
If you have questions about this ruling, please contact FinCEN's regulatory
helpline at (703) 905-3591.
Sincerely,
//signed//
Jamal El-Hindi
Associate Director
Policy Division
7
A number of older FinCEN administrative rulings, although not directly on point because they interpret an
older version of the regulatory definition of MSBs, explain the application of our definitions in comparable
situations. See, e.g., FIN-2009-R001, “Whether Certain Operations of a Service Provider to Prepaid Stored
Value Program Participants is a Money Services Business,” January 22, 2009, available at
http://www.fincen.gov/statutes_regs/guidance/pdf/fin-2009-r001.pdf.
8
31 CFR §§ 1010.711-717.