Maker of Physical Bitcoin Tokens Suspends Operation After Hearing from Federal Government
Mike Caldwell ran a business called Casascius that printed physical tokens with a bitcoin digital key on it, key hidden behind a tamper proof strip. He'd charge $50 worth of bitcoin to print a bitcoin key you sent him via computer on this token. Cool stuff--a good friend of mine found one sitting unnoticed in her tip jar from an event at which she sold her artisan lamps from 2011 and was naturally delighted given the nearly 1000x increase in value of a bitcoin since then.
So, you're making something fun, useful, interesting, harmless--naturally the federal government is very concerned and wants to hobble you.
Just before Thanksgiving, [Caldwell] received a letter from the Financial Crimes Enforcement Network, or FINCEN, the arm of the Treasury Department that dictates how the nation's anti-money-laundering and financial crime regulations are interpreted. According to FINCEN, Caldwell needs to rethink his business. "They considered my activity to be money transmitting," Caldwell says. And if you want to transmit money, you must first jump through a lot of state and federal regulatory hoops Caldwell hasn't jumped through.
Caldwell has stopped taking orders for his popular Casascius bitcoins….[he]argues that sending the coins through the mail is not a way of transmitting money. He thinks the coins should be viewed as collectibles.
But, clearly, that's not how the federal government sees things. If he doesn't verify or have a way of knowing whether the owner of the bitcoins is the same person he's sending the coins to, that's a problem….
Caldwell says there's no Casascius bank account for authorities to seize. But he adds that he has no desire to anger the feds, whether he agrees with them or not. So he's cranking out his last few orders and talking to his lawyer. He says this may spell the end of Casascius coins. "It's possible. I haven't come to a final conclusion," he says.
He's already been forced to spend $5,000 lawyering up since receiving that helpful letter from the feds.
I wrote back in May on FinCEN beginning to sniff around the world of bitcoin.