Regulation

pelle edited this page Sep 13, 2010 · 3 revisions

This page should provide information and links about government regulation of various kinds of businesses using OpenTransact. Please create a heading for your country and help fill this out. First a general disclaimer. None of this should be taken as final legal advice. Talk to a lawyer (and report back please). The goal here is to give entrepreneurs an idea of what to expect.

United States

Generally speaking there seems to be a magic $1000/person per day limit for unregulated transfer systems. Stored Value of which a OpenTransact based system in theory would be is also currently unregulated, but it looks like this is going to change. e-Gold was in theory a stored value system as well, but were charged with operating a unregulated money transmitting business.

The theory (not legal advice) is that IF (big if) you limit transactions per account to $1000 per day (maybe even less to be more conservative) you might not have to register. Interesting question is also if that limit is for the payer or if the payee is included as well. If the $1000 limit includes receipts, then a merchant would quickly hit that limit.

Payment Systems

Payment Systems and Exchange agents appear to be what is known as Money Service Businesses (MSB) and fall under the jurisdiction of FinCen.

Usage Credits

Usage credits appear to be governed under the term “closed loop stored value” as they can only be redeemed directly with the issuer. OpenTransact would allow people to sell these credits on an exchange independently of the issuer. It needs to be clarified if it would still be a Closed Loop operator in this case.

Back Office

This ruling appears to show that anyone providing back office services for a MSB is not required to register.

European Union

The European Union has had common rules on Electronic Money Operators since 2000. The original rules E-Money directive 2000 required a minimum capital requirement of €1,000,000 (I think Doctor Evil played a hand in that number). Their updated e-money directive of 2009 lowers this to €350,000 which is still a sizable number. I’m still trying to decipher what this means as some sources claim it is €125,000.

Read and edit this page on EU Rules for more.

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