The Department of Financial Regulation of Vermont has issued a letter to the operators of the state’s only bitcoin ATM suggesting that they may be subject to penalties for operating the machine without a money transmitter license.
Bitcoin ATM services operator PYC and Blu-Bin, a Burlington-based 3-D printing business, were both sent the correspondence, according to Vermont Public Radio, which went on to estimate the total liabilities for operating without a license at $85,000.
The agency has asserted that those involved with the machine were “knowingly engaging in a money service business” without a license, and as such, could face up to three years in prison. The $85,000 estimate includes a fine of $10,000 as well as $1,000 per day in administrative penalties.
PYC CEO Emilio Pagan-Yourno, however, downplayed the sensational claims in the article, suggesting that he has yet to personally receive a letter, and that further, his group has been in contact with state officials.
Pagan-Yourno reported that both PYC and Blu-Bin spoke to regulators two-and-a-half weeks ago, and that, due to his interpretation of state statues, he remains confident PYC needs no additional licensing in Vermont and that neither it nor Blu-Bin will pay any fines.
He told CoinDesk:
The letter alleges that to lawfully operate in the state, PYC requires a money transmission license, while Blu-Bin needs to be appointed as authorized delegates.
The Blu-Bin bitcoin ATM machine, however, is no longer active, he said, while discussions with regulators are ongoing.
PYC defiant to regulators
Pagan-Yourno went on to suggest that the incident calls into question the competence of regulators, and how well they understand bitcoin business models and services.
The CEO sought to position his company as one that was being singled out unfairly given that other online startups have been servicing state residents for some time.
"What they don't understand is that the business model doesn’t constitute as a money transmitter," he said.
In particular, Pagan-Yourno cited bitcoin services provider Coinbase as an example of a company that would require licensing should PYC need to obtain it as well.
Pagan-Yourno sought to paint PYC as compliant with regulations put forth by FinCEN, stating that the company has an MSB license in all 50 states.
Vermont image via Shutterstock