Is Coinbase legal?

If you look on eBay there are no Bitcoins for sale inside the USA. And according to Wikipedia:

In the US, the Financial Crimes Enforcement Network (FinCEN) established regulatory guidelines for “decentralized virtual currencies” such as Bitcoin, classifying American “Bitcoin miners” who sell their generated bitcoins as Money Service Businesses (or MSBs), that may be subject to registration and other legal obligations.

So how is it that anyone can sign up for a Coinbase account and then they have the option: to link a bank account i.e. “Bank Accounts – used to buy and sell bitcoins, U.S. only right now” and purchase the bitcoin currency?

Is Coinbase legal?

Well, I posted a question in the help section of Coinbase asking:

Is Coinbase legal? I read on Wikipedia that it is illegal to buy and sell bitcoins in the USA. Is that true?

Then I get a response via e-mail:

A public question has been updated: Link to Question

The only problem is that when I click on the link it goes to the general help section – i.e. the question has been deleted.

So I suppose the question of whether or not Bitcoin sales in the USA is still a grey area, and it seems Coinbase has responded by ignoring the question and/or trying to make it go away. Very odd. I checked the rest of their FAQ section and also their legal pages without seeing any comment on this.

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One Response to Is Coinbase legal?

  1. Andy Barratt says:

    Yes Bitcoin sales in America are legal. As you’ve stated, to sell Bitcoins legally in America, a company must be registered as an MSB. Coinbase.com is an MSB and so they must conform to Anti Money Laundering (AML) and Know Your Customer (KYC) regulations to stay legal. The reason many individuals don’t choose to sell their Bitcoin on eBay is because of PayPal. People would sell Bitcoin on eBay, the buyer would pay with PayPal. The buyer would receive their Bitcoin and then report to PayPal that they didn’t get it. PayPal would then ask the seller for proof that they sent the Bitcoin to that user which at the best of times, would be difficult to provide as all they would have is the logs of a transaction going to a random Bitcoin address that would be difficult to prove belonged to the buyer. At this point, PayPal would refund the transaction automatically leaving the seller with no cash in their PayPal or Bitcoin wallets. (This is why we can’t have nice things.)

    Coinbase is a fantastic and trusted service though as you’ve seen, they could be better at keeping on top of their support tickets and they have had issues with delayed transactions and downtime. I imagine the public question they’ve updated for you was a valid response and something just went wrong along the line, probably a genuine human error, don’t worry, respond to their email and ask for a different link… and hope they respond in a timely fashion.

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