> Cash is perfectly legal and so is any cash like instrument
With Bitcoin, you can squish around as to whether it’s a commodity or currency and argue as to the actual dollar amount transmitted. With a stable coin, you’re explicitly transmitting U.S. dollars in kind. That’s the AML difference
It’s marketed as a 1:1 equivalent for the regulated hard currency. It may be doing a bad job at that, but it’s essentially a bearer security for U.S. dollars. This case law has been long decided in respect of far cleverer schemes.
"An administrator or exchanger of convertible virtual currencies that (1) accepts and transmits a convertible virtual currency or (2) buys or sells convertible virtual currency in exchange for currency of legal tender or another convertible virtual currency for any reason (including when intermediating between a user and a seller of goods or services the user is purchasing on the user’s behalf) is a money transmitter under FinCEN's regulations, unless a limitation to or exemption from the definition applies to the person.
...
To the extent that a user mines Bitcoin and uses the Bitcoin solely for the user’s own purposes and not for the benefit of another, the user is not an MSB under FinCEN’s regulations, because these activities involve neither 'acceptance' nor 'transmission' of the convertible virtual currency and are not the transmission of funds within the meaning of the Rule" [1].
TL; DR Because "virtual currency does not have legal tender status in any jurisdiction," FinCEN does not consider it a "real currency" for purposes of its money transmission rules. Volatility is not taken into account in their analyses.
With Bitcoin, you can squish around as to whether it’s a commodity or currency and argue as to the actual dollar amount transmitted. With a stable coin, you’re explicitly transmitting U.S. dollars in kind. That’s the AML difference