Mike Caldwell spent years turning digital currency into physical
coins. That may sound like a paradox. But it’s true. He takes bitcoins —
the world’s most popular digital currency — and then he mints them here
in the physical world. If you added up all the bitcoins Caldwell has
minted on behalf of his customers, they would be worth about $82
Basically, these physical bitcoins are novelty items. But by moving
the digital currency into the physical realm, he also prevents hackers
from stealing the stuff via an online attack. Or at least he did. His
run as the premiere bitcoin minter may be at an end. Caldwell has been
put on notice by the feds.
Just before Thanksgiving, he says, he 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, which have become one of the most
recognizable images of the thoroughly intangible digital currency
Because the process is so complicated, Caldwell has stopped taking orders for his popular Casascius bitcoins — which have become one of the most recognizable images of the
thoroughly intangible digital currency. In recent months, the feds have
cracked down on many other bitcoin operations in similar ways, including
Mt. Gox, the most prominent online bitcoin exchange. But Caldwell’s
case is a little different. He doesn’t think he transmits money.
Caldwell doesn’t accept U.S. dollars or any type of fiat currency.
You send him bitcoins via the internet, and he sends you back metal
coins via the U.S. Postal Service. To spend bitcoins, you need a secret
digital key — a string of numbers and letters — and when Caldwell makes
the coins, he hides this key behind a tamper-resistant strip.
So long as you can keep your Casascius bitcoins safe, nobody can
learn the key. To date, Caldwell has minted nearly 90,000 bitcoins in
various denominations. That’s worth about $82 million at today’s
Caldwell takes a fee of about $50 on each coin he mints, but he
argues that sending the coins through the mail is not a way of
transmitting money. He thinks the coins should be viewed as