{"id":2808,"date":"2020-02-10T08:54:02","date_gmt":"2020-02-10T08:54:02","guid":{"rendered":"http:\/\/sygna.io\/?p=2808"},"modified":"2020-05-12T07:39:20","modified_gmt":"2020-05-12T07:39:20","slug":"fincen-digital-asset-cryptocurrency-regulations-2020-vs-2019","status":"publish","type":"post","link":"https:\/\/www.sygna.io\/zh-hant\/blog\/fincen-digital-asset-cryptocurrency-regulations-2020-vs-2019\/","title":{"rendered":"How FinCEN Set Up Its 2020 Cryptocurrency Regulation in 2019"},"content":{"rendered":"\n
<\/div>\n\n\n\n

The United States\u2019 presidency of the Financial Action Task Force (FATF)<\/a> in 2018\/2019 provided an opportune time for the U.S. to help establish a strong and cohesive global framework for the anti-money-laundering and combating-terrorism-funding (AML\/CFT) regulation of virtual assets. Without a doubt, the Financial Crimes Enforcement Network (FinCEN)<\/a>, the leading U.S. AML\/CFT regulator which enforces the country’s Bank Secrecy Act (BSA), played an important part in helping to implement the BSA’s “Travel Rule”<\/a> worldwide. <\/p>\n\n\n\n

\"\"<\/figure><\/div>\n\n\n\n

In 2019, FinCEN became noticeably more active and vocal in their regulation of virtual assets (also referred to as digital assets), in what was a clear end-of-decade push to tie their regulatory efforts since 2011 together and create a clear and comprehensive approach for 2020. <\/p>\n\n\n\n

Here follow FinCEN’s most important actions of 2019, with possible implications for 2020. <\/p>\n\n\n\n

\"\"\/
Kenneth Blanco, FinCEN Director (Coindesk)<\/a> <\/figcaption><\/figure><\/div>\n\n\n\n
<\/div>\n\n\n\n

April 2019: First Action vs Individual Crypto Trader<\/strong><\/h2>\n\n\n\n
<\/div>\n\n\n\n

In April 2019, FinCEN penalizes an individual for the first time<\/a> for failing to register as a money service business, in a move that shocks the crypto industry. <\/p>\n\n\n\n

Described as a peer-to-peer virtual currency exchanger, Californian resident Eric Powers was fined after failing to follow BSA money transmitter rules by not filing Currency Transaction Reports (CTRs) nor Suspicious Activity Reports (SAR) for any of his 200+ crypto transactions to the value of $10,000 during 2012-2014. <\/p>\n\n\n\n

At the time, Kenneth Blanco said the following:<\/a><\/p>\n\n\n\n

\u201cObligations under the BSA apply to money transmitters regardless of their size.\u201d<\/p><\/blockquote>\n\n\n\n

It wasn\u2019t the first time FinCEN targeted an individual dealing with cryptocurrency ( they prosecuted Theresa Tetley<\/a>, the \u201cBitcoin Maven\u201d in 2017 for facilitating the exchange of Bitcoin for cash). It was, however, the most significant action against a crypto-related entity since the $110m fining of the exchange BTC-e<\/a> and the subsequent arrest of its founder Alexander Vinnick.<\/p>\n\n\n\n

Without a doubt, this civil money penalty<\/a> was an unmistakable shot across the bows for the industry at large. It was clear now that FinCEN now expected any entity, which includes individuals or a business of any size, who exchanges virtual currency for anything other than personal use, to be subject to the laws of the BSA and compelled to fulfill all its regulations the same a compliant financial institution has to. <\/p>\n\n\n\n

<\/div>\n\n\n\n

May 2019: FinCEN consolidates a decade of regulation with 2 guidances<\/strong><\/h2>\n\n\n\n
<\/div>\n\n\n\n

In May 2019, FinCEN tied together nearly a decade of previous statements on virtual currencies (2011-2019) with two interpretive new guidances. <\/p>\n\n\n\n

FinCEN\u2019s CVC guidance, Regulations to Certain Business Models Involving Convertible Virtual Currencies<\/a>, warns crypto businesses that they are in fact MSBs due to their transacting with CVCs, and are therefore in breach of the BSA if they don\u2019t register and adhere to FinCEN policies. <\/p>\n\n\n\n

\"\"\/
Source: Fincen.gov<\/a><\/figcaption><\/figure><\/div>\n\n\n\n

FinCEN further takes aim at decentralized applications (dAPPS) <\/a>and says some of them are in fact also MSBs and therefore under their jurisdiction. <\/p>\n\n\n\n

FinCEN\u2019s second issuance, The Advisory on Illicit Activity Involving Convertible Virtual Currency<\/a> is arguably the most important update since the 2013 MSB guidance.<\/p>\n\n\n\n

In it, they mention that the 2011 and 2013 guidances had been \u201cexceptionally durable\u201d and therefore didn\u2019t need to be changed much. However, as the industry requested clearer guidelines, the May 2019 advisory did just that. <\/p>\n\n\n\n

The document consolidates contemporary FinCEN rules, guides, and rulings that involve money transmitters of virtual currency and is meant to help financial institutions comply with existing BSA obligations, the violations of which can result in significant criminal and civil liability to “money servicing businesses.”<\/p>\n\n\n\n

<\/div>\n\n\n\n

May 2019- FinCEN announces new \u201cInnovation Hours\u201d initiative<\/strong><\/h2>\n\n\n\n
<\/div>\n\n\n\n

In May 2019, FinCEN announced a new initiative, the Innovation Hours program, that would put them in touch with AML and CFT innovators and allow these companies to present their innovative solutions to FinCEN in person. Requests to meet with FinCEN are limited to companies who are already operating businesses and will be approved at the discretion of FinCEN on a rolling basis. The Innovation Hours initiative fits into a bigger program that tries to find novel ways of improving AML\/CFT compliance by involving key industry players, in order to shed light on specific challenges and gain better feedback. <\/p>\n\n\n\n

<\/div>\n\n\n\n

October 2019: FinCEN, SEC and CFTC release joint statement<\/strong> on digital assets<\/h2>\n\n\n\n
<\/div>\n\n\n\n
\"\"<\/figure><\/div>\n\n\n\n

In October 2019, FinCEN issues a joint statement<\/a> with the U.S. Securities and Exchange Commission (SEC) and U.S. Commodity Futures Trading Commission (CFTC) to provide a united AML\/CFT front and explain how they define and regulate digital assets. The joint statement foreshadowed the proposed Crypto-Currency Act of 2020 which followed two months later. <\/p>\n\n\n\n

The 3 leading U.S. crypto regulators intended to \u201cremind persons engaged in activities involving digital assets of their anti-money laundering and combating the financing of terrorism (AML\/CFT) duties” and that they should make sure that they stay compliant with Bank Secrecy Act (BSA).<\/p>\n\n\n\n

The statement also mentioned that any entity that is defined by the BSA as a “financial institution” should fulfill AML\/CFT duties, including “money services businesses (MSBs) as defined by FinCEN, and broker-dealers and mutual funds obligated to register with the SEC.\u201d<\/p>\n\n\n\n

The agencies also tried to clarify what constitutes \u201cdigital assets\u201d and acknowledged the fact that there were many different variants and concepts used by the cryptocurrency community. However, this might not be completely accurate, therefore participants should consider the \u201cfacts and circumstances underlying an asset, activity or service, including its economic reality and use (whether intended or organically developed or repurposed)\u201d.<\/p>\n\n\n\n

The three agency heads misters Heath Tarbert (CFTC), Jay Clayton (SEC) and Kenneth Blanco (FinCEN) also made extra comments to further define their agencies’ various roles in crypto-regulation. <\/p>\n\n\n\n