CBE Blockchain Governance and Regulatory Compliance 1 — Questions and Answers
Question 1: Which US regulatory body primarily oversees cryptocurrency exchanges and classifies many tokens as securities?
- SEC (Correct answer)
- CFTC
- FinCEN
- OCC
Correct answer: SEC
The SEC (Securities and Exchange Commission) applies the Howey Test to determine if tokens are securities and regulates exchanges accordingly.
Question 2: What is the primary purpose of on-chain governance in a blockchain network?
- To allow token holders to vote on protocol upgrades directly via the blockchain (Correct answer)
- To enable miners to approve all transactions
- To let developers push updates without community input
- To enforce KYC requirements automatically
Correct answer: To allow token holders to vote on protocol upgrades directly via the blockchain
On-chain governance lets token holders submit and vote on proposals—such as protocol upgrades—with results enforced automatically by the network.
Question 3: The Bank Secrecy Act (BSA) requires US crypto businesses to implement which compliance program?
- AML/KYC (Correct answer)
- GDPR
- PCI-DSS
- HIPAA
Correct answer: AML/KYC
The BSA mandates Anti-Money Laundering (AML) and Know Your Customer (KYC) programs for money services businesses, including many crypto firms.
Question 4: Which governance model uses a foundation or small committee to make protocol decisions, rather than broad token holder voting?
- Off-chain governance (Correct answer)
- On-chain governance
- Delegated governance
- Liquid democracy
Correct answer: Off-chain governance
Off-chain governance relies on informal processes—forums, foundations, or core teams—to reach consensus before implementing changes.
Question 5: What does FinCEN require of US-based cryptocurrency 'money services businesses' (MSBs)?
- Registration with FinCEN and adherence to AML/CTF rules (Correct answer)
- SEC registration as broker-dealers
- CFTC licensing as commodity pools
- Federal Reserve approval for all transactions
Correct answer: Registration with FinCEN and adherence to AML/CTF rules
FinCEN requires crypto MSBs to register, maintain AML programs, and file suspicious activity reports (SARs).
Question 6: In blockchain governance, what is a 'hard fork' typically used to resolve?
- Irreconcilable protocol disagreements that split the community (Correct answer)
- Minor bug fixes that are backward compatible
- Increasing block rewards temporarily
- Reducing transaction fees for a short period
Correct answer: Irreconcilable protocol disagreements that split the community
A hard fork creates a permanent divergence in the blockchain when the community cannot agree, resulting in two separate chains (e.g., Bitcoin vs. Bitcoin Cash).
CBE Blockchain Governance and Regulatory Compliance 1
Which US regulatory body primarily oversees cryptocurrency exchanges and classifies many tokens as securities?