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Blockchain Governance and Regulatory Compliance Flashcards

6 cards from real CBE practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.

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  1. Which US regulatory body primarily oversees cryptocurrency exchanges and classifies many tokens as securities?

    Answer: SEC

    The SEC (Securities and Exchange Commission) applies the Howey Test to determine if tokens are securities and regulates exchanges accordingly.

  2. What is the primary purpose of on-chain governance in a blockchain network?

    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.

  3. The Bank Secrecy Act (BSA) requires US crypto businesses to implement which compliance program?

    Answer: AML/KYC

    The BSA mandates Anti-Money Laundering (AML) and Know Your Customer (KYC) programs for money services businesses, including many crypto firms.

  4. Which governance model uses a foundation or small committee to make protocol decisions, rather than broad token holder voting?

    Answer: Off-chain governance

    Off-chain governance relies on informal processes—forums, foundations, or core teams—to reach consensus before implementing changes.

  5. What does FinCEN require of US-based cryptocurrency 'money services businesses' (MSBs)?

    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).

  6. In blockchain governance, what is a 'hard fork' typically used to resolve?

    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).