CBP - Certified Bitcoin Professional Security and Regulatory Issues Questions and Answers

Question 1

A U.S.-based Bitcoin exchange identifies a series of complex transactions from a single user designed to obscure the source of funds, totaling over $5,000.
Under the Bank Secrecy Act (BSA), what is the exchange's primary obligation?

Accepted Answer

File a Suspicious Activity Report (SAR) with FinCEN.

Answer

File a Currency Transaction Report (CTR) with FinCEN.

Answer

Immediately freeze the user's account and report them to the IRS.

Answer

Report the user's capital gains to the Securities and Exchange Commission (SEC).

Question 2

According to the Internal Revenue Service (IRS) Notice 2014-21, how is Bitcoin treated for U.S. federal tax purposes, and what does this imply for users?

Accepted Answer

As property, meaning dispositions like selling or spending it are taxable events subject to capital gains or losses.

Answer

As a foreign currency, meaning gains and losses are only recognized when converted back to U.S. dollars.

Answer

As a security, requiring all transactions to be reported through a registered broker-dealer.

Answer

As a tax-exempt digital asset, meaning no taxes are due until the total value exceeds a certain lifetime limit.

Question 3

Which of the following represents the most significant and direct capability of an attacker who successfully controls more than 51% of the Bitcoin network's hash rate?

Accepted Answer

Prevent new transactions from being confirmed and reverse their own recent transactions (double-spend).

Answer

Change the block reward and create new bitcoins out of thin air.

Answer

Steal bitcoin from other users' wallets by forging their private keys.

Answer

Alter transactions from months or years ago deep within the blockchain.

Question 4

A user instructs their Virtual Asset Service Provider (VASP A) in the United States to send $4,000 worth of Bitcoin to another user at VASP B. Under FinCEN's interpretation of the Bank Secrecy Act's 'Travel Rule,' what is VASP A obligated to do?

Accepted Answer

Collect and transmit certain originator and beneficiary information to VASP B.

Answer

Nothing, as the transaction is below the $10,000 Currency Transaction Report threshold.

Answer

Only record the transaction hash on a public ledger for transparency.

Answer

File a report with the IRS detailing the potential capital gain for the sender.

Question 5

What is the primary motivation behind a 'dusting attack' on Bitcoin users?

Accepted Answer

To compromise the privacy of users by linking different addresses to a single entity.

Answer

To slow down the Bitcoin network by broadcasting thousands of small, spam transactions.

Answer

To steal small, negligible amounts of bitcoin from thousands of wallets simultaneously.

Answer

To test the network's capacity for handling a high volume of microtransactions.

Question 6

What is the primary regulatory objective for imposing Know Your Customer (KYC) and Anti-Money Laundering (AML) requirements on cryptocurrency exchanges?

Accepted Answer

To prevent the use of cryptocurrencies for illicit activities such as money laundering and terrorist financing.

Answer

To build a government database of all cryptocurrency holders for the purpose of future wealth taxes.

Answer

To protect investors from price volatility by ensuring they meet certain income requirements.

Answer

To guarantee that all exchange users have the technical expertise to manage their own private keys securely.

A U.S.-based Bitcoin exchange identifies a series of complex transactions from a single user designed to obscure the source of funds, totaling over $5,000.Under the Bank Secrecy Act (BSA), what is the exchange's primary obligation?

A U.S.-based Bitcoin exchange identifies a series of complex transactions from a single user designed to obscure the source of funds, totaling over $5,000.
Under the Bank Secrecy Act (BSA), what is the exchange's primary obligation?