CBP Legal, Compliance, and Economic Implications of Bitcoin 2

Question 1

Under the Bank Secrecy Act (BSA), which type of business dealing in Bitcoin is typically classified as a Money Services Business (MSB)?

Accepted Answer

A Bitcoin exchange that accepts fiat currency

Answer

Bitcoin exchanges that convert fiat currency to cryptocurrency are classified as MSBs under the BSA and must register with FinCEN.

Question 2

Which U.S. agency requires cryptocurrency exchanges to file Suspicious Activity Reports (SARs)?

Accepted Answer

Financial Crimes Enforcement Network (FinCEN)

Answer

FinCEN requires MSBs, including crypto exchanges, to file SARs for transactions that appear suspicious or involve potential money laundering.

Question 3

What does the 'Travel Rule' require of cryptocurrency exchanges in the U.S. when transmitting funds?

Accepted Answer

Exchanges must pass sender and receiver identifying information to counterparty institutions

Answer

The Travel Rule requires that transmitting financial institutions pass along certain customer identifying information to the receiving institution when funds are transmitted.

Question 4

In the context of U.S. tax law, how does the IRS classify Bitcoin?

Accepted Answer

Property subject to capital gains tax

Answer

The IRS classifies Bitcoin as property, meaning capital gains rules apply when it is sold, exchanged, or used to purchase goods.

Question 5

Which economic concept best explains why Bitcoin has value despite not being backed by a physical commodity?

Accepted Answer

Network effects — value increases as more users adopt it

Answer

Bitcoin's value is partly explained by network effects: the more people and businesses accept it, the more useful and valuable it becomes.

(CBP) Certified Bitcoin Professional Practice Test

(CBP) Certified Bitcoin Professional Practice Test

CBP Legal, Compliance, and Economic Implications of Bitcoin 2