CBP Security and Regulatory Issues 3

Question 1

What does the FATF 'Travel Rule' require of virtual asset service providers (VASPs)?

Accepted Answer

VASPs must share originator and beneficiary information with counterpart VASPs for transfers above a threshold

Answer

The FATF Travel Rule requires VASPs to collect and transmit customer identifying information alongside crypto transfers, mirroring traditional wire transfer rules.

Question 2

Which Bitcoin security practice involves generating keys on a device that has never connected to the internet?

Accepted Answer

Cold storage

Answer

Cold storage means generating and keeping private keys entirely offline, eliminating remote attack vectors that target internet-connected systems.

Question 3

How does a 51% attack threaten Bitcoin network security?

Accepted Answer

It allows the attacker to rewrite recent transaction history and double-spend coins

Answer

Controlling over half the network hashrate lets an attacker mine a private chain longer than the honest chain, enabling double spends by replacing confirmed transactions.

Question 4

What is 'dusting' in the context of Bitcoin privacy attacks?

Accepted Answer

Sending tiny amounts of BTC to many addresses to trace wallet ownership

Answer

A dusting attack sends tiny, unusable amounts of Bitcoin to target addresses so that when those 'dust' UTXOs are spent, they reveal address clustering and potentially wallet ownership.

Question 5

Under U.S. law, how does the IRS currently treat Bitcoin and other cryptocurrencies?

Accepted Answer

As property, making each disposal a taxable event

Answer

IRS Notice 2014-21 and subsequent guidance classify cryptocurrency as property, so selling, trading, or spending it triggers capital gains or loss recognition.

(CBP) Certified Bitcoin Professional Practice Test

(CBP) Certified Bitcoin Professional Practice Test

CBP Security and Regulatory Issues 3