Practice Test Geeks(CCA) Certified Cryptocurrency Auditor Practice Test
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Regulatory and Legal Frameworks Flashcards

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  1. Under the Howey Test, which element is NOT required to classify a crypto token as a security?

    Answer: Physical delivery of the underlying asset

    The Howey Test has four prongs: investment of money, in a common enterprise, with an expectation of profits, derived from the efforts of others — physical delivery is not a factor.

  2. Which U.S. agency published guidance in 2019 stating that certain crypto-to-crypto exchanges do not require MSB registration because they involve no fiat currency?

    Answer: FinCEN

    FinCEN's May 2019 guidance clarified which crypto activities trigger MSB registration requirements, noting that certain peer-to-peer and software-only activities may not require registration.

  3. Wyoming's Special Purpose Depository Institution (SPDI) charter is significant because it allows banks to:

    Answer: Custody digital assets without obtaining federal deposit insurance

    Wyoming's SPDI charter allows banks to legally custody digital assets for customers without being required to carry FDIC insurance, making them 100% reserve institutions.

  4. Under OFAC sanctions rules, a U.S. crypto exchange must:

    Answer: Screen all transactions and block transfers involving sanctioned individuals, entities, or jurisdictions

    OFAC requires U.S. persons and entities, including crypto exchanges, to screen all transactions—regardless of amount—and block any involving parties or jurisdictions on OFAC's SDN or other sanctions lists.

  5. The 'crypto mom' nickname refers to which SEC commissioner known for advocating a regulatory 'safe harbor' for token projects?

    Answer: Hester Peirce

    SEC Commissioner Hester Peirce earned the nickname 'Crypto Mom' for her proposal of a three-year safe harbor that would allow token networks time to decentralize before being subject to securities laws.

  6. A VASP that provides custodial wallet services is generally considered to be which type of regulated entity under U.S. law?

    Answer: A money transmitter subject to FinCEN MSB registration

    Custodial wallet providers are generally classified as money transmitters and must register with FinCEN as MSBs and comply with applicable state money transmission licensing requirements.

  7. Which provision of the Infrastructure Investment and Jobs Act (2021) significantly expanded cryptocurrency tax reporting requirements?

    Answer: Sections 6045 and 6045A, redefining 'broker' to include crypto exchange operators

    The 2021 Infrastructure Act amended IRC Sections 6045 and 6045A to expand the definition of 'broker' to include crypto exchange operators, requiring them to report customer transaction data to the IRS.