Regulatory and Legal Frameworks Flashcards
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Read the first 7 Regulatory and Legal Frameworks flashcards as text
Which type of stablecoin is most likely to face regulatory treatment as a security under U.S. law?
Answer: Crypto-collateralized stablecoins governed by a DAO with profit-sharing features
Stablecoins with profit-sharing or governance token features attached to a DAO may satisfy the Howey Test, making them more likely to be classified as securities by the SEC.
Under the Bank Secrecy Act (BSA), cryptocurrency exchanges registered as MSBs must retain transaction records for a minimum of:
Answer: 5 years
The BSA requires MSBs to maintain records of certain transactions and customer identification information for a minimum of five years.
The CFTC has asserted regulatory authority over Bitcoin primarily on what basis?
Answer: Bitcoin qualifies as a commodity under the Commodity Exchange Act (CEA)
The CFTC has consistently classified Bitcoin as a commodity under the CEA, giving it anti-fraud and anti-manipulation authority over Bitcoin spot and derivatives markets.
Which regulatory action best describes a 'Wells Notice' in the context of crypto enforcement?
Answer: A formal notification from the SEC that it intends to recommend enforcement action
A Wells Notice is the SEC staff's formal notification to a company or individual that it plans to recommend enforcement action, giving the recipient an opportunity to respond before charges are filed.
A DeFi protocol that pools user funds to generate yield and distributes profits to token holders is most analogous to which traditional regulated entity?
Answer: An investment company subject to the Investment Company Act of 1940
DeFi yield protocols that pool investor funds and distribute profits may fall under the Investment Company Act of 1940, which regulates entities that invest pooled capital on behalf of investors.
Under the EU's Transfer of Funds Regulation (TFR) as amended to align with MiCA, what information must accompany a crypto-asset transfer?
Answer: Originator and beneficiary information for all transfers regardless of amount
The amended EU TFR removes the €1,000 threshold that applied to traditional wire transfers, requiring VASPs to include originator and beneficiary information on ALL crypto-asset transfers, regardless of amount.
Which U.S. legal doctrine allows courts to infer that a digital asset is a security even when the asset itself conveys no formal ownership rights?
Answer: The Howey Test's 'efforts of others' prong
Under the Howey Test, profit expectation derived from 'the efforts of others' (including developers or promoters) can establish a security even if the token conveys no formal equity rights.