CCA Regulatory and Legal Frameworks 2 — Questions and Answers
Question 1: Under the FATF Travel Rule, what threshold triggers the requirement to transmit originator and beneficiary information for virtual asset transfers?
- $1,000 USD or equivalent (Correct answer)
- $3,000 USD or equivalent
- $5,000 USD or equivalent
- $10,000 USD or equivalent
Correct answer: $1,000 USD or equivalent
FATF Recommendation 16 requires VASPs to transmit originator and beneficiary information for virtual asset transfers at or above $1,000 USD (or equivalent in local currency).
Question 2: Which U.S. regulatory body has primary authority over cryptocurrency exchanges that list tokens deemed to be securities?
- FinCEN
- CFTC
- SEC (Correct answer)
- OCC
Correct answer: SEC
The SEC has primary authority over exchanges listing crypto tokens classified as securities under federal securities laws, including the Securities Exchange Act of 1934.
Question 3: New York's BitLicense, introduced in 2015, requires virtual currency businesses to do which of the following?
- Register as a money service business with FinCEN only
- Obtain a license from the NYDFS before conducting virtual currency business activity in New York (Correct answer)
- File quarterly reports with the SEC
- Obtain FDIC insurance for customer crypto holdings
Correct answer: Obtain a license from the NYDFS before conducting virtual currency business activity in New York
The BitLicense regulation (23 NYCRR Part 200) requires any entity engaging in virtual currency business activity involving New York residents to obtain a license from the New York Department of Financial Services (NYDFS).
Question 4: Under U.S. law, which of the following best describes how the IRS treats cryptocurrency received as payment for services?
- It is tax-exempt as a foreign currency equivalent
- It is treated as ordinary income at fair market value on the date received (Correct answer)
- It is treated as a capital gain regardless of holding period
- It is deferred until the cryptocurrency is sold or exchanged
Correct answer: It is treated as ordinary income at fair market value on the date received
Per IRS Notice 2014-21 and subsequent guidance, cryptocurrency received for services is treated as ordinary income equal to the fair market value of the crypto on the date of receipt.
Question 5: Which international body sets the global Anti-Money Laundering and Counter-Terrorism Financing (AML/CTF) standards that most countries adopt for virtual assets?
- The World Bank
- The Financial Action Task Force (FATF) (Correct answer)
- The Bank for International Settlements (BIS)
- The International Monetary Fund (IMF)
Correct answer: The Financial Action Task Force (FATF)
FATF is the intergovernmental body that sets international AML/CTF standards; its 2019 amendment to Recommendation 15 specifically extended these standards to virtual assets and VASPs.
Question 6: A cryptocurrency exchange that operates as a Money Services Business (MSB) must file a Suspicious Activity Report (SAR) with FinCEN when a suspicious transaction involves at least:
- $2,000
- $5,000 (Correct answer)
- $10,000
- $25,000
Correct answer: $5,000
Under the Bank Secrecy Act, MSBs (including crypto exchanges) must file a SAR for suspicious transactions involving $5,000 or more.
Question 7: The EU's Markets in Crypto-Assets (MiCA) regulation primarily aims to:
- Ban all algorithmic stablecoins across EU member states
- Create a harmonized regulatory framework for crypto-assets not covered by existing EU financial services law (Correct answer)
- Transfer oversight of Bitcoin to the European Central Bank
- Require all EU citizens to report crypto holdings above €1,000
Correct answer: Create a harmonized regulatory framework for crypto-assets not covered by existing EU financial services law
MiCA establishes a comprehensive, harmonized EU-wide regulatory framework for crypto-assets (including utility tokens, asset-referenced tokens, and e-money tokens) not already covered by existing financial services legislation.
CCA Regulatory and Legal Frameworks 2
Under the FATF Travel Rule, what threshold triggers the requirement to transmit originator and beneficiary information for virtual asset transfers?