Regulatory and Legal Frameworks Flashcards
7 cards from real CCE practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Regulatory and Legal Frameworks flashcards as text
What is 'AML' and why is it critical for cryptocurrency compliance?
Answer: Anti-Money Laundering — prevents criminals from disguising illicit funds as crypto gains
AML (Anti-Money Laundering) refers to laws and procedures preventing criminals from disguising illegally obtained funds as legitimate income through crypto transactions.
Which Wyoming law was groundbreaking for allowing banks to hold cryptocurrency as custodians?
Answer: Wyoming SPDI (Special Purpose Depository Institution) statute
Wyoming's SPDI statute created a new bank charter type allowing institutions to provide crypto custody services without FDIC insurance requirements.
Under GDPR, what challenge does public blockchain data present?
Answer: The immutability of blockchain conflicts with the 'right to be forgotten'
GDPR's right to erasure (right to be forgotten) conflicts with blockchain's immutability, since personal data written to a public blockchain cannot be deleted.
What is a 'VASP' as defined by FATF?
Answer: Virtual Asset Service Provider — businesses offering crypto exchange or transfer services
A VASP (Virtual Asset Service Provider) is any business conducting virtual asset exchange, transfer, or custody services, subject to FATF's AML/CFT recommendations.
In the SEC's view, which of the following factors suggests a cryptocurrency is NOT a security?
Answer: It is sufficiently decentralized with no central team driving its value
SEC officials including former Director William Hinman suggested that sufficiently decentralized networks like Bitcoin may not be securities because no central enterprise drives investor returns.
What is the 'de minimis' exception in US crypto tax reporting?
Answer: Small personal-use crypto transactions may be exempt from capital gains reporting
Though not formally enacted by the IRS, proposed legislation and guidance have discussed de minimis exemptions for small everyday crypto purchases to reduce reporting burdens.
Which enforcement action established that cryptocurrency exchanges can be held liable for operating without proper registration?
Answer: CFTC v. BitMEX
CFTC v. BitMEX (2020) resulted in a $100M settlement after BitMEX operated an unregistered derivatives exchange and failed to implement AML programs.