CCE Regulatory & Legal Framework 2 — Questions and Answers
Question 1: Which US agency issued the 2019 guidance clarifying that certain digital assets are 'investment contracts' subject to securities laws?
- CFTC
- SEC (Correct answer)
- FinCEN
- OCC
Correct answer: SEC
The SEC issued its Framework for 'Investment Contract' Analysis of Digital Assets in April 2019 to help issuers determine if their tokens qualify as securities.
Question 2: Under the EU's MiCA regulation, which category of crypto-asset issuers must hold minimum own funds of at least €350,000?
- E-money token issuers
- Asset-referenced token issuers
- Crypto-asset service providers (CASPs) (Correct answer)
- Utility token issuers
Correct answer: Crypto-asset service providers (CASPs)
MiCA requires crypto-asset service providers to hold minimum own funds of €50,000 to €150,000 depending on service type, while ART issuers face higher thresholds—but CASPs face the €350K floor for certain classes.
Question 3: What does the FATF 'Travel Rule' require Virtual Asset Service Providers (VASPs) to transmit?
- Transaction confirmation hashes to regulators
- Originator and beneficiary information for transfers above a threshold (Correct answer)
- KYC documents to central banks
- Proof-of-reserve certificates quarterly
Correct answer: Originator and beneficiary information for transfers above a threshold
FATF Recommendation 16 (Travel Rule) requires VASPs to collect and transmit originator and beneficiary identifying information for virtual asset transfers of $1,000/€1,000 or above.
Question 4: In the US, the Bank Secrecy Act (BSA) requires money services businesses to file a Currency Transaction Report (CTR) for cash transactions exceeding what amount?
- $1,000
- $5,000
- $10,000 (Correct answer)
- $25,000
Correct answer: $10,000
The BSA mandates CTR filing for cash transactions exceeding $10,000 in a single day, and this threshold also applies to MSBs handling cryptocurrency.
Question 5: Which landmark US court case established that the anti-fraud provisions of federal securities laws can apply to digital token sales?
- SEC v. Ripple Labs (Correct answer)
- SEC v. W.J. Howey Co.
- CFTC v. BitMEX
- United States v. Ulbricht
Correct answer: SEC v. Ripple Labs
SEC v. Ripple Labs (2020–ongoing) is the landmark case applying securities anti-fraud provisions to XRP token sales, though Howey established the underlying investment contract test.
Question 6: Which type of US regulatory framework governs a crypto exchange that only lists tokens deemed commodities, not securities?
- SEC registration as a national securities exchange
- CFTC registration as a designated contract market or SEF (Correct answer)
- FinCEN MSB registration only
- OCC special purpose national bank charter
Correct answer: CFTC registration as a designated contract market or SEF
Exchanges listing commodity tokens must register with the CFTC as a Designated Contract Market (DCM) or Swap Execution Facility (SEF) under the Commodity Exchange Act.
Question 7: What is the primary purpose of a 'safe harbor' proposal (like the one suggested by SEC Commissioner Hester Peirce) in the context of crypto token launches?
- To exempt all crypto from securities laws permanently
- To give token networks a grace period to achieve decentralization before securities rules apply (Correct answer)
- To allow unregistered exchanges to operate legally for two years
- To shield miners from commodity regulations
Correct answer: To give token networks a grace period to achieve decentralization before securities rules apply
Commissioner Peirce's Token Safe Harbor proposal would give blockchain projects a three-year grace period to decentralize their network before determining whether their tokens are securities.
CCE Regulatory & Legal Framework 2
Which US agency issued the 2019 guidance clarifying that certain digital assets are 'investment contracts' subject to securities laws?