CCE Regulatory & Legal Framework 3

Question 1

Under FinCEN guidance, which entity is NOT classified as a Money Services Business for cryptocurrency purposes?

Accepted Answer

A user who mines Bitcoin for personal gain and converts it to fiat

Answer

FinCEN's 2013 guidance clarifies that a user who mines cryptocurrency and converts it to fiat for personal use is not an MSB; only exchangers and administrators are covered.

Question 2

Which US state was first to enact a comprehensive 'BitLicense' framework for virtual currency businesses?

Accepted Answer

New York

Answer

New York's Department of Financial Services issued the BitLicense regulation in 2015, the first state-level comprehensive licensing regime for virtual currency businesses.

Question 3

Under GDPR and blockchain, which principle creates tension because blockchain's immutability conflicts with data subject rights?

Accepted Answer

Right to erasure (right to be forgotten)

Answer

The GDPR's right to erasure conflicts with blockchain's immutability because on-chain personal data cannot easily be deleted once recorded.

Question 4

The Financial Action Task Force (FATF) uses what term to describe entities providing services related to virtual assets?

Accepted Answer

Virtual Asset Service Providers (VASPs)

Answer

FATF uses the term Virtual Asset Service Providers (VASPs) to describe businesses facilitating exchange, transfer, or custody of virtual assets.

Question 5

In the context of US tax law, how does the IRS classify Bitcoin and other cryptocurrencies for federal tax purposes?

Accepted Answer

Property

Answer

Per IRS Notice 2014-21, virtual currencies are treated as property for US federal tax purposes, meaning capital gains rules apply to disposals.

(CCE) Certified Cryptocurrency Expert Practice Test

(CCE) Certified Cryptocurrency Expert Practice Test

CCE Regulatory & Legal Framework 3