Regulation and Compliance Flashcards

Under the Bank Secrecy Act (BSA), cryptocurrency exchanges operating in the US must register with which agency?

Answer: FinCEN

Crypto exchanges are classified as Money Services Businesses (MSBs) and must register with FinCEN under the BSA.

What is the 'Travel Rule' in the context of cryptocurrency compliance?

Answer: A requirement to transmit sender/receiver information for transfers above $3,000

The Travel Rule requires VASPs to share originator and beneficiary information for transfers of $3,000 or more.

Which US regulatory framework requires cryptocurrency exchanges to implement AML and KYC programs?

Answer: Bank Secrecy Act

The Bank Secrecy Act mandates AML programs and KYC requirements for crypto exchanges classified as MSBs.

What does FATF stand for in cryptocurrency regulation?

Answer: Financial Action Task Force

The Financial Action Task Force (FATF) is an intergovernmental body that sets global AML and counter-terrorism financing standards.

In the US, which type of cryptocurrency product is most clearly regulated as a commodity?

Answer: Bitcoin

Bitcoin is widely recognized by the CFTC as a commodity, giving the CFTC jurisdiction over Bitcoin derivatives markets.

What is a Suspicious Activity Report (SAR) in crypto compliance?

Answer: A mandatory report filed by financial institutions when they detect potentially illegal activity

SARs must be filed with FinCEN by financial institutions, including crypto exchanges, when they detect transactions suspected of involving illicit activity.

Which US state was first to introduce a comprehensive cryptocurrency licensing framework known as the 'BitLicense'?

Answer: New York

New York's Department of Financial Services (NYDFS) introduced the BitLicense in 2015, requiring crypto businesses to obtain a license to operate in the state.