Regulation and Compliance Flashcards
7 cards from real Cryptocurrency practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Regulation and Compliance flashcards as text
A US crypto exchange discovers a customer is on OFAC's Specially Designated Nationals (SDN) list. What must it do?
Answer: Block the transaction and report to OFAC within 10 days
When a match with an SDN is found, exchanges must block the transaction and any associated funds, then file a blocked property report with OFAC.
Under the Infrastructure Investment and Jobs Act (2021), which new crypto reporting requirement was introduced?
Answer: Crypto brokers must report customer transactions to the IRS on Form 1099
The 2021 Infrastructure Act expanded the definition of 'broker' to include crypto platforms, requiring them to report user transactions to the IRS.
What is the primary purpose of a crypto exchange's AML compliance program?
Answer: To detect, prevent, and report money laundering and terrorist financing
AML programs are legally required to identify and prevent the use of crypto platforms for laundering illicit funds or financing terrorism.
What was the outcome of the FTX collapse regarding crypto regulation in the US?
Answer: It intensified calls for stronger regulation and led to increased enforcement actions
FTX's $8 billion fraud accelerated congressional and regulatory focus on crypto oversight, leading to more enforcement actions and regulatory proposals.
Which of the following activities would MOST likely cause a crypto exchange to file a Suspicious Activity Report (SAR)?
Answer: A customer repeatedly transacting just below $10,000 with no clear business purpose
Repeated transactions just below reporting thresholds (structuring) is a classic red flag that triggers SAR filing obligations.
Which regulatory body has primary oversight over crypto commodity derivatives in the United States?
Answer: Commodity Futures Trading Commission (CFTC)
The CFTC has jurisdiction over derivatives markets, including crypto futures, options, and swaps, particularly for commodities like Bitcoin.
A DeFi protocol operates entirely through smart contracts with no centralized operator. Under current US law, this MOST likely means:
Answer: Its regulatory status is legally uncertain and subject to ongoing debate
Regulators have not definitively resolved how decentralized protocols fit into existing frameworks, making DeFi compliance one of the most contested areas in crypto law.