Cryptocurrency Regulation and Compliance 2 — Questions and Answers
Question 1: Under the Bank Secrecy Act (BSA), cryptocurrency exchanges operating in the US must register with which agency?
- SEC
- CFTC
- FinCEN (Correct answer)
- OCC
Correct answer: FinCEN
Crypto exchanges are classified as Money Services Businesses (MSBs) and must register with FinCEN under the BSA.
Question 2: What is the 'Travel Rule' in the context of cryptocurrency compliance?
- A rule limiting crypto transactions to domestic use only
- A requirement to transmit sender/receiver information for transfers above $3,000 (Correct answer)
- A rule prohibiting crypto use while traveling internationally
- A tax rule applied to crypto gains from foreign exchanges
Correct 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.
Question 3: Which US regulatory framework requires cryptocurrency exchanges to implement AML and KYC programs?
- Dodd-Frank Act
- Bank Secrecy Act (Correct answer)
- Securities Exchange Act of 1934
- Gramm-Leach-Bliley Act
Correct answer: Bank Secrecy Act
The Bank Secrecy Act mandates AML programs and KYC requirements for crypto exchanges classified as MSBs.
Question 4: What does FATF stand for in cryptocurrency regulation?
- Federal Authority for Token Frameworks
- Financial Action Task Force (Correct answer)
- Foreign Asset Transfer Fund
- Federal Anti-Fraud Team
Correct answer: Financial Action Task Force
The Financial Action Task Force (FATF) is an intergovernmental body that sets global AML and counter-terrorism financing standards.
Question 5: In the US, which type of cryptocurrency product is most clearly regulated as a commodity?
- Ethereum tokens
- Bitcoin (Correct answer)
- Stablecoins
- Security tokens
Correct answer: Bitcoin
Bitcoin is widely recognized by the CFTC as a commodity, giving the CFTC jurisdiction over Bitcoin derivatives markets.
Question 6: What is a Suspicious Activity Report (SAR) in crypto compliance?
- A report filed when a user attempts to withdraw more than $10,000
- A mandatory report filed by financial institutions when they detect potentially illegal activity (Correct answer)
- A quarterly audit report submitted to the SEC
- A user complaint report about suspicious market prices
Correct 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.
Question 7: Which US state was first to introduce a comprehensive cryptocurrency licensing framework known as the 'BitLicense'?
- California
- Texas
- Wyoming
- New York (Correct answer)
Correct 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.
Cryptocurrency Regulation and Compliance 2
Under the Bank Secrecy Act (BSA), cryptocurrency exchanges operating in the US must register with which agency?