Cryptocurrency Regulation and Compliance 4

Question 1

What is the Howey Test used to determine in the context of cryptocurrency?

Accepted Answer

Whether a crypto asset qualifies as an investment contract (security)

Answer

The Howey Test, derived from a 1946 Supreme Court case, is the SEC's primary tool for determining whether a crypto token constitutes a security.

Question 2

Under FINCEN guidance, which of the following is generally classified as a Money Services Business?

Accepted Answer

A centralized crypto exchange accepting fiat deposits

Answer

Centralized exchanges that accept fiat and allow customers to buy/sell crypto are classified as MSBs and must register with FinCEN.

Question 3

What is a Virtual Asset Service Provider (VASP) according to FATF?

Accepted Answer

Any business that exchanges, transfers, or safeguards virtual assets for others

Answer

FATF defines VASPs broadly to include exchanges, wallet providers, and any entity conducting financial activities involving virtual assets on behalf of others.

Question 4

Which Wyoming law was groundbreaking because it recognized DAOs as legal entities?

Accepted Answer

The Wyoming Decentralized Autonomous Organization Supplement

Answer

Wyoming's DAO Supplement, passed in 2021, was the first US law to grant DAOs legal entity status as a type of LLC.

Question 5

If a US person receives cryptocurrency as payment for services, how should it be reported to the IRS?

Accepted Answer

As ordinary income at the fair market value on the date received

Answer

The IRS treats crypto received as payment for services as ordinary income valued at the fair market value on the date of receipt.

Cryptocurrency Practice Test

Cryptocurrency Practice Test

Cryptocurrency Regulation and Compliance 4