CBP - Certified Bitcoin Professional Security and Regulatory Issues Questions and Answers

Question 1

A U.S.-based Bitcoin exchange identifies a series of complex transactions from a single user designed to obscure the source of funds, totaling over $5,000. Under the Bank Secrecy Act (BSA), what is the exchange's primary obligation?

Accepted Answer

File a Suspicious Activity Report (SAR) with FinCEN.

Answer

Cryptocurrency exchanges are considered Money Services Businesses (MSBs) and are required to file a Suspicious Activity Report (SAR) with the Financial Crimes Enforcement Network (FinCEN) for any suspicious transaction or pattern of transactions involving $2,000 or more. The scenario describes activity designed to hide the source of funds, which is a classic red flag for money laundering and triggers the SAR filing requirement.

Question 2

According to the Internal Revenue Service (IRS) Notice 2014-21, how is Bitcoin treated for U.S. federal tax purposes, and what does this imply for users?

Accepted Answer

As property, meaning dispositions like selling or spending it are taxable events subject to capital gains or losses.

Answer

The IRS has explicitly stated in Notice 2014-21 that it treats virtual currencies like Bitcoin as property for tax purposes. This classification means that when a user sells, trades, or uses Bitcoin to purchase goods or services, it is a taxable event. The user must calculate the difference between the fair market value at the time of disposition and their cost basis to determine if they have a capital gain or loss.

Question 3

Which of the following represents the most significant and direct capability of an attacker who successfully controls more than 51% of the Bitcoin network's hash rate?

Accepted Answer

Prevent new transactions from being confirmed and reverse their own recent transactions (double-spend).

Answer

A 51% attack grants the attacker control over the creation of new blocks. This allows them to create a private version of the blockchain that can eventually overtake the honest chain. With this power, they can choose to ignore certain new transactions (censorship) and, most importantly, reverse their own recent transactions by creating a new chain where those transactions never occurred, allowing them to 'double-spend' the coins. They cannot, however, change fundamental consensus rules like the block reward, steal private keys, or alter deeply confirmed past transactions.

Question 4

A user instructs their Virtual Asset Service Provider (VASP A) in the United States to send $4,000 worth of Bitcoin to another user at VASP B. Under FinCEN's interpretation of the Bank Secrecy Act's 'Travel Rule,' what is VASP A obligated to do?

Accepted Answer

Collect and transmit certain originator and beneficiary information to VASP B.

Answer

FinCEN's guidance clarifies that the 'Travel Rule' applies to virtual assets. For transfers at or above $3,000, the originating institution (VASP A) must collect and transmit specific information about the sender (originator) and receiver (beneficiary) to the receiving institution (VASP B). This rule is separate from the $10,000 CTR threshold, which applies to cash transactions.

Question 5

What is the primary motivation behind a 'dusting attack' on Bitcoin users?

Accepted Answer

To compromise the privacy of users by linking different addresses to a single entity.

Answer

In a dusting attack, an attacker sends tiny, traceable amounts of bitcoin ('dust') to a large number of addresses. The goal is to monitor these dust UTXOs. When the owner of a dusted wallet eventually combines the dust in a transaction with other funds, the attacker can link multiple addresses together, de-anonymizing the user and revealing information about their holdings and transaction patterns.

(CBP) Certified Bitcoin Professional Practice Test

(CBP) Certified Bitcoin Professional Practice Test

CBP - Certified Bitcoin Professional Security and Regulatory Issues Questions and Answers