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FinCEN issues new guidance on convertible virtual currencies

Fri, 10 May 2019, 09:49 am UTC

The Financial Crimes Enforcement Network (FinCEN) has issued guidance on cryptocurrencies in order to provide regulatory certainty for businesses and individuals.

Published on May 09, the guidance, Application of FinCEN’s Regulations to Certain Business Models Involving Convertible Virtual Currencies (CVC) has been issued in response to the queries from various financial institutions, law enforcement, and regulators concerning the regulatory treatment of multiple variations of businesses dealing in CVCs.

The latest guidance, FinCEN said, does not establish new regulatory expectations. It only consolidates current FinCEN regulations, guidance and administrative rulings relating to money transmission involving cryptocurrencies, and applies the same interpretive criteria to other common business models involving CVC.

“This guidance is intended to help financial institutions comply with their existing obligations under the BSA [Bank Secrecy Act] as they relate to current and emerging business models involving CVC,” the document states.

FinCEN clarified that its rules define certain businesses or individuals involved with CVCs as money transmitters subject to the same registration requirements and a range of anti-money laundering, program, recordkeeping, and reporting responsibilities as other money services businesses.

The guidance explains in detail how its money transmission regulations apply to several common business models involving transactions in CVC, including Peer-to-Peer (P2P) exchangers, CVC wallets, CVC kiosks, and Decentralized Applications (DApps), among others.

In addition to the guidance, FinCEN has also issued an Advisory on Illicit Activity Involving Convertible Virtual Currency to assist financial institutions in identifying and reporting suspicious activity related to criminal exploitation of CVCs for illicit activities such as money laundering and sanctions evasion, among others.

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