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U.S. SEC, CFTC, FinCEN issue rare statement warning crypto users to abide banking laws

Mon, 14 Oct 2019, 06:58 am UTC

The Securities and Exchange Commission (SEC), the Financial Crimes Enforcement Network (FinCEN), and the Commodity Futures Trading Commission (CFTC) have issued a three-party joint statement on cryptocurrency.

The rare statement warned crypto users that their activities must abide by their anti-money laundering (AML) and countering the financing of terrorism (CFT) obligations via the Bank Secrecy Act (BSA).

Among those AML/CFT obligations are the requirement to establish and implement an effective anti-money laundering program (AML Program) and recordkeeping and reporting requirements, including suspicious activity reporting (SAR) requirements,” the announcement stated.

Particularly, the agencies said that the “nature of the digital asset-related activities” a person joins in will determine what agencies a person should register with, including what other laws they need to abide.

They said that despite the label or terminology the market participants use, “it is the facts and circumstances underlying an asset, activity or service, including its economic reality and use (whether intended or organically developed or repurposed), that determines the general categorization of an asset, the specific regulatory treatment of the activity involving the asset, and whether the persons involved are ‘financial institutions’ for purposes of the BSA.”

The agencies defined digital assets in the statement as “instruments that may qualify under applicable U.S. laws as securities, commodities, and security- or commodity-based instruments such as futures or swaps.”

The signatories of the statement include CFTC Chairman Heath Tarbert, FinCEN Director Kenneth Blanco, and SEC Chairman Jay Clayton.

Just last week, Tarbert also opinioned that Ethereum’s ether, the second-largest cryptocurrency by market capitalization, is a commodity and not a security. He further suggested that the CFTC may soon allow ether futures to trade on the U.S. markets.

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