Kenneth A. Blanco, director of the US Financial Crimes Enforcement Network (FinCen), recently insinuated that cryptocurrency regulations are in his agency’s sights.
First Things First: What is FinCen?
FinCen — the Financial Crimes Enforcement Network — is a treasury department tasked with fighting monetary crimes. Think: Law & Order: Financial Fraud Unit [cue obligatory “cha chung” sound effect]. Kenneth A. Blanco has marshaled the department since 2017.
How Does The Current FinCen Head Feel About Cryptocurrency?
Is Blanco, FinCen’s current director, anti-cryptocurrency? What seems to be Blanco’s main concern regarding crypto?
At the conference, the FinCen head explained his concerns:
“Nobody here today wants to see innovative products and services misused to support terrorism, facilitate child exploitation, or become another vehicle for criminals to carry out fraud, identity theft, corruption, or extortion. There are already too many victims out there who may never be made whole again, and harm can be done with devastatingly increasing speed, breadth, and obscurity in the digital world.”
The FinCen chief also touched on anti-money laundering (AML) and counter terrorism (CTF) protocols and noted the importance of unearthing “mixers” and “tumblers” that hide transactional origins and endpoints. While these services are not illegal per se, according to authorities, they should register as money service businesses and comply with all AML and CTF standards and regulations.
Blanco explained the agency’s stance on the issue:
“Further, businesses providing anonymizing services (commonly called “mixers” or “tumblers”), which seek to conceal the source of the transmission of virtual currency, are money transmitters when they accept and transmit convertible virtual currency, and, therefore, have regulatory obligations under the BSA.”
FinCen’s Crypto Regulatory History
Has FinCen already dabbled in cryptocurrency regulation?
In 2011 the department updated regulatory language so that token exchanges qualified as a money service business, thereby tethering such operations to the panoply of financial regulations. In 2014, the department heavily weighed in on the status of miners and protocol legalities regarding virtual currency trading platforms.
Do FinCen’s rules apply to cryptocurrencies?
Yes they do. At the conference, Blanco made it perfectly clear:
“FinCEN’s rules apply to all transactions involving money transmission—including the acceptance and transmission of value that substitutes for currency, which includes virtual currency.”
Connect With A Cryptocurrency Lawyer
Financial Crimes Enforcement Network regulations are not the only ones with which cryptocurrency investors and businesses must comply. Our crypto legal team regularly guides parties, step by step, through the digital currency compliance maze. We’ll make sure your ICO or investing strategies are on the right side of international, IRS, SEC, FinCen, and state regulations.
Give the Gordon Law Group a call today. The consultation is on us.