Kenneth A. Blanco, director of the US Financial Crimes Enforcement Network (FinCen), recently insinuated that cryptocurrency regulations may be 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 his main concern regarding crypto?
At the conference, the FinCen head explained:
“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? Yes. The department updated regulatory language in 2011 to ensure that token exchanges qualified as money service businesses. The change tethered such operations to a panoply of financial regulations. Then, in 2014, the department weighed in on miners’ issues and exchange protocol legalities.
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 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.