The heads of three US financial regulators warned the industry cryptocurrency comply with banking laws in a joint statement released on Friday.
The statement, signed by Commodity Futures Trading Commission (CFTC) Chairman Heath Tarbert, Financial Crimes Enforcement Network (FinCEN) Director Kenneth White, and the Securities and Exchange Commission (SEC) Chairman Jay Clayton, “remembers” players in the space encryption must comply with various laws of banking and financial services in the US, regardless of what they call their cryptocurrencies or tokens.
Organisms that the Bank Secrecy Act (BSA), which describes how different financial services firms must register with regulators concerns.
Specifically, the agency explained that the “nature of the activities related to digital assets” a person is involved in will determine which bodies that person must register with, as well as other laws they need to meet.
“For example, something referred to as un’intercambio’en a market for digital assets may or may not also be considered as un’intercambio’ya that term is used under the federal securities laws,” the statement said, adding:
“As such, regardless of the label or terminology that market participants may use, or the level or type of technology employed, 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.”
White, Tarbert and Clayton define the scope of its agencies on cryptocurrencies and service providers additional comments published with the joint declaration against futures brokers, introducing brokers, exchanges, brokers and funds investment, as some examples. Each of the directors of the agencies went so far as to describe the types of companies monitor their regulatory bodies.
In his remarks, White apparently applied for service providers BSA virtual currency, noting that his agency issued interpretive guidance in May to address “sending money value denominated in the currency replacing” including cryptocurrencies.
“As stated in the 2019 CVC Guidance, a number of related digital assets qualify a person as an MSB [money services business] that is regulated by FinCEN activities,” he said. “BSA Regulations FinCEN also provides that any person registered with, and functionally regulated or examined by the SEC or the CFTC, ‘would not be subject to the obligations of BSA applicable to MSBs, but would be subject to the obligations BSA of such a type of regulated entity “.
Clayton said his agency’s mandate is to protect investors, ensure fair markets and help capital formation, which usually monitors the value space, but added that the BSA provides the SEC with some other requirements.
“The brokerages and investment funds are required to implement AML reasonably designed programs and report suspicious activity. These rules are not limited in their application to activities relating to digital assets that are ‘values’ under the federal securities laws, “he said.
Jay Clayton image via CoinDesk archives