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FinCEN Included a “Wide Array of Virtual Currency Businesses” Under Its Watch, Director Says


Kenneth A. Blanco, Director of the US Financial Crimes Enforcement Network (FinCEN), recently spoke at the Chicago-Kent Block Tech Conference, revealing that the bureau has widened its purview, including an array of virtual currency businesses.

FinCEN, recognizing the impact that cryptocurrencies could have on economies, created a Bitcoin training program for tax examiners back in 2015. A few years later, the bureau has substantially increased its purview, keeping the cryptocurrency field under a careful watch.

Why FinCEN?

Speaking at last week’s Chicago-Kent Block Tech Conference, FinCEN’s directory Kenneth A. Blanco shared important insights on the work of the bureau and its involvement in the cryptocurrency field.

Blanco detailed that FinCEN’s regulations apply to both fiat transactions and those made with virtual currencies:

First, as our March 2013 guidance indicates, 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.  Thus, our regulations cover both transactions where the parties are exchanging fiat and convertible virtual currency, but also to transactions from one virtual currency to another virtual currency.

The director also said that the bureau is working closely with other federal regulators, revealing a coordinated and consolidated approach towards the field:

In addition, we are working closely with our federal regulatory colleagues, including the SEC and CFTC, for coordinated policy development and regulatory approaches, including addressing risks.

According to Blanco, these risks include illicit finance as well as fraud which surround Initial Coin Offerings (ICOs). The director urged businesses involving ICOs and cryptocurrencies, in general, to pay close attention to the existing obligations regarding anti-money laundering and terrorist financing.

Increased SAR Filings – A Good Thing

The director revealed that the bureau is receiving an increased amount of Suspicious Activity Reports involving cryptocurrencies:

We now receive over 1,500 SARs per month describing suspicious activity involving virtual currency, with reports coming from both MSBs in the virtual currency industry itself and other financial institutions.

He also mentioned that the industry itself is developing new technologies designated to identify suspicious activity in the field, helping the bureau to identify and investigate the same. According to the director, this allows the industry to further focus on innovation and legitimate applications.

A Proactive Approach

Blanco mentioned that FinCEN is actively working on developing information sharing programs which help other financial services in the sector battle illicit activity. In his words:

We are focused on swiftly and continuously building our capabilities and understanding in the emerging technologies space to (a) rapidly identify risks, (b) close gaps, and (c) support responsible innovation through clarity.

Do you think FinCEN’s proactive regulatory approach is beneficial for the cryptocurrency field? Don’t hesitate to let us know in the comments below!

Images courtesy of Flickr


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