U.S. Financial Watchdogs Draft Joint Statement on Cryptocurrency
Top financial regulators in the United States, including the Securities and Exchange Commission (SEC), the Commodity Futures Trading Commission (CFTC) and the Financial Crimes Enforcement Network (FinCEN) have issued a joint statement reminding cryptocurrency market participants of their anti-money-laundering (AML) and counter-terrorist financing obligations under the Bank Secrecy Act (BSA), reports EconoTimes on October 14, 2019.
Regulators Issue New Guidelines
In an effort to foster regulatory clarity and reduce uncertainty in the U.S. cryptospace, the heads of top financial regulatory agencies in the region have issued fresh guidelines to govern crypto market participants and stakeholders.
The statement which was jointly issued by SEC Chairman Jay Clayton, CFTC Chairman, Heath Tarbert, and FinCEN Director, Kenneth Blanco, aims to remind cryptocurrency exchanges and other bitcoin-linked businesses including futures commission merchants and broker-dealers of their obligations to tackle money laundering and terrorist financing.
Per the agency, all entities defined as “financial institutions” by the Bank Secrecy Act (BSA), including introducing brokers that fall under the purview of the CFTC, as well as those labelled as money services businesses by FinCEN, mutual funds and broker-dealers obligated to register with the SEC, are required to formulate robust AML/CFT programs.
What’s more, the authorities have also made it clear that crypto-linked businesses must also keep proper records of transactions while also ensuring that suspicious transactions are promptly reported to the agencies.
Importantly, the authorities have stated that while crypto market participants refer to digital assets using a vast array of labels which may not align with the definitions of the BSA, it is, however, the underlying economic activities of the asset that determines its categorization.
The agencies said:
“The nature of the digital asset-related activities a person engages in is a key factor in determining whether and how that person must register with the CFTC, FinCEN, or the SEC. for instance, certain “commodity”-related operations may trigger registration and other obligations under the Commodity Exchange Act (CEA), while certain securities-related activities may trigger registrations under the federal securities laws.
The financial regulators have stated categorically that all crypto-based businesses are expected to fulfill their AML/CFT and Suspicious Activity Reporting (SAR) obligations, whether they are dealing with securities or commodities.
In related news, on October 11, 2019, Heath Tarbert, CFTC Chairman declared that ether (ETH) is a commodity just like bitcoin (BTC).
On October 12, 2019, BTCManager informed that the SEC has filed an emergency order against Telegram (GRAM) and Telegram Open Network (TON) for selling unregistered security to U.S. investors via their multi-billion dollar initial coin offering (ICO).