Here comes another news for the Cryptocurrency users and basically it is a warning to all the cryptocurrency users that their activities must abide by anti-money laundering (AML) and countering the financing of terrorism (CFT) obligations via the bank secrecy act (BSA).
This warning is given by a rare 3 party joint statement issued by the Securities and Exchange Commission (SEC), the Financial Crimes Enforcement Network (FinCEN) and the Commodity Futures Trading Commission (CFTC) which are the financial regulatory bodies of the US.
Here we look at the working of SEC whose mission is to protect investors and maintain fair, orderly and efficient markets and help in facilitating capital formation.
The FinCEN is the administrator of and lead regulator under the BSA. The mission of FinCEN includes protecting our financial system from illicit use, maintain our national security and protect the citizens of the country from harm.
The mission of CFTC includes promoting the integrity, resilience and vibrancy of the US and its derivatives markets through sound regulation. The key participants of CFTC include the board of trade, introducing brokers, swaps dealers, and many others.
The financial institution which is associated with AML or CFT consists of future commissions merchants, CFTC registered brokers, money services businesses (MSB’s) registered with FinCEN, and SEC-registered broker-dealer and mutual funds.
These institutions should look and place effective anti Money laundering rules and also record and reporting of suspicious transactions.
The agencies also cleared that the nature of the digital asset-related activities, a person is choosing will determine what agencies should a person register because the different digital asset is maintained by different agencies and they should also abide by the laws of the respective agencies. They also said that despite the label or terminology the market uses, the general categorization of an asset is determined by the facts and circumstances underlying the asset and also considers its economic aspects and also it’s used.
The agencies also defined digital assets as
“ instruments which may qualify under the applicable US laws as securities, commodities and security or commodity based things like futures or swaps”.
The joint statement which is issued has signatures of CFTC chairman Heath Tarbert, director of FinCEN Kenneth Blanco, and chairman of SEC Jay Clayton.
SEC chairman Jay Clayton also said that market participants which are receiving payments or are involved in other types of transactions in digital assets should take care of risks like anti Money laundering or terror financing which are present in transactions performed in cash mode.
If we talk about last week, CFTC chairman Heath Tarbert gave his opinion on Ethereum’s ether which is the 2nd largest Cryptocurrency if we talk about market capitalization, is a commodity and not a security. He also suggested that ether futures will be able to trade on the US markets because CFTC may soon provide the required permission for that.