CCE Regulatory and Legal Frameworks 2 — Questions and Answers
Question 1: Which US agency primarily regulates cryptocurrency exchanges as money services businesses?
- SEC
- FinCEN (Correct answer)
- CFTC
- OCC
Correct answer: FinCEN
FinCEN (Financial Crimes Enforcement Network) requires cryptocurrency exchanges to register as money services businesses and comply with AML/BSA requirements.
Question 2: Under the EU's MiCA regulation, what does 'MiCA' stand for?
- Markets in Crypto Assets (Correct answer)
- Management of International Crypto Accounts
- Monetary Integration of Crypto Assets
- Multilateral Interoperability of Crypto Assets
Correct answer: Markets in Crypto Assets
MiCA stands for Markets in Crypto Assets, the EU's comprehensive regulatory framework for crypto-assets that came into force in 2023.
Question 3: A US cryptocurrency exchange that allows trading of crypto futures contracts must primarily register with which regulator?
- SEC
- FinCEN
- CFTC (Correct answer)
- FDIC
Correct answer: CFTC
The CFTC (Commodity Futures Trading Commission) has jurisdiction over cryptocurrency derivatives including futures contracts.
Question 4: What is the primary purpose of the Bank Secrecy Act (BSA) as applied to cryptocurrency businesses?
- To prevent banks from holding Bitcoin
- To require crypto businesses to report suspicious activity and maintain records (Correct answer)
- To ban anonymous cryptocurrency transactions
- To set maximum transaction limits for crypto
Correct answer: To require crypto businesses to report suspicious activity and maintain records
The BSA requires cryptocurrency businesses to implement AML programs, file SARs, and maintain transaction records to combat financial crimes.
Question 5: Which legal doctrine did the SEC use to classify many ICO tokens as securities?
- The Ripple Test
- The Howey Test (Correct answer)
- The Bitcoin Standard
- The Morrison Doctrine
Correct answer: The Howey Test
The Howey Test (from SEC v. W.J. Howey Co.) determines if an asset is an investment contract/security based on investment of money in a common enterprise with profit expectation from others' efforts.
Question 6: What is a 'Travel Rule' in the context of cryptocurrency regulation?
- Rules restricting cross-border crypto transfers
- Requirements for VASPs to share sender/receiver information on transfers above a threshold (Correct answer)
- Tax rules for crypto held in foreign wallets
- Regulations on crypto used for international travel payments
Correct answer: Requirements for VASPs to share sender/receiver information on transfers above a threshold
The Travel Rule (FATF Recommendation 16) requires Virtual Asset Service Providers to collect and transmit customer information for transfers above a specified threshold.
Question 7: In the US, which state first enacted a comprehensive 'BitLicense' framework for cryptocurrency businesses?
- California
- Wyoming
- New York (Correct answer)
- Texas
Correct answer: New York
New York was the first state to create a specific cryptocurrency business license (BitLicense) through the NY Department of Financial Services in 2015.
CCE Regulatory and Legal Frameworks 2
Which US agency primarily regulates cryptocurrency exchanges as money services businesses?