Regulation and Compliance Flashcards
7 cards from real Cryptocurrency practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Regulation and Compliance flashcards as text
Under IRS guidance, how are cryptocurrency gains generally taxed in the United States?
Answer: As capital gains or ordinary income depending on holding period
Crypto held over one year qualifies for long-term capital gains rates; held under one year is taxed as ordinary income.
What is the purpose of a Currency Transaction Report (CTR) in crypto exchange compliance?
Answer: Report cash transactions exceeding $10,000 to FinCEN
CTRs must be filed with FinCEN for cash transactions exceeding $10,000, including when crypto is purchased with large cash amounts.
What does 'structuring' mean in the context of cryptocurrency compliance violations?
Answer: Breaking up transactions to avoid triggering reporting thresholds
Structuring (smurfing) is the illegal practice of breaking large transactions into smaller ones to evade CTR or SAR reporting requirements.
Which law gives the OFAC authority to sanction individuals and entities involved in cryptocurrency transactions?
Answer: The International Emergency Economic Powers Act (IEEPA)
OFAC derives much of its sanctions authority from IEEPA, allowing it to block assets and prohibit transactions with designated parties, including crypto wallets.
What is the significance of the SEC v. Ripple Labs case for US crypto regulation?
Answer: It challenged whether XRP was an unregistered security
The SEC sued Ripple claiming XRP was sold as an unregistered security, making this a landmark case for how tokens are classified under securities law.
A crypto exchange that operates a non-custodial peer-to-peer platform without holding customer funds is MOST likely classified as:
Answer: Potentially exempt from MSB registration requirements
FinCEN guidance suggests that purely non-custodial platforms that never control customer funds may not qualify as MSBs, though the analysis is fact-specific.
The EU's Markets in Crypto-Assets (MiCA) regulation primarily affects US crypto businesses that:
Answer: Offer services to EU customers or operate within EU member states
MiCA applies to crypto-asset service providers operating in or offering services to clients within the European Union, regardless of where the company is headquartered.