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In a bid to counter the money laundering act and terrorist financing, US financial regulatory bodies have collaboratively issued a guideline for every crypto user. The trio consisting of the Securities and Exchange Commission (SEC), The Financial Crimes Enforcement Network (FinCEN) and the Commodity Futures Trading Commission (CFTC). The Fresh guidelines were drawn from the Bank Secrecy Act (BSA) which states the obligations of Counter-terrorist Financing and anti-money-laundering(AML).
SEC, FinCEN and CFTC Issue Fresh Guidelines
Following so many ambiguities in the US crypto space in which SEC has come out to clarify, (Recall in the previous article how SEC clarified that Bitcoin does not classify as a security, CFTC also clarified in a recent statement that Ether (ETH) is a commodity like Bitcoin), the Trio of SEC, FinCEN and CFTC have deemed it fit to address such uncertainties by issuing fresh guidelines. Also in a bid to call the attention of every crypto user(stakeholders inclusive) to their obligations of Counter-terrorist Financing and anti-money-laundering(AML). These new policies will act as a guide for all crypto market transactions.
Guidelines for Agencies
The classification of agency as defined in the new guidelines referred to all bodies so-called “financial institutions” as defined By BSA (Bank Secrecy Act) and introducing brokers inclusive, Money Services Businesses (these two are regulated by CFTC and FinCEN), mutual funds and broker-dealers under SEC purview must create rich vibrant AML/CFT programs.
Secondly, there has to be efficient record keeping of all transactions, in which suspicious transactions must be brought to the body’s notice immediately.
Guidelines for Crypto Users
The bodies stated that for every digital asset, the definitions of such assets by the user may be at variance with BSA’s definitions, but the common ground for the definition of such an asset is its underlying economic activities.
Guidelines for CFTC, FinCEN and SEC Registrations
Crypto users must come to the understanding that each digital asset has its classification and this classification determines which registration applies to it. The classification is however based on the crypto activities carried out by the individuals. CFTC is for commodity-related activities, while securities-related activities fall under SEC purview.
SEC recently filed an order against the duo of Telegram (GRAM) and Telegram Open Network (TON) for selling unregistered security to U.S. investors through their multi-billion dollar initial coin offering (ICO).
All crypto-related business is to perform their AML/CFT and Suspicious Activity Reporting (SAR) obligations regardless of whatever it deals in maybe securities or commodities.