U.S. Regulatory Agencies and Policies  (last updated September 2018)

Taxation - Dept of the Treasury

IRS Internal Revenue Service (Treasury) - tokens are property

Guidance on “virtual currencies” 2014 (Q-8) - can be capital gains on transactions, mining

Treasury Inspector General 2016 report on IRS incoherent approach

no like-kind exchanges (on real property only, under 2017 tax law)

IRS tracks bitcoin transactions (contract with Chainalysis)

Coinbase raid - IRS demanded customer id information

enforces FATCA - must report assets in foreign accounts

active crypto traders may qualify for trader tax status (TTS)

Section 988 currency transactions (guidance) - normally ordinary income

securities v. commodities taxation...

Securities / Commodities regulation - Independent agency and SROs (under the SEC)

SEC Securities & Exchange Commission (Independent)* - ICO tokens are securities 

enforces Securities Acts, FCPA, BSA (with FinCEN)

regulates exchanges, investment advisers and administrators - must register with SEC

narrow registration exemption for offers and sales outside the U.S.

Howey case (whether token = security), Munchee order (whether ICO token = security) Chairman; bitcoin a medium of exchange so not a security; staff: ether now has no central third party so not a security - SEC disclosures not required

ICO Investor Bulletin, SALI database

miners could be corporate partners under state law, so personally liable

principals could be personally liable

crypto custody requires “qualified custodian

CFTC Commodity Futures Trading Commission (a SRO) - tokens can be commodities

regulates futures, swaps, commodity futures-linked securities

certain persons must file “ownership and control” reports 

Introduction to Virtual Currency - LabCFTC Primer - Backgrounder on Virtual Currencies 

Court order: tokens are “goods” therefore commodities - disputed in separate case 

anti-fraud and manipulation enforcement authority over virtual currency cash markets

Commodities or futures contracts are not securities -

option on commodities futures contract = a security - performance depends on 3rd party

Other SROs (securities industry Self Regulatory Organizations overseen by the SEC)

FINRA Financial Industry Regulatory Authority - for broker dealers

        Report on Distributed Ledger Technology

        may assist the SEC in enforcement actions, including against compliance officers

requested information on crypto activity of members

CBOE Chicago Board of Options Exchange - bitcoin futures available for trading -

6.26.2018 BZX Exchange proposes first crypto-related rulemaking for SEC

NASDAQ - blockchain-based ETFs, Digital Currency Index, considering bitcoin futures 

NYSE (subsidiary of ICE, a RSA?!) - $14m fine for violating Reg SCI 

NFA National Futures Association - designated by CFTC as primary SRO for derivatives

Notice-Registered Securities Future Product Exchanges (notice registered with SEC)

CME Group (CME Chicago Mercantile Exchange, CBOT Chicago Board of Trade, NY Mercantile Exchange, NY Commodity Exchange) - bitcoin futures

Currency regulation - Dept of the Treasury and Independent agencies

FRB Federal Reserve Board (Independent) - bank holding companies

Federal Reserve Bank of New York

“Banking Bitcoin-Related Businesses”

Electronic Fund Transfer Act, Reg E: consumer disclosures

International Investment and Trade in Services Survey Act - foreign securities reporting

assists in enforcing the BSA/AML rules

OCC Comptroller of the Currency (Treasury) - national banks, federal savings assocs  

monetary transactions*

considering special purpose bank charters for fintech

BSA compliance for banks (can use as guidance) - enforces with FinCEN

FDIC Federal Deposit Insurance Corporation (Independent) - financial institutions

Nonbank Financial Institutions: Virtual Currency

supervises state-chartered banks not members of Fed Reserve

Criminal enforcement - Dept of the Treasury, Dept of Justice, Dept of State 

FinCEN Financial Crimes Enforcement Network (Treasury) - tokens are money

enforces Bank Secrecy Act + AML acts amending BSA over financial institutions/MSBs

crypto exchanges are MSBs - must file SARs and CTRs  (see FAQs)

2013 Guidance

AML (analysis) + KYC (identity) + CFT (pattern of asset flows) (2018 guidance)

Money Services Businesses (MSBs) must register with FinCEN 

BSA customer due diligence for securities dealers*  (FAQs)

2014 mining ruling

tools to fight corruption by foreign leaders pillaging their nations’ treasuries

Note: If US taxpayer’s wallet is held by non-US exchange, they may have to file a FinCEN FBAR report and an IRS Statement of Specified Foreign Financial Assets.

OFAC Office of Foreign Assets Control (Treasury) - trade sanctions and asset freezing 

may add digital currency addresses to the SDN List - requiring financial institutions

to screen individuals’ virtual currency addresses

FBI Federal Bureau of Investigation (Justice) - federal crimes

investigates securities fraud        

SEC and FBI raided AriseBank 1.26.18 - seized assets and funds raised from ICO

uses asset forfeiture - DOJ abuse

INL/C Office of Anti-Crime Programs (State) - international crime

organized crime, cybercrime, corruption, money laundering, counter terrorism financing,

IP protection

Consumer protection - Independent agencies

FTC Federal Trade Commission (Independent)- antitrust, unfair and deceptive practices

Credit Card Accountability Responsibility and Disclosure Act of 2009, FRB Regulation E -

FTC enforcement of FRB rules on gift cards

FTC v. BF Labs dba Butterfly Labs - subpoenaed bitcointalks messages, settled in 2016

CFPB Consumer Financial Protection Bureau (Independent) haha

accepts complaints about bitcoin 

General financial regulation - Independent boards and committees (under the Dept of the Treasury)

FSOC Financial Stability Oversight Council - from Dodd-Frank, chaired by Treasury Sec

“authority to designate a nonbank financial firm for tough new supervision”

CFIUS Committee on Foreign Investment in the United States - 31CFR Part 800

FIRRMA Foreign Investment Risk Review Modernization Act 

Treasury International Capital (TIC) System - data on capital flows into and out of the US

* The SEC cooperates with the Department of Justice Criminal Division, Fraud and Asset Forfeiture Money Laundering Sections; the IRS: the Department of Homeland Security, the Prosecution Authority of the Netherlands, the National Authority for Investigation and Prosecution of Economic and Environmental Crime in Norway (ØKOKRIM), the Swedish Prosecution Authority, the Office of the Attorney General in Switzerland, and the Corruption Prevention and Combating Bureau in Latvia, and law enforcement in the United Kingdom, France, and Ireland, including the British Virgin Islands Financial Services Commission, the Cayman Islands Monetary Authority, the Bermuda Monetary Authority, the Central Bank of Ireland, the Paris Court of Appeals, the Serious Fraud Office, and the Financial Control Authority.



US State Regulatory Agencies and Policies

All states -         Federal law prohibits money transmission without state license (where required)        

Multi-state compact for MSBs; ULC model state law: defines who has "control"

Business practices and consumer protection laws enforced by state AGs

California        Consumer Privacy Act, 2020: very broad definition of personal info, C&D letters

Delaware -        stock tracking on blockchain, Del Blockchain Initiative, smart UCC filings

Wyoming -         new asset class; utility tokens exempt from securities, money transfer, prop tax

New York -        Dept of Financial Services BitLicense

Texas -                Securities Bd, Dept of Banking cease-and-desist letters; BitConnect, AriseBank

Vermont -        Digital currency LLC introduced Jan 2018 - tax breaks stripped out in final

Illinois -                Chicago authorized real estate records on blockchain


International Regulatory Agencies and Policies

Multi-state -         FSB Financial Stability Board - Implications: Annex F; crypto monitoring metrics;

AML standards report 

FATF Financial Action Task Force - AML/CFT - 2018: new rules proposed

Egmont Group of Financial Intelligence Units (FinCEN is a member)

BIS Bank for International Settlements - private co. owned by 60 central banks

Currency exchange rates through forex trading (per The Balance) or by govts

        The Americas-        The Egmont Group


EU -                 GDPR General Data Protection Regulation (text, critique)

EU 2009/110/EC E-Money Directive (EMD) - payment services

European Central Bank (ECB) - says it has no power to regulate bitcoin 

European Securities & Markets Authority (ESMA) - considering CFDs on crypto

European Supervisory Authorities - virtual currencies not regulated

China -                 banned ICOs and domestic exchanges - BTCC and others leaving China

froze bitcoin accounts, ended mining incentives 

plans to ban trading on overseas exchanges

produces the most bitcoin; National Internet Finance Assoc (NIFA) self-reg org

cybercrime law

Bitcoin is virtual property July 2019


Australia        “just like money” so no GST on crypto purchases, Taxation Office guidance;

registration, AML rules for crypto exchanges - 3 exchanges registered as of 4.11;

India -                 Supreme Court recognizes dangers posed to liberty in a digital world

UK                plans to end anonymity for crypto traders due to AML, tax evasion crackdowns

Financial Conduct Authority (FCA) Project Innovate - Regulatory Sandbox

Germany         financial regulator BaFin

Sweden        land registry blockchain pilot (using centralized ID verification)

Switzerland          FINMA guidelines for ICOs; 3 types of tokens: payment, utility, asset + hybrids

Japan                 bitcoin is legal method of payment, with currency requirements,

biggest bank to release own cryptocurrency, 4.17 crypto exchanges must register

SKorea         trading hub -bars anonymous crypto trader accounts, fines unsecure user data;

will tax crypto exchanges at cumulative 24.2%

Israel                will tax tokens as property

Spain                Finance Ministry demands granular info on crypto transactions and parties

Singapore         national KYC utility for govt database and financial industry, cybercrime law

Philippines          rules for bitcoin exchanges

Iran                  growing bitcoin usage 

Thailand        SEC issues ICO rules

Israel                  plans to tax ICOs 

Nigeria                bitcoin to end-run currency controls restricting access to the dollar

Brazil                Securities & Exchange Commission (CVM) - no crypto by investment funds

Venezuela          bitcoin as peer exchange; government launched oil-backed token the “petro” 

Ecuador         state-run electronic money payment system

Zimbabwe          bitcoin as crisis currency 

Costa Rica

Tokenize-IT plans to launch tokens with a regulatory compliant framework. Costa

Rican regulators consider crypto assets a commodity, and we already have

the required broker-dealer and currency exchange licenses there.

United Kingdom - Financial Conduct Authority (“FCA”)

Switzerland - Swiss Financial Market Supervisory Authority (“FINMA”)

Singapore - Monetary Authority of Singapore, Securities and Futures Act (“SFA”)

Australia - Australian Securities and Investment Commission (“ASIC”), Corporations Act

Gibraltar - Gibraltar Financial Service Commission, Financial Services (Distributed Ledger Technology Providers) Regulations 2017

Germany - Federal Financial Supervisory Authority (“BaFin”)

Canada - Canadian Securities Administration (“CSA”) four-factor test

Israel - The Bank of Israel - individuals mining or trading cryptocurrencies in connection with businesses must pay a seventeen percent value-added tax (“VAT”) in addition to capital gains tax.”

France - Autorite Des Marchés Financiers (“AMF”)  

Spain - Banco de España and Comisión Nacional del Mercado de Valores (“CNMV”)

Poland - National Bank of Poland and Financial Supervision Commission, Polish Financial Supervision Authority (“KNF”)

Liechtenstein - Financial Market Authority  

China - has banned ICOs, the offering of coins, and the exchanges used to trade coins.

Luxembourg - Commission de Serveillance du Secteur Financier (“CSSF”)

Argentina - Unidad de Información Financiera Aquellos (Financial Information Unit)

Sweden - finansinspektionen (“FI”), FI cites European Securities and Markets Authority publications

Multi-state treaties - Treaties of the US

TPP - cross-border data transfers, IP, ISDS Investor-State Dispute Settlement

Basel II and Solvency II - reporting of portfolio risk data

Basel III - liquidity and capital rules

PCT Patent Cooperation Treaty, Paris Convention of 1883



*Definitions (U.S. federal law)

Monetary Instrument 

US coins/currency;

as the Secretary may prescribe by regulation, coins and currency of a foreign country, travelers’

checks, bearer negotiable instruments, bearer investment securities, bearer securities, stock on which title is passed on delivery, and similar material; and

as the Secretary shall provide by regulation for purposes of sections 5316 and 5331 [reporting],

checks, drafts, notes, money orders, and other similar instruments which are drawn on or by a foreign financial institution and are not in bearer form

(31USC Subtitle IV)


any note, stock, treasury stock, security future, security-based swap,

bond, debenture, evidence of indebtedness,

certificate of interest or participation in any profit-sharing agreement, collateral-trust certificate,

preorganization certificate or subscription,

transferable share, investment contract, voting-trust certificate, certificate of deposit for a security,

fractional undivided interest in oil, gas, or other mineral rights,

any put, call, straddle, option, or privilege on any security, certificate of deposit, or group or index of securities, or

any put, call, straddle, option, or privilege entered into on a national securities exchange relating to foreign currency, or,

in general, any interest or instrument commonly known as a “security”, or

any certificate of interest or participation in, temporary or interim certificate for, receipt for, guarantee of, or warrant or right to subscribe to or purchase, any of the foregoing.

(15USC 77b(a)(1)


wheat, cotton, rice, corn, oats, barley, rye, flaxseed, grain sorghums, mill feeds, butter, eggs,

Solanum tuberosum (Irish potatoes), wool, wool tops, fats and oils (including lard, tallow, cottonseed oil, peanut oil, soybean oil, and all other fats and oils), cottonseed meal, cottonseed, peanuts, soybeans, soybean meal, livestock, livestock products, and frozen concentrated orange juice, and all other goods and articles, except onions...

and motion picture box office receipts (or any index, measure, value, or data related to such

receipts), and

all services, rights, and interests (except motion picture box office receipts, or any index,

measure, value or data related to such receipts) in which contracts for future delivery are presently or in the future dealt in  7


Financial agency 

a person acting for a person...as a financial institution, bailee, depository trustee, or agent, or acting in a similar way related to money, credit, securities, gold, or a transaction in money, credit, securities, or gold. (31USC Subtitle IV)

Financial institution 

an insured bank (as defined in 12USC1813(h));

a commercial bank or trust company;

a private banker;

an agency or branch of a foreign bank in the United States;

any credit union;

a thrift institution;

a broker or dealer registered with the SEC under the Securities Exchange Act of 1934;

a broker or dealer in securities or commodities;

an investment banker or investment company;

a currency exchange;

an issuer, redeemer, or cashier of travelers’ checks, checks, money orders, or similar instruments;

an operator of a credit card system;

an insurance company;

a dealer in precious metals, stones, or jewels;

a pawnbroker;

a loan or finance company;

a travel agency;

a licensed sender of money

or any other person who engages as a business in the transmission

of funds, including any person who engages as a business in an informal money transfer system or any network of people who engage as a business in facilitating the transfer of money domestically or internationally outside of the conventional financial institutions system;

a telegraph company;

a business engaged in vehicle sales, including automobile, airplane, and boat sales;

persons involved in real estate closings and settlements;

the United States Postal Service;

an agency of the United States Government or of a State or local government carrying out a duty or power of a business described in this paragraph;

a casino, gambling casino, or gaming establishment with an annual gaming revenue of more than

$1,000,000 which—is licensed as a casino, gambling casino, or gaming establishment...

any business or agency which engages in any activity which the Secretary of the Treasury

determines, by regulation, to be an activity which is similar to, related to, or a substitute for any activity in which any business described in this paragraph is authorized to engage; or any other business designated by the Secretary whose cash transactions have a high degree of usefulness in criminal, tax, or regulatory matter.

(31USC Subtitle IV)


any organization, association, or group of persons, whether incorporated or unincorporated,

which constitutes, maintains, or provides a market place or facilities for bringing together purchasers and sellers of securities or

for otherwise performing with respect to securities the functions commonly performed by a stock

exchange as that term is generally understood, and

includes the market place and the market facilities maintained by such exchange

(15 USC 78c(a)(1))


anyone in the business of effecting transactions in securities for the account of others.

exception for certain bank activities.—tl;dr (15USC 78c (a)(4))


any person engaged in the business of buying and selling securities (not including security-based

swaps, other than security-based swaps with or for persons that are not eligible contract

participants) for such person’s own account through a broker or otherwise...

does not include a person that buys or sells securities (not including security-based swaps,

other than security-based swaps with or for persons that are not eligible contract participants) for such person’s own account, either individually or in a fiduciary capacity, but not as a part of a regular business.

exception for certain bank activities. tl;dr  (15USC 78c (a)(4))

Investment “adviser” 

any person who, for compensation, engages in the business of advising others,

either directly or through publications or writings,

as to the value of securities or as to the advisability of investing in, purchasing, or selling securities,

or who, for compensation and as part of a regular business, issues or promulgates analyses or

reports concerning securities;

but does not include

a bank...,

any lawyer, accountant, engineer, or teacher whose performance of such services is

solely incidental to the practice of his profession;

any broker or dealer whose performance of such services is solely incidental to the

conduct of his business as a broker or dealer and

who receives no special compensation therefor;

the publisher of any bona fide newspaper, news magazine or business or financial

publication of general and regular circulation;

any person whose advice, analyses or reports relate to no securities

other than securities which are direct obligations of or obligations guaranteed as to principal or interest by the United States,...

any nationally recognized statistical rating organization, as that term is defined in...

[15 U.S.C. 78c(a)(62)],

unless such organization engages in issuing recommendations as to

purchasing, selling, or holding securities or in managing assets,

consisting in whole or in part of securities, on behalf of others;

any family office, as defined by rule, regulation, or order of the Commission, in

accordance with the purposes of this subchapter; or

such other persons not within the intent of this paragraph, as the Commission may

designate by rules and regulations or order.


Stored value (California)

monetary value representing a claim against the issuer that is

(ii) stored on an electronic or digital medium and evidenced by an electronic or digital

record, and that is

(iii) intended and accepted for use as a means of redemption for money or monetary value or payment for goods or services

does not include a credit card voucher, letter of credit, or any stored value that is only redeemable

by the issuer for goods or services provided by the issuer or its affiliate, except to the extent required by applicable law to be redeemable in cash for its cash value.

(Cal. Fin. Code § 2003(v))

Money services business

(ff)Money services business. A person wherever located doing business, whether or not on a regular basis or as an organized or licensed business concern, wholly or in substantial part within the United States, in one or more of the capacities listed in paragraphs (ff)(1) through (ff)(7) of this section. This includes but is not limited to maintenance of any agent, agency, branch, or office within the United States.

(1)Dealer in foreign exchange. A person that accepts the currency, or other monetary instruments, funds, or other instruments denominated in thecurrency, of one or more countries in exchange for the currency, or other monetary instruments, funds, or other instruments denominated in thecurrency, of one or more other countries in an amount greater than $1,000 for any other person on any day in one or more transactions, whether or not for same-day delivery.

(2)Check casher -

(i)In general. A person that accepts checks (as defined in the Uniform Commercial Code), or monetary instruments (as defined at § 1010.100(dd)(1)(ii), (iii), (iv), and (v)) in return for currency or a combination of currency and other monetary instruments or other instruments, in an amount greater than $1,000 for any person on any day in one or more transactions.

(ii)Facts and circumstances; Limitations. Whether a person is a check casher as described in this section is a matter of facts and circumstances. The term “check casher” shall not include:

(A) A person that sells prepaid access in exchange for a check (as defined in the Uniform Commercial Code), monetary instrument or other instrument;

(B) A person that solely accepts monetary instruments as payment for goods or services other than check cashing services;

(C) A person that engages in check cashing for the verified maker of the check who is a customer otherwise buying goods and services;

(D) A person that redeems its own checks; or

(E) A person that only holds a customer's check as collateral for repayment by the customer of a loan.

(3)Issuer or seller of traveler's checks or money orders. A person that

(i) Issues traveler's checks or money orders that are sold in an amount greater than $1,000 to any person on any day in one or more transactions; or

(ii) Sells traveler's checks or money orders in an amount greater than $1,000 to any person on any day in one or more transactions.

(4)Provider of prepaid access -

(i)In general. A provider of prepaid access is the participant within a prepaid program that agrees to serve as the principal conduit for access to information from its fellow program participants. The participants in each prepaid access program must determine a single participant within theprepaid program to serve as the provider of prepaid access.

(ii)Considerations for provider determination. In the absence of registration as the provider of prepaid access for a prepaid program by one of the participants in a prepaid access program, the provider of prepaid access is the person with principal oversight and control over the prepaid program. Which person exercises “principal oversight and control” is a matter of facts and circumstances. Activities that indicate “principal oversight and control” include:

(A) Organizing the prepaid program;

(B) Setting the terms and conditions of the prepaid program and determining that the terms have not been exceeded;

(C) Determining the other businesses that will participate in the prepaid program, which may include the issuing bank, the payment processor, or the distributor;

(D) Controlling or directing the appropriate party to initiate, freeze, or terminate prepaid access; and

(E) Engaging in activity that demonstrates oversight and control of the prepaid program.

(iii)Prepaid program. A prepaid program is an arrangement under which one or more persons acting together provide(s) prepaid access. However, an arrangement is not a prepaid program if:

(A) It provides closed loop prepaid access to funds not to exceed $2,000 maximum value that can be associated with a prepaid access device or vehicle on any day;

(B) It provides prepaid access solely to funds provided by a Federal, State, local, Territory and Insular Possession, or Tribal government agency;

(C) It provides prepaid access solely to funds from pre-tax flexible spending arrangements for health care and dependent care expenses, or from Health Reimbursement Arrangements (as defined in 26 U.S.C. 105(b) and 125) for health care expenses; or

(D) (1) It provides prepaid access solely to:

(i) Employment benefits, incentives, wages or salaries; or

(ii) Funds not to exceed $1,000 maximum value and from which no more than $1,000 maximum value can be initially or subsequently loaded, used, or withdrawn on any day through a device or vehicle; and

(2) It does not permit:

(i) Funds or value to be transmitted internationally;

(ii) Transfers between or among users of prepaid access within a prepaid program; or

(iii) Loading additional funds or the value of funds from non-depository sources.

(5)Money transmitter -

(i)In general.

(A) A person that provides money transmission services. The term “money transmission services” means the acceptance of currency, funds, or other value that substitutes for currency from one personand the transmission of currency, funds, or other value that substitutes for currency to another location or person by any means. “Any means” includes, but is not limited to, through a financial agency or institution; a Federal ReserveBank or other facility of one or more Federal Reserve Banks, the Board of Governors of the Federal Reserve System, or both; an electronic funds transfer network; or an informal value transfer system; or

(B) Any other person engaged in the transfer of funds.

(ii)Facts and circumstances; Limitations. Whether a person is a money transmitter as described in this section is a matter of facts and circumstances. The term “money transmitter” shall not include a person that only:

(A) Provides the delivery, communication, or network access services used by a money transmitter to support money transmission services;

(B) Acts as a payment processor to facilitate the purchase of, or payment of a bill for, a good or service through a clearance and settlement system by agreement with the creditor or seller;

(C) Operates a clearance and settlement system or otherwise acts as an intermediary solely between BSA regulated institutions. This includes but is not limited to the Fedwire system, electronic funds transfer networks, certain registered clearing agencies regulated by the Securities and Exchange Commission (“SEC”), and derivatives clearing organizations, or other clearinghouse arrangements established by a financial agency or institution;

(D) Physically transports currency, other monetary instruments, other commercial paper, or other value that substitutes for currency as a personprimarily engaged in such business, such as an armored car, from one person to the same person at another location or to an account belonging to the same person at a financial institution, provided that the person engaged in physical transportation has no more than a custodial interest in thecurrency, other monetary instruments, other commercial paper, or other value at any point during the transportation;

(E) Provides prepaid access; or

(F) Accepts and transmits funds only integral to the sale of goods or the provision of services, other than money transmission services, by theperson who is accepting and transmitting the funds.

(6)U.S. Postal Service. The United States Postal Service, except with respect to the sale of postage or philatelic products.

(7)Seller of prepaid access. Any person that receives funds or the value of funds in exchange for an initial loading or subsequent loading of prepaid access if that person:

(i) Sells prepaid access offered under a prepaid program that can be used before verification of customer identification under § 1022.210(d)(1)(iv); or

(ii) Sells prepaid access (including closed loop prepaid access) to funds that exceed $10,000 to any person during any one day, and has not implemented policies and procedures reasonably adapted to prevent such a sale.

(8)Limitation. For the purposes of this section, the term “money services business” shall not include:

(i) A bank or foreign bank;

(ii) A person registered with, and functionally regulated or examined by, the SEC or the CFTC, or a foreign financial agency that engages in financial activities that, if conducted in the United States, would require the foreign financial agency to be registered with the SEC or CFTC; or

(iii) A natural person who engages in an activity identified in paragraphs (ff)(1) through (ff)(5) of this section on an infrequent basis and not for gain or profit.


Lauren Saine, 5.28.2018