FinCEN Director Kenneth A. Blanco reminded market participants of their obligations to comply with AML regulations related to convertible virtual currencies ("CVC").
In remarks at the Chainalysis Blockchain Symposium, Mr. Blanco reminded market participants that:
FinCEN applies a technology-neutral regulatory framework: CVC activities are regulated based on their functionality, not the labels that industry uses to describe an activity;
money transmission denominated in CVC is money transmission;
suspicious activity reports about CVC must be filed by both CVC entities and other financial institutions with which CVC entities transact;
the "funds travel rule" - which requires financial institutions to communicate certain information with fund transmittals of over $3,000 to the next financial institution - applies to CVC;
accepting and transmitting activity denominated in stablecoins falls within FinCEN's definition of "money transmission services"; and
administrators of stablecoins must register as money services businesses with FinCEN.
FinCEN is working actively and with success to convince virtual currency operators to enter the fold of regulatory compliance. The number of virtual currency-related suspicious activity reports filed with FinCEN increased dramatically after FinCEN issued comprehensive guidance in May 2019. In raw numbers, however, interactions with FinCEN involving virtual currency pale in comparison with those involving dollars or other monetary instruments. Judging from the numbers Director Blanco provided in his speech, roughly one tenth of one percent of reports filed with FinCEN relate to virtual currency. And of the 16,000 calls FinCEN receives annually on its regulatory hotline, an average of only 143 calls per year have related to virtual currency. The greenback and other fiat currencies are still king.