https://www.youtube.com/watch?v=8qbUG05jKPY
Cryptocurrency attorney Adam S. Tracy discusses FINCEN’s regulation of cryptocurrency and the impact on traders, cryptocurrency exchanges, and OTC bitcoin dealers. Email: at@tracyfirm.com
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A former competitive rugby player, serial entrepreneur and, trader attorney, Adam S. Tracy offers over 17 years of progressive legal and compliance experience in the areas of corporate, commodities, cryptocurrency, litigation, payments and securities law. Adam’s experience ranges from commodities trader for oil giant BP, initial public offerings, M&A, to initial coin offerings, having represented both startups to NASDAQ-listed entities. As an early Bitcoin adapter, Adam has promoted growth of cryptocurrency and offers a unique approach to representing crypto-clients. Based in Chicago, IL, Adam graduated from the University of Notre Dame with dual degrees in Finance and Computer Applications and would later obtain his J.D. and M.B.A. from DePaul University. Adam lives outside Chicago with his six animals, which is illegal where he lives.
Email me: at@tracyfirm.com
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TRANSCRIPTION:
Obviously, there’s a huge emphasis on compliance from a cryptocurrency standpoint with respect to the SEC and to a lesser extent to the CFTC. But the one government agency that’s really put forth the most guidance, if you will, would be FinCEN. And we’ve talked about money service business registration in past, and FinCEN is the government agency that is dealt with enacting the tenants of the Bank Secrecy Act and overseeing money service businesses. And so FinCEN has put out guidance that sort of defines the players in the cryptocurrency market. And those three players are: users, administrators, and exchangers.
And so user is someone who uses virtual currency or cryptocurrency to buy and sell goods. FinCEN has come out directly and said that a user is not a money transmitter and hence not a money service business. An exchanger is one who deals in the exchange of cryptocurrency — the buying and selling of cryptocurrency in exchange for real or other virtual currencies. And in most cases FinCEN and has found that a exchanger is a money transmitter and thus a money service business, and subject to registration as a money service business. Then finally, an administrator, which is the interesting sort element here, is a party that issues virtual currency and has the ability to redeem that virtual currency. And in most cases FinCEN has found that an administrator is, in fact, a money transmitter and thus a money service, and is required to register as a money service business. And it’s a weird implication, or important implication, for ICO companies because they are obviously issuing cryptocurrency, but the caveat or sort of the tenant where I think most ICO companies fall out of the definition of an administrator is that most ICO companies don’t have the ability to redeem their cryptocurrency, right? They issue it, but they don’t redeem it. So therefore they wouldn’t fall into that definition of a money transmitter. So, you know, it’s a very strange implication because there are some ICOs out there that, you know, have this innate ability to redeem whether through conversion or some other mechanism the cryptocurrency that they’ve issued and sold. And technically by the book, according to FinCEN, you are the money transmitter and you need to register as a money service business or face severe fines, penalties, and the like. That’s sort of point one that people, I think, overlook.
Point two is, you know, how do you, sort of, fall outside the ambit of this, if you are a speculator, right? Let’s say I’m an individual who engages in the buying and selling of cryptocurrency or the arbitrage of different cryptocurrencies for my own account. FinCEN has come out with a decision that actually exempts such activity from the definition an exchanger, which across the board is almost always a money transmitter and thus required to register as a money service business. So, you know, there’s a great emphasis on the SEC, and where the SEC is going to fall, and to some extent the CFTC. And that’s valid. That’s super valid, because ultimately that’s cryptocurrency and the large part is a function of an ICO and raising capital for businesses, right? And so the question becomes are we engaging in offerings of securities? And that’s another discussion for another time. But what is codified, what is real, what people overlook, in my opinion my humble opinion for it’s worth, is FinCEN, and their money service business registration and the money transmitter laws that are associated there with. So, it’s definitely something to consider and definitely something to check out, you know, depending on what player you are within the the ecosphere of cryptocurrency. So check me out — TracyFirm.com.
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