FinCEN Clarifies Money Transmission Regulations Pertaining to DApps
The United States Financial Crimes Enforcement Network (FinCEN) has issued a new guide that contains its financial regulation policies concerning Decentralized Applications.
In the introduction to the guide, FinCEN notes the guide serves to clarify and provide examples to make compliance easier for entities whose activities fall under the purview of the Bank Secrecy Act (BSA).
FinCEN notes that any DApps which “accept and transmit value, regardless of whether they operate for profit” all fall under the same regulatory interpretation as mechanical agencies like automated teller machines. The upshot, FinCEN says, is the following:
“Accordingly, when DApps perform money transmission, the definition of money transmitter will apply to the DApp, the owners/operators of the DApp, or both.”
Thus, any DApp involving money transmission is subject to BSA regulations.
As previously reported by Cointelegraph, FinCEN took action last month against Eric Powers, who has been fined for $35,000. FinCEN concluded that Powers was “wilfully violating money transmission laws in his work as a peer-to-peer exchanger of virtual currencies” and debarred him from further money services business operations.
FinCEN remarked that this was the institution’s first case of enforcing regulatory requirements pertaining to a cryptocurrency exchanger.
Earlier this month, research from cryptocurrency analytics firm Diar found that ether (ETH) volumes on DApps were at an all-time high last month. Per Diar, in April 2019, 776,000 ETH ($129,592,000) was transacted on DApps.