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USA: FinCEN published guidelines – dApps are classified as financial transactions

the The investigative authority of the U.S. Finnazministeriums, FinCEN, has published guidelines for the classification of payment service providers in the cry

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USA: FinCEN published guidelines – dApps are classified as financial transactions
the The investigative authority of the U.S. Finnazministeriums, FinCEN, has published guidelines for the classification of payment service providers in the cryptographic sector. The paper contains no new provisions, but rather summarizes the regulatory Status quo. Accordingly, any commercial dealing with Bitcoin & co. falls under the banking law of 1970 and is associated with strict conditions.

By Christopher clover
10. May 2019BTC$6.526,00 4.27%part Facebook Twitter LinkedIn xing mail

The US authority for the combating of financial crime, FinCEN has on 8. May an interpretation basis for the classification of the crypto-published service providers. To the authority, which cryptographic-related activities with the Bank Secrecy Act compliant and, accordingly, must satisfy strict requirements. The FinCEN distinguishes between whether a Person or a company is classified as a money service provider (Money Service Business, in the Following: MSB) or not. It is, in principle, to the activities of a (legal) Person, not their Status.

a natural person (P2P traders)

It is a peculiarity of the law is a system of numerous jurisdictions is that companies also represent a (legal) Person. Of a "natural Person", however, is the speech, if it is explicitly to people. In the Following, it goes to the business with the exchange of (crypto-) currencies between two individuals (Peer-to-Peer: in P2P). This levels the regulators a gates, in principle, as the MSB.

A natural Person who is acting as a P2P Exchanger and money transfer services with real currency or CVCs [Convertable Virtual Currency = crypto currency] offer, must comply with as a money transmitter, which acts as the Contracting authority ["Principal"], and the BSA regulations.

it does not matter if the Exchanger uses an Online platform, or P2P trading via other channels in a coordinated way. This means that everyone who deserves to be with the Exchange of crypto-currencies of money with FinCEN as a MSB register and AML, recording and reporting must meet requirements. Of natural persons "engaged in such activity [P[P2P-trading]elegent and not profitable.

crypto-Wallets: Not your Keys, not your Problem?

For the classification of crypto-Wallets, the FinCEN, the following four evaluation criteria. So it is a matter

who has the value,where the value is stored,whether the owner works directly with the payment system of crypto-currency inter-whether the Person who acts as an intermediary, has a completely independent control over the value.

This means that the regulator between the Custodial and Non-Custodial Wallets differ. In the case of the Custodial (trust) Wallets, the Wallet operator (Host) managed currencies, Crypto, i.e. controls the Private Keys. Because the Host in the case of crypto-act transactions as a mediating third party, he operates according to the view of the FinCEN for a MSB.

Free travel for Non-Custodial Wallets

it is Different, however, with the Non-Custodial Wallets. Here the Private Keys are in the possession of the Wallet-owner, the access by third parties or the Wallet-operator is excluded. In the wording it says in the guidelines:

In the case of non-hosted Wallets with a single signature, (a) is the value (by definition) the property of the owner and will be stored in a Wallet, while (b) the owner interacts directly with the payment system and the full, independent control over the value. To the extent that the Person carries out a transaction on the non-hosted Wallet, to purchase Goods or services in its own name, is not a money transfer.

The Same is true for Multi-Sig Wallets – but only if the role of the host confined to the creation of the Wallet. He may not be one of the Keys and the authorization of transactions is required.


The operators of Bitcoin ATM to go in principle, a MSB and must AML processes and the like to implement:

An owner/operator of a [K[crypto-machines]used an electronic Terminal to accept the currency of a customer and to transfer the counter-value in CVC (or Vice versa), to qualify as money transmitters [[...] < / p> < /p>


Decentralized applications (dApps) are functioning currencies in the Crypto. Therefore, the FinCEN will classify you prinizipiell as MSB:

The same regulatory interpretation, such as mechanical agents, such as CVC-kiosks [K[crypto-ATM]ilt for dApps, the values, accept and transfer, regardless of whether they are profitable. Accordingly, the Definition of a money transmitter for the dApp, the owner/operator of the dApp, or both, shall apply in the implementation of money transfers by dApps.

Also, the developers of dApps need to take in Eight: While it is not forbidden, however, to develop a dApp; it becomes problematic, however, if the developer or the developer used their creation to transfer of funds:

The developer of a dApp is not a money generator for the mere act of creating the application, even if the purpose of the dApp is a CVC to issue or facilitate the otherwise financial activities that run on CVC.If the developer of the dApp uses them, or uses a money to perform a transfer, then the developer as a money qualified lenders under the BSA.

Privacy Coins and a Tumbler/Mixer

Who used Privacy Coins like Monero (XMR), or Zcash only mint, and to Pay for Goods for their own needs, which operates according to the FinCEN Guideline not a MSB. Who offers, however, payment services using Privacy Coins, falls under the BSA and must register consequently, when FinCEN.

the Same applies to the service providers, the traces of transactions. This Tumbler, or Mixer service providers referred to mix transactions so confused that they can only be severely persecuted. Unlike the developers of the blender Software, a provider of anonymization services is classified as a MSB.

Green-light – for-a- really – decentralized exchange (DEX)

FinCEN classifies decentralized exchanges as a payment transmitter as long as the Users are in possession of the Private Keys and the stock exchange, Order Matching operates, the Trader will be your trading partner is selected.

Mining Pools and Cloud Mining

Mining Pools and Cloud Mining services to be covered under the BSA, if it is just the distribution of Block Rewards.

If the head of the Pools, the Cloud Miner or unincorporated organization, or software Agency acting on behalf of its owner/administrator, [K[crypto-currencies]n the pool members, or contract, customers, transmits, to distribute [d[the Mining]rzielten amount, are not subject to this distribution as a money transmission under the BSA.

the operators of Mining Pools, however, in addition to a role as a Trustee, you must register as a MSB:

however, If the head, the Cloud-Miner or the software Agency combines all your management and rental services, with the Service of hosting of CVC - Wallets, on behalf of the pool members, or contract buyer, [g, [reaching the]ie FinCEN Definition [f[for]eldübermittler for the account-based money transfer.


The FinCEN guidelines reflect why crypto-currencies and related projects and companies in the United States have a leg to Stand on. Especially the generalization of dApps as a Money Service Business could easily become the stumbling block for the adaptation and further development of crypto-currencies and Distributed Ledger technologies. The Problem lies not in the fact buried, and that a payment service provider should comply with regulatory obligations, but in the inflexible classification. That is, each decentralized, it is classified the program as the MSB, is not only outrageous and blind to the different Use Cases. Here is the US need to catch up-regulators, if the US don't want to be crypto-friendly Jursidiktionen obsolete. This applies not only to the FinCEN, but also for the SEC and CFTC.

As the American stock exchange and the financial Supervisory authority of SEC on Bitcoin & co. is looking, you can find here.

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