The U.S. FinCEN Issues Money Transmission Regulations Concerning DApps


The_U.S.-FinCEN-Issues-Money-Transmission-Regulations-Concerning-DApps The U.S. FinCEN Issues Money Transmission Regulations Concerning DAppsThe Financial Crimes Enforcement Network (FinCEN), a bureau of the U.S. Department of the Treasury, has issued new guidance that contains current FinCEN regulations, and related administrative guidance concerning Decentralized Applications (DApps). The agency notes that 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). Additionally, it defines Dapps as, “Decentralized (distributed) application software programs that operate on a P2P (peer-to-peer) network of computers running a blockchain platform.”

FinCEN further 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. According to them, “Accordingly, when DApps perform money transmission, the definition of money transmitter will apply to the DApp, the owners/operators of the DApp, or both.” Hence, any DApp involving money transmission is subject to Bank Secrecy Act regulations. As part of the guidance, users of a DApp may also fall under FinCEN regulations. Moreover, any investors or operators of a DApp who use it to transfer funds would be classified as money transmitters themselves.

According to the report, the agency took action last month against Eric Powers, who has been fined for USD 35,000, where the FinCEN concluded that Powers was “wilfully violating money transmission laws in his work as a peer-to-peer exchanger of virtual currencies” and disentitle him from further money services business operations.