Government Opinion

FinCEN Says Dapps May Qualify As Money Transmitters Under New Guidelines

New guidelines issued earlier today by the Financial Crimes Enforcement Network (FinCEN) indicate that decentralized applications also known as Dapps may qualify as money transmitters under the U.S. law in certain circumstances.

The regulator published a new guidance sheet that outlines when and how different individuals, companies and platforms operating within the cryptocurrency space could be classified as money transmitters under the Bank Secrecy Act (BSA) and a few other relevant laws.

By being termed as a money transmitter, the involved person or company has to obtain all the necessary licenses in all states where they operate. Also, they have to follow federal anti-money laundering (AML) and know-your-customer (KYC) regulations.

In the notice, the U.S. Treasury Department’s AML bureau noted that while it’s not responsible for establishing any new regulatory expectations or requirements, it does combine several previous documents that have been issued over the past eight years and detail in higher specificity how the participating entities might violate AML regulations.

According to the document Dapps are “designed such that they are not controlled by a single person or group of persons,” however, if a dapp accepts and “transmits value” then it qualifies as a money transmitter under the same interpretation that is applied to cryptocurrency-dispensing vending machines.

The guidance noted:

“Accordingly, when Dapps perform money transmission, the definition of money transmitter will apply to the dapp, the owners/operators of the dapp, or both.”

However, as for the developers behind the Dapps, even though the app is designed to issue cryptocurrencies or at least even facilitate financial services in cryptocurrencies – they don’t qualify as a money transmitter until the Dapp is put to use.

Interestingly, the guidance also stated that users of the Dapp might fall under FinCEN regulations. Any operators or investors of the Dapp that use it to transfer funds will be classified as money transmitters themselves.

What’s your take on FinCEN guidelines that stipulate Dapps may be classified as money transmitters under certain circumstances? Share your thoughts in the comment section below.

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coinmag

Basil has three years of freelance experience writing on disruptive technologies. He focuses on breaking news and education pieces; helping to spread the gospel of Blockchain. He hopes to have his own blockchain company one day; helping the world through its innovative ledger technology.

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