ICO projects will have to report suspicious investors according to new US regulations

A letter from the treasury department says ICO projects will have to comply with anti-terrorism and money laundering laws that require reporting of suspicious investors to authorities.

In December 2017 Oregon Senator Ron Wyden wrote to the Financial Crimes Enforcement Network (FinCEN ) seeking to understand the steps the organization was taking when it came to oversight and regulation of cryptocurrencies.

FinCEN response was published yesterday though it was originally dated February 13. The letter says companies with Initial coin offerings are legally considered as money transmitters and therefore are subject to rules set up to fight money laundry and funding of terrorism.

Under the Bank Secrecy Act (BSA), these rules apply to all money service businesses. FinCEN goes on to say the act applies to any project that involves “convertible virtual currency” which “either has an equivalent in real currency or acts as a substitute for real currency” as its stipulated in a guidance released by the Treasury Bureau in 2013.

The letter goes on to state that depending on the nature of the ICO projects, its regulation will fall under the Commodity Futures Trading Commission (CFTC) or the Securities and Exchange Commission (SEC).

To comply, companies in the space are expected to register with FinCEN as businesses that transmit money. It’s then their duty to investigate and report any suspicious customer activity to the right authorities.

While some companies have registered as they anticipate the upcoming regulation many have not. According to BSA, falling to register will carry up to five years in a federal prison.

For the states that are yet to create regulation on cryptocurrencies, the ruling can serve as a guideline. In the future, ICOs can be required to obtain a money transmitter license.

In 2017 ICOs by individuals and startups raised over $4 Billion and if we are to make predictions based on the recently launched Telegram ICO, that raised almost $2 Billion in the US alone, 2018 promises to see a rise in ICO projects.

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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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