Leaders of CFTC, FinCEN, and SEC Issue Joint Statement on Digital Assets

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Jason B. Freeman

Jason B. Freeman

Managing Member

214.984.3410
jason@freemanlaw.com

Mr. Freeman is the founding member of Freeman Law, PLLC. He is a dual-credentialed attorney-CPA, author, law professor, and trial attorney.

Mr. Freeman has been named by Chambers & Partners as among the leading tax and litigation attorneys in the United States and to U.S. News and World Report’s Best Lawyers in America list. He is a former recipient of the American Bar Association’s “On the Rise – Top 40 Young Lawyers” in America award. Mr. Freeman was named the “Leading Tax Controversy Litigation Attorney of the Year” for the State of Texas for 2019 and 2020 by AI.

Mr. Freeman has been recognized multiple times by D Magazine , a D Magazine Partner service, as one of the Best Lawyers in Dallas, and as a Super Lawyer by Super Lawyers, a Thomson Reuters service. He has previously been recognized by Super Lawyers as a Top 100 Up-And-Coming Attorney in Texas.

Mr. Freeman currently serves as the chairman of the Texas Society of CPAs (TXCPA). He is a former chairman of the Dallas Society of CPAs (TXCPA-Dallas). Mr. Freeman also served multiple terms as the President of the North Texas chapter of the American Academy of Attorney-CPAs. He has been previously recognized as the Young CPA of the Year in the State of Texas (an award given to only one CPA in the state of Texas under 40).

Leaders of CFTC, FinCEN, and SEC Issue Joint Statement on Digital Assets

Responding to the rise in cryptocurrency and other digital tokens, the leaders of the U.S. Commodity Futures Trading Commission (CFTC), the Financial Crimes Enforcement Network (FinCEN), and U.S. Securities and Exchange Commission (SEC) recently issued a joint statement on activities involving digital assets. The leaders issued the statement to remind those involved in such activities of their anti-money laundering and countering-the-financing-of-terrorism (AML/CFT) obligations under the Bank Secrecy Act (BSA).

The AML/CFT obligations apply to those entities defined as “financial institutions” under the BSA. Examples of such financial institutions include money service businesses (MSBs), futures commission merchants, introducing brokers, and mutual funds and other broker-dealers. The obligations under AML/CFT include establishing and implementing an effective anti-money laundering (AML) program, and recordkeeping and reporting—including reporting suspicious activity.  The failure to comply with these obligations can trigger significant penalties and criminal exposure.

The joint statement emphasized that the language used in the market does not determine whether a digital asset qualifies as a security, commodity, or security- or commodity-based item. Rather, whether an asset, activity, or service is subject to the BSA or other laws and whether those involved are “financial institutions” under the BSA is determined from the facts and circumstances surrounding the activity, “including its economic reality and use (whether intended or organically developed and repurposed).” The nature of the activities will determine whether one is subject to regulation by the CFTC, FinCEN, the SEC, the National Futures Association (NFA), or the Financial Industry Regulatory Authority (FINRA).

The statement concludes by stating that AML/CFT obligations apply broadly to financial institutions, without regard to whether a transaction involves a “security” or “commodity” as defined by federal securities law or the CEA.

Additional comments reinforcing the mission and purpose of the agencies and the AML/CFT obligations were included. This joint statement makes it clear that the increased use of digital assets in the marketplace has generated scrutiny from these agencies, who intend to use their regulatory authority to oversee and regulate activities with respect to digital assets.

 

Cryptocurrency and Blockchain Attorneys

Have Cryptocurrency or Blockchain Issues or questions? Freeman Law is an innovative thought leader in the blockchain and cryptocurrency space. Blockchain and virtual currency activities take place in a rapidly evolving regulatory landscape. Freeman Law is dedicated to staying at the forefront as these emerging technologies continue to revolutionize social and economic activities. Contact Freeman Law to Schedule a consultation or call (214) 984-3410 to discuss your cryptocurrency and blockchain technology concerns.

 

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