WASHINGTON—The Financial Crimes Enforcement Network (FinCEN) says it intends to regulate Initial Coin Offering (ICO) participants.
In a letter to Ron Wyden (D-KS), ranking member of the Senate Finance Committee, FinCEN suggested it will apply existing regulations to all ICOs.
The letter, signed by FinCEN’s Drew Maloney, assistant secretary for legislative affairs, suggested that developers and exchanges that interact with ICOs should register as a money transmitter. This would involve complying with a lengthy list of AML (anti-money laundering) and KYC (know your customer) regulations, Crypto Globe reported, noting that the implications of money transmitter law are arguably greater than U.S securities law as money transmitter law applies to a greater number of entities than securities law.
“Generally, under existing regulations and interpretations, a developer that sells convertible virtual currency, including in the form of ICO coins or tokens, in exchange for another type of value that substitutes for currency is a money transmitter and must comply with AML/CFT requirements that apply to this type of MSB. An exchange that sells ICO coins or tokens, or currency, would typically also be a money transmitter,” wrote Maloney.
“The upshot of this proposal would mean any entity that helps facilitate an ICO or its secondary market trading (exchanges) would be breaking felony laws if they fail to register with FinCEN as a money transmitter,” Crypto Globe stated.