WASHINGTON—The U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) has released guidance, issued in the form of frequently asked questions, explaining that transactions involving cryptocurrencies will be treated the same as other transactions.
It’s a position that multiple Treasury Department officials have signaled for several months, JD Supra said.
OFAC’s guidance was announced in conjunction with President Trump’s Executive Order prohibiting transactions related to virtual currencies issued by, for, or on behalf of the Venezuelan government. Venezuela issued the “petro” in February 2018, a cryptocurrency that U.S. officials said was created to evade U.S. sanctions against the country, JD Supra said.
“Venezuela’s actions, and the U.S. response, show that the U.S. government is focused not just on sanctions violations involving traditional financial transactions, but also on the emerging use of digital currencies, including those issued by foreign governments,” JD Supra said.
Under OFAC’s newly issued FAQs, U.S. persons will have the same sanctions and compliance obligations regardless of whether transactions involve “real” currencies or cryptocurrencies. OFAC said it will work with law enforcement to ensure that the use of “new payment mechanisms” will not create a blind spot for sanctions enforcement.
JD Supra’s analysis further noted:
- FAQ 559 defines the key terms of “virtual currency,” “digital currency,” “private keys,” “wallet,” “digital currency address,” “hosted wallet provider,” and “wallet provider.”
- FAQ 560 explains that compliance obligations “are the same, regardless of whether a transaction is denominated in digital currency or traditional fiat currency,” meaning that companies and other persons are expected to develop “tailored risk-based compliance programs” that address the risks posed by virtual currencies.
- FAQ 561 states that “OFAC may include as identifiers on the SDN List specific digital currency addresses associated with blocked persons.”
- FAQ 562 states that “parties who identify digital currency identifiers or wallets that they believe are owned by, or otherwise associated with, an [Specially Designated Person (SDN)] and hold such property should take the necessary steps to block the relevant digital currency and file a report with OFAC.”
- FAQ 563 explains the format that digital currency addresses will take on the SDN List.