The organizers of the ICO campaigns may be required to follow the provisions of anti-money laundering and terrorist financing laws requiring reporting of any suspicious investor activity to the authorities. This is reported by Bloomberg.
In December 2017, Senator Ron Wyden appealed to the US Treasury Financial Crimes Enforcement Network (FinCEN) with a request to report on the work done in the area of establishing control over the sphere of crypto-currencies. FinCEN's answer to the senator was published this Tuesday.
In its letter, the agency explains that companies that conduct ICO, from the point of view of the law, can be considered as services for the money transfers. Thus, they can be presented with all the requirements designed to combat the financing of terrorism and money laundering in this area specified in the law on bank secrecy.
FinCEN explains that these requirements apply to all projects related to convertible virtual currencies, which are either equivalent to real currencies, or can be used to replace real currencies. Depending on the conditions of the specific ICO, such companies may be regulated by either the Securities and Exchange Commission (SEC) or the Commodity Futures Trading Commission (CFTC).
In accordance with the requirements of the law, the organizers of the ICO must register with FinCEN, and then report any suspicious activity of investors to the relevant services.
Although some ICOs have already begun to register, while waiting for the introduction of new requirements, most have not yet done so. According to the law on bank secrecy, the latter can wait up to 5 years in prison.
States that have not yet developed their own legislation to regulate the digital currencies can use the FinCEN letter as a guide for decision-making in the future, requiring that the new ICOs receive a license as companies operating in the field of money transfers.
Although some consider this message as old news related to the Ministry of Finance decree issued five years ago, and welcome the establishment of legal certainty in the ICO area, others note the lack of specificity in the message of FinCEN.
Particular problems may arise in startups, operating in the US, but registered abroad. Although they do not directly fall under the requirements of FinCEN, they may also be required to report suspicious investor activity. In addition, small projects, perhaps, will not be able to conduct ICO at all because of the costs associated with the new requirements.