ICOs May Need to Follow Bank Secrecy Rules

Tokensale campaigns can face new regulatory restrictions
07 March 2018   430

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.

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Nishiawakura to Launch First Municepal ICO in Japan

Officials studied the possibility to strengthen the economy of the village thru the ICO since November 2017
19 June 2018   135

The authorities of the Japanese village of Nishyavakura from Okayama prefecture announced the start of the initial coin offering (ICO). Officials studied the possibility to strengthen the economy of the village thru the ICO since November 2017. This is reported by Bitcoin.com.

With the help of the ICO and its own crypto currency, the authorities hope to get money for "a sustainable regional economy in the future, providing the municipal authorities with new financial resources and developing the region with the help of starting investments."

1500 people lives in village, and 95% of area are occupied by woods. In the early 2000s, when all the municipalities of the country joined the city's districts, Nishyavakura managed to remain an economically independent village and since then the authorities have been seeking funds for its development.

In order to promote the creation of a sustainable region in the future, as a means for small local governments to secure new financing resources and to build up regions through upfront investment, tokens issuance, and the creation of virtual currencies, we will introduce fundraising through an ICO for the first time as a municipality in Japan.

Nishyavakura Statement

The local economy association will issue tokens called Nishiawakura Coin (NAC). The owners of coins will have the right to vote, which will allow them to participate in decision-making regarding enterprises in the village.