FinCEN Announces New Regulations for ICOs

On Tuesday, the Financial Crimes Enforcement Network (FinCEN) published a letter written by Drew Maloney, FinCEN’s Assistant Secretary, stating that AML/CFT regulations will now be applied to businesses that conduct initial coin offerings (ICOs).  The letter was sent to U.S Senator Ron Wyden explaining that developers and exchanges involved in the sale of ICOs would be required to register as money transmitters and comply with anti-money laundering (AML) and know your customer (KYC) regulations.

The letter goes on to say that ICO regulations can vary depending on the user and the circumstances and states that “The application of AML/CFT obligations to participants in ICOs will depend on the nature of the financial activity involved in any particular ICO.  This is the matter of the facts and circumstances of each case.”  For instance, in the case of ICOs used in the sale of derivatives or securities, the regulations under the U.S Securities and Exchange Commission (SEC) or the Commodity Futures Trading Commission (CFTC) would come into effect.  FinCEN is currently working together with the SEC and the CFTC to ensure other U.S agencies are complying with these new regulations.


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