- U.S. Federal Reserve Board and Financial Crimes Enforcement Network have called for cryptocurrencies to be defined as money
- The agencies also want the Bank Secrecy Act threshold to be reduced from $3,000 to $250
- Cryptocurrencies are generally regarded as assets or commodities at present
The U.S. Federal Reserve Board (FRB) and Financial Crimes Enforcement Network (FinCen) have called for cryptocurrencies to be defined as money to ensure that they stop slipping through international regulatory gaps. In a press release advocating the reduction of the Bank Secrecy Act (BSA) threshold from $3,000 to $250, the two agencies said that state actors such as Venezuela and Iran were purposefully using cryptocurrencies to evade sanctions, and so rules should be changed to close the loopholes they provide.
Cryptocurrencies Don’t Fall Under BSA Jurisdiction
The BSA requires U.S. financial institutions to collect information on funds transfers and transmittals of funds over $3,000, but this rule doesn’t apply to cryptocurrencies (CVCs) as they are not considered tender. The FRB/FinCen document calls for a change to the BSA classifications in order to address the rise in cryptocurrency use:
The Agencies are also proposing to clarify the meaning of “money” as used in these same rules to ensure that the rules apply to domestic and cross-border transactions involving convertible virtual currency…
The two agencies go on to state that various regimes have moved to use this discrepancy to their advantage, most notably Venezuela and North Korea. The agencies hope that the rule changes they propose would restrict these advantages and bring cryptocurrency transfers into line with fiat transfers:
This proposed rule would define “money”…to make explicitly clear that both payment orders and transmittal orders include any instruction by the sender to transmit CVC or any digital asset having legal tender status to a recipient.
Regulators Worldwide Face Growing Crypto Headache
Agreeing a formal definition of cryptocurrencies has been a long running battle between various agencies in almost all countries where they have seen usage, with digital assets being classed variously as assets, commodities, and property.
The classing of cryptocurrencies as money, either in actuality or only for reasons of regulation, is something that is needed sooner rather than later if regulators are to get a handle on their usage by bad actors.