Requirements for Certain Transactions Involving Convertible Virtual Currency or Digital Assets Summary

Updated 02/16/2022

On December 23, 2020, Financial Crimes Enforcement Network (FinCEN), Department of Treasury, issued a notice of proposed rulemaking (proposed rule) pursuant to the Bank Secrecy Act (BSA) to require banks and money service businesses (MSBs) to submit reports, keep records, and verify the identity of customers in relation to transactions involving convertible virtual currency (CVC) or digital assets with legal tender status (legal tender digital assets or LTDA) held in unhosted wallets, or held in wallets hosted in a jurisdiction identified by FinCEN. As part of the proposed rule, FinCEN would now consider CVC and LTDA to be ‚Äúmonetary instruments‚ÄĚ for certain parts of the BSA. However, FinCEN did not go so far as to propose modifying the regulatory definition of ‚Äúmonetary instruments‚ÄĚ or otherwise alter existing BSA regulatory requirements applicable to ‚Äúmonetary instruments‚ÄĚ in FinCEN‚Äôs regulations, including the existing currency transaction reporting (CTR) requirement and the existing transportation of currency or monetary instruments reporting requirement.

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