Today, March 6th, 2018, the Financial Crimes Enforcement Network ("FinCEN") sent a letter to Congress that provides insight into how they will be addressing cryptocurrency regulation. Indeed, the letter specifically stated that FinCEN believes Initial Coin Officers ("ICOs") do fall under their agency jurisdiction. Prior to this, it was the common perception that the SEC and CFTC held the majority of regulatory authority.
U.S. Senator Ron Wyden received this letter, which explained how "both developers and exchanges" involved in ICOs may be required to file for a money transmitter license ("MTL"), and comply with relevant anti-money laundering ("AML"), and know-your-customer (KYC) regulations.
"...a developer that sells convertible virtual currency, including in the form of ICO coins or tokens, in exchange for another type of value that substitutes for currency is a money transmitter and must comply with AML/CFT requirements that apply to this type of [money services business]. An exchange that sells ICO coins or tokens, or exchanges them for other virtual currency, fiat currency, or other value that subsitutes for currency, would typically also be a money transmitter."
In the U.S., a MTL violation carries with it significant punishment, which can include jail time. However, did clarify that not all ICO's will be subject to this regulation, and it depends on the token, the area the business exists in, and other factors. FinCEN, similarly to when the SEC handed down the DAO and Munchee decisions, stated that it depends on the individual circumstances. Indeed, "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."
In other words, we will have to wait and see how the potential regulation applies to certain ICOs. Then, and only then, can we begin to construct jurisdictional precedent for how U.S. governmental agencies will approach ICOs, cryptocurrencies, and other blockchain related technologies.