The United States Financial Crimes Enforcement Network (FinCEN) issues a new guide for new financial regulation policies concerning Decentralized Applications (DApps) on May 9.
FinCEN notes in the guide’s introduction that it will purportedly clarify and provide examples in order to simplify compliance for entities whose activities fall under the purview of the Bank Secrecy Act (BSA), much simpler. As per FinCEN’s definition, DApps are –
“Decentralized (distributed) application software programs that operate on a P2P [peer-to-peer] network of computers running a blockchain platform.”
The firm further notes that any DApps that “accept and transmit value, regardless of whether they operate for profit” will fall under the same regulatory interpretation as mechanical agencies like automated teller machines. The document states:
“Accordingly, when DApps perform money transmission, the definition of money transmitter will apply to the DApp, the owners/operators of the DApp, or both.”
In simpler terms, any DApp involving money transmission will be subjected to BSA regulations. Last month, FinCEN took action against Eric Powers and fined him for $35,000. FinCEN alleges that Powers was “wilfully violating money transmission laws in his work as a peer-to-peer exchanger of virtual currencies”, debarred him from further money services business operations. The institution remarked at the time that this was their first case of enforcing regulatory requirements pertaining to a cryptocurrency exchanger. The regulatory action follows recent research from cryptocurrency analytics firm Diar, released earlier this month showcasing that ether (ETH) volumes on DApps were at an all-time high last month. Per Diar, in April 2019, 776,000 ETH ($129,592,000) was transacted on DApps.
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