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"FinCEN’s new cryptocurrency guidance matches Coin Center recommendations" - Positive for Monero

Today the Financial Crimes Enforcement Network (FinCEN) issued new guidance on how the Bank Secrecy Act (BSA) applies to cryptocurrencies and its users. Here’s our initial analysis of that guidance which, on the whole, we find thoughtful and on-the-mark (note: the PDF is on their website although there’s no press release yet). The guidance makes explicit several interpretations for which Coin Center has long advocated, such as clear statements that software wallet providers, multi-sig providers, decentralized exchanges, and other non-custodial services are not regulated as money transmitters.

Software Wallets and Multi-Sig Providers

First, let’s look at how the Guidance applies to software wallets and multi-sig providers. Section 4.2.1 states that software wallet providers (i.e., “non-custodial” or “unhosted” wallet providers) are not regulated as money transmitters. And section 4.2.2 states that multi-sig providers without the ability to (unilaterally) transact are also not regulated as money transmitters. Neither of these two conclusions are surprising, but it’s great to see them spelled out by FinCEN.

Coin Center has argued since 2014 that non-custodial wallet providers and multi-sig providers, because they do not have sufficient credentials to unilaterally execute or prevent transactions, are never able to accept or transmit currency or currency substitutes and therefore could not and should not be a “money transmitter” (a type of Money Service Business (MSB)) under the BSA’s implementing regulations, which require acceptance and transmittal. Today’s guidance is the first time FinCEN has made that interpretation clearly and explicitly in guidance.

Describing minority key-holders, the Guidance states: “the person participating in the transaction to provide additional validation at the request of the owner does not have total independent control over the value.” And if you develop the multi-sig wallet software and limit yourself to pro...

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