FinCEN Highlights Responsible Crypto Innovation, Warns Service Providers
On May 19, Alessio Evangelista, the Associate Director of the Enforcement and Compliance Division of FinCEN, presented at the Chainalaysis Links Conference on the topic of “Intersection of Cryptocurrencies and National Security.” Evangelista stated that crypto firms “have the same obligations as all other financial institutions to ensure that their new offerings can leverage innovations while still protecting consumers, reducing cybercrime, combating illicit financial activity, and ensuring their platforms are not used to harm our national security.” He also stressed that the agency believes that innovation goes hand in hand with regulation, rather than being at odds with each other.
Evangelista also stated that virtual asset service providers (VASPs) ignore red flags and continue to do business with problematic companies far too often. He called on these VASPs to be proactive with regulatory compliance and to avoid having “paper programs” or compliance regimes that exist on paper but are not implemented, either by mistake or design. Here, FinCEN will continue to prioritize cases where it identifies “significant non-compliance and threats” to the financial system and where there is “willful disregard for regulatory requirements.”
Putting It Into Practice: These remarks follow a series of remarks by agency heads involving the regulation of cryptocurrency (we discussed these remarks in previous blog posts here and here). Financial institutions engaging in cryptocurrencies should pay special attention to these regulators as they begin to gear up for more stringent regulation.