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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.

Copyright © 2022, Sheppard Mullin Richter & Hampton LLP.National Law Review, Volume XII, Number 153
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About this Author

Moorari Shah Bankruptcy Lawyer Sheppard Mullin Law Firm
Partner

Moorari Shah is a partner in the Finance and Bankruptcy Practice Group in the firm's Los Angeles and San Francisco offices. 

Areas of Practice

Moorari combines deep in-house and law firm experience to deliver practical, business-minded legal advice. He represents banks, fintechs, mortgage companies, auto lenders, and other nonbank institutions in transactional, licensing, regulatory compliance, and government enforcement matters covering mergers and acquisitions, consumer and commercial lending, equipment finance and leasing, and supervisory examinations,...

213-617-4171
A.J. S. Dhaliwal Bankruptcy Attorney Sheppard Mullin Washington DC
Associate

A.J. is an associate in the Finance and Bankruptcy Practice Group in the firm's Washington, D.C. office. 

A.J. has over a decade of experience helping banks, non-bank financial institutions, and other companies providing financial products and services in a wide range of matters including government enforcement actions, civil litigation, regulatory examinations, and internal investigations.

With a diversified regulatory, compliance, and enforcement background, A.J. counsels financial institutions in matters involving...

202-747-2323
Associate

Gabriel is an Associate on the Telecom team and the Co-Lead Associate on the Blockchain and Digital Assets team in the firm’s Washington, D.C. office. He is a Blockchain Law Professional as Certified by the Blockchain Council.

At Sheppard Mullin, Gabriel assists the Telecom team in all aspects of communications law and regulation including, satellites, spectrum, 5G implementation, media companies, and new technologies. He assists the Blockchain and Digital Assets team in legal issues relating to the use of blockchain technology, social media, internet, video games, online gambling,...

202-747-2194
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