Financial Integrity Network Urges US Congress To Regulate Crypto Sector Under Bank Secrecy Act

News, Regulation | September 3, 2019 By:

Washington D.C.-based strategic advisory firm Financial Integrity Network (FIN) is urging the US Congress to create a new class of financial institution under the Bank Secrecy Act (BSA) to regulate firms in the cryptocurrency sector.

In a testimony published Sunday ahead of a hearing, FIN Vice President David Murray said that some virtual asset service providers (VASP) are regulated as money transmitters under the Bank Secrecy Act (BSA) while others are not regulated at all.

“Congress should create a new class of financial institution under the BSA to cover firms involved in convertible virtual currency transactions: virtual asset service providers (VASPs), which are firms involved in convertible virtual currency transactions,” Murray said. “VASPs should include cryptocurrency service providers that are already covered by the BSA as well as virtual asset services that currently fall outside the scope of the BSA.”

According to Murray, VASPs should be regulated based on the particular service or services that they provide, with an emphasis on promoting system-wide governance to prevent bad actors from establishing VASPs and connections to the international financial system.

Murray believes that imposing the proposed regulations on people and entities who perform crypto-related functions would almost certainly make it difficult for some existing implementations of blockchain- based payments to continue operating as they do today.

Murray, however, noted that it is not the purpose of the BSA or the global financial transparency regime to enable or accommodate all manner of financial products and services, regardless of the threat that they pose to
financial transparency.