Virtual Currency Transactions

🚨 In breaking and unreported news, yesterday, IRS Criminal Investigation, the U.S. Department of Justice, and the Federal Bureau of Investigation (FBI) in coordination with the German Federal Criminal Police Office (BKA) and the Attorney General’s Office in Frankfurt, seized the domain for online crypto wallet Cryptonator for failing to have appropriate anti-money laundering controls in place and facilitating illicit activity. Cryptonator, domiciled in Hong Kong and launched in 2014, is an online cryptocurrency wallet that enables direct transactions and allows instant exchange between different cryptocurrencies in one personal account, essentially acting as a personal cryptocurrency exchange. In addition to seizing the domain, prosecutors in the Middle District of Florida charged administrator Roman Boss for money laundering and operating an unlicensed money service business. According to the criminal complaint, Cryptonator did not collect personal data, allowing customers to conceal their identities. Counter to US anti-money laundering regulations, Cryptonator allowed users to open an account with only an email and password rather than the rigorous KYC requirements typical in onboarding at a complaint exchange.   Based on blockchain intelligence, the government alleges that between 2014 and 2023, cryptocurrency addresses controlled by Cryptonator completed more than 4 million transactions, totaling approximately USD 1.4 million. Furthermore, Bitcoin addresses controlled by Cryptonator sent or received more than USD 25 million to or from Darknet Markets and Fraud Shops, more than USD 34.5 million to or from scam addresses, more than USD 80 million to or from high risk exchanges, more than USD 8 million to or from ransomware campaigns, more than USD 54 million to or from addresses associated with hacked or stolen funds, more than USD 34 million to or from addresses associated with mixers, and nearly USD 17 million to or from sanctioned addresses. This activity is visualized in TRM’s graph visualizer below. The detailed, 29-page complaint alleges that Boss knowingly allowed his service to be used for illicit activities including purchases on Darknet Markets including evidence based on direct communications with undercover agents. This case is an example of global law enforcement cooperation and the use of blockchain intelligence to thwart illicit activity.

"• When calculating the amount of tangible net worth required under Section 10.01 of the #Money_Transmission Modernization Act, money transmitters with #virtual_currency assets on their balance sheet must include all such virtual currency assets in #total_assets.   • When calculating a licensee’s #tangible_net_worth, a virtual currency asset need not be subtracted from total assets where the virtual currency asset has a #corresponding_customer_liability denominated in the same virtual currency.   • Recognizing virtual currency as #acceptable_capital for the limited purpose of satisfying customer obligations contributes to the #safe_and_sound operation of money transmitters. …   At its core, the MTMA [Money Transmission Modernization Act] is designed to ensure the #financial_security of money transmission customers. When customers provide money or monetary value to a money transmitter, they should trust that their money will be accessible or safely transferred according to an agreement between the parties. … #FASB has confirmed that virtual currencies are #intangible assets. … However, money transmitters involved in the day-to-day business of virtual currency transmission present a tension between the #accounting_standards’ codification of intangible assets and the principles on which the codification is based.  ... In the limited circumstances where virtual currency is held as an asset for the business purpose of providing customers with financial transactions that result in the creation and extinguishment of a corresponding obligation to the customer, virtual currency is #intangible_in_form_only. … Accordingly, holding virtual currency assets as #capital for the limited purpose of satisfying customer obligations denominated in the same virtual currency provides added #customer_protection."   — From: Conference of State Bank Supervisors (CSBS), Money Transmission Modernization Act Guidance Tangible Net Worth and Virtual Currency, June 2025   The full document is here: https://lnkd.in/eTyUfgw9

Crypto was supposed to revolutionize payments, right? Decentralized, secure, and seamless. But if you’ve ever tried making a crypto payment, you know the reality isn’t so simple. Here’s why the adoption of crypto as a mainstream payment method still faces serious roadblocks: ⭕ Price Volatility: Imagine agreeing on a payment, only to have the value shift dramatically before it’s confirmed. For traders, volatility is thrilling. For businesses? It’s a nightmare. Pricing goods, setting up consistent payments—nearly impossible when the value is constantly fluctuating. (And yes, I know we can use stablecoins, but those are currencies pegged to Fiat..) ⭕ Complex Transaction Flow: Ever felt anxious copying and pasting a long wallet address, triple-checking every character? One mistake, and your funds could disappear forever. Plus, understanding and managing gas fees adds another layer of frustration. Crypto transactions are far from user-friendly. ⭕ Security Risks: While blockchain is secure, the process of transferring crypto isn’t. Without verification for wallet addresses, you could be sending funds to a scammer instead of your intended recipient. And once a mistake is made, it’s irreversible. The risk is real. ⭕ Lack of Automation: Recurring payments? Milestone-based disbursements? Forget it. Most crypto systems require manual steps for each transaction, making complex or regular payments a hassle for businesses. ⭕ Operational Complexity for Businesses: Businesses face additional challenges, from managing private keys to navigating varying regulations. Integrating crypto with existing financial systems while managing unpredictable gas fees? That’s a tough nut to crack. ⭕ Opaque Addressing and Transaction Details: Traditional financial systems have identifiable entities and clear transaction details. Crypto relies on pseudonymous addresses, making it tough to verify recipients, understand transactions, or resolve disputes. The Bottom Line: For crypto to move from a speculative asset to a true alternative in traditional finance, these issues need solutions. We need better user interfaces, stronger security measures, automation tools, and effective ways to bridge crypto with traditional finance. Can you relate to these issues? Where do you see the biggest hurdles in crypto payments? P.S. Picture from Italy Dolomites 🏔 #Crypto #Blockchain #Fintech

PA Department of Banking and Securities: Virtual Currency is “Money” 👋 Happy Tuesday from your friendly neighborhood Compliance Officer! A heads up for all my FI/MSB friends in the Commonwealth of #Pennsylvania: 🎙️ On April 20, 2024, the Pennsylvania Department of Banking and Securities (DOBS) issued a policy statement to “clarify” that the Department’s interpretation of the term “money” in the Pennsylvania Money Transmitter Act (MTA) includes “virtual currency, such as Bitcoin.” The MTA provides in part that “[n]o person shall engage in the business of transmitting money by means of a transmittal instrument for a fee or other consideration with or on behalf of an individual without first having obtained a license from the department.’” 🚨 Thus, the Policy Statement means that virtual currency exchangers and related businesses doing business in Pennsylvania must become licensed as money transmitters. 🗓️ The effective date of the Policy Statement is October 15, 2024. Inconveniently, neither the DOBS nor the MTA actually define “virtual currency.” This is, therefore, left to the best judgement of chiefs of #compliance or #risk, and I would advise erring on the side of caution, given the reputational and actual damages that could be incurred by a failure to properly operate in the Commonwealth. 📑 The “clarification” offered by the Policy Statement is in fact a reversal by the DOBS. In January 2019, the DOBS had issued guidance (Prior Guidance) declaring that virtual currency, “including Bitcoin,” was not considered “money” under the MTA. Therefore, the Prior Guidance stated that the operator of the typical virtual currency exchange platform, kiosk, ATM or vending machine did NOT represent a money transmitter subject to Pennsylvania licensure. The Policy Statement does not, of course, acknowledge the Prior Guidance. 💡 My take? The approach of the various states regarding whether virtual currency exchangers represent money transmitters subject to state licensure is quickly evolving – as exemplified by this latest move by Pennsylvania – and is postured to include virtual currency within the ambit of state money transmission laws. Prepare yourselves to apply, apply, apply. #AML #BSA #MTL #MargoNetwork #Margo #crypto #cryptocurrency