The Financial Crimes Enforcement Network (FinCEN) has been to date one of the most active – and more controversial – US federal agencies to address the bitcoin ecosystem, doing so through a number of published rulings aiming to provide clarity to the industry.
Founded in 1990, the US agency is responsible for collecting information about financial transactions that may be used to support money laundering, terrorist financing and financial crimes. FinCEN first addressed emerging virtual currencies in 2008 and has been simultaneously praised for engaging with the bitcoin ecosystem, while facing criticism from those who say its efforts have sometimes stifled innovation.
In a new interview with CoinDesk, FinCEN Director Jennifer Shasky Calvery has moved to counter this narrative, reiterating that while her agency's foremost goal is to protect domestic businesses and citizens, FinCEN remains committed to minimizing the burden of bitcoin and digital currency startups that are making good-faith efforts to comply with regulation.
Calvery told CoinDesk:
Further, Calvery said that FinCEN is more broadly seeking to gain the support of the domestic bitcoin ecosystem, suggesting that the industry should seek to demonstrate how the technology could possibly be an aid to law enforcement agencies and organisations such as FinCEN:
The comments come as part of wide-ranging interview with CoinDesk in which Calvery discussed developments in the field of digital currency, New York's BitLicense proposal and what FinCEN expects from bitcoin businesses seeking to serve to the US public.
Bitcoin steps up to crime concerns
Throughout the interview, Calvery sought to make clear her belief that bitcoin as a technology is not more susceptible to criminal misuse than other financial services.
Rather, Calvery said that bitcoin's status as a newcomer to the financial ecosystem has made it the target of bad actors.
She suggested that FinCEN believes the bitcoin community is taking steps to combat the technology's use in dark markets and illicit commerce, but that some businesses are actively making it difficult for her agency. Overall, however, her tone was arguably softer than in interviews earlier this year, when Silk Road and its related law enforcement cases dominated headlines.
Informal bitcoin dealers on radar
Consistent with its mandate as chief AML regulator for the US, Calvery asserted that all members of the bitcoin ecosystem that fall under FinCEN's guidance should follow its directives.
Of particular concern, Calvery said, are informal bitcoin dealers who may think they can operate outside of the agency's oversight.
"I hear reports that there are folks who say that they'll wait and see if there's any enforcement behind our requirements before they take it too seriously, so that's unfortunate. I have to hear that folks want to see folks do wrong, and take action before they're willing to comply, but we're willing to do that if we need to," she said.
As for how many bitcoin businesses may be following its guidance, Calvery said she can only speculate, given that money services businesses (MSBs) do not need to register as a bitcoin business:
However, Calvery aimed to characterize her agency as one that is open to engaging with bitcoin businesses, and said that she has been encouraged by bitcoin startups that have hired experienced AML compliance professionals.
To those without such experienced personnel, Calvery said that the FinCEN Resource Center is available to provide answers within 24 hours. More specific questions, she indicated, will receive written responses to be published on FinCEN's website.
One slice of the pie
Calvery also commented on how FinCEN fits into the broader framework of US regulatory organisations, cautioning that the agency is just one "slice of a pie" that includes agencies dedicated to capital markets, consumer protection and safety and soundness.
Calvery suggested that while FinCEN has been a first-mover, other agencies are now beginning to assess how bitcoin and digital currency fall under their mandates, saying:
For its part, Calvery indicated that FinCEN is trying to create a consistent framework across the entire financial ecosystem, one that covers everything from cash to credit cards to bitcoin.
"I guess we're agnostic in terms of how we think of any industry or product. For us, every industry and product through which value flows provides an opportunity for criminals and bad actors to take advantage of it," Calvery added.
BitLicense not technology-specific
Calvery also weighed in on the debate surrounding New York's BitLicense proposal, suggesting that she doesn't believe it to be technology-specific, as some in the industry have alleged.
"When I looked through it, I saw a lot of concepts that I was already familiar with from New York and other places," Calvery said.
Though she commended Ben Lawsky for playing a leadership role on the project, Calvery indicated her belief that the New York regulator, like her own organisation, also needs the support of some other federal agencies.
Calvery told CoinDesk:
Cash-like controls on the table
More broadly, Calvery suggested that FinCEN believes that it may need to alter its approach to bitcoin and digital currency should the technology be adopted more widely. Calvery first proposed a similar path forward for the agency at the US Senate hearings on bitcoin last November.
However, her comments suggest that this scenario may still be far into the future, when it becomes possible for larger numbers of individuals to conduct their finances solely in the bitcoin ecosystem.
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