Some Dapps Can Qualify As US Money Transmitters, Says FinCEN

Decentralized applications (dapps) are reportedly able to qualify as money transmitters under the U.S. law, although this will only be possible in certain circumstances. The big reveal is according to the country’s very own anti-money-laundering (AML) regulator called FinCEN.

Dapps As Money Transmitters

In guidance sheet published by The Financial Crimes Enforcement Network (FinCEN), the AML regular outlines when and how a variety of individuals, companies, and even platforms in the digital currency space can be deemed money transmitters under the Bank Secrecy Act (BSA). The qualification, according to the said sheet, can also be applied in accordance with other relevant laws. Interestingly, dapps are just among other models highlighted by the regulator.

If a firm or person is designated as a money transmitter, it suggests that licenses must be obtained in the states where they perform business. Even more so, they will be responsible for following all federal AML and know-your-customer (KYC) regulations.

Just recently, the United States Treasury Department’s AML bureau revealed that while it does not necessarily bring forth any “new regulatory expectations or requirements,” it has been combining a deluge of previous documents, all of which have been issued over the past eight years. Also, the bureau goes on to detail in greater specificity how all participants in the industry can violate all AML regulations.

How FinCEN Qualifies Dapps

According to the aforementioned sheet, dapps created in a way that they cannot be controlled, neither by a single individual nor a group of individuals. In other words, dapps do not offer a single entity, one that can operate as the administrator.

FinCEN, however, claimed that if a dapp is capable of accepting and/or transmitting value, it will be automatically qualified as a money transmitter as long as it is covered under the same regulatory interpretation. This interpretation, on the other hand, is directly applied to all digital currency-dispensing vending machines.

So if a dapp performs money transmission, the definition of money transmitter will subsequently apply to the dapp itself. This definition will also be applied to the owners and/or operates of the dapp.

But as far as the developers behind a dapp are concerned, they do not qualify as money transmitters. This is also the case even if the dapp is developed in an attempt to issue cryptos and/or facilitate financial services in cryptos. However, the narrative can be changed once the dapp is put into use.