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Crypto Law/Level I · What crypto is in law/1.3 Who's who/Lesson 4

FinCEN and anti-money-laundering

How the Treasury’s financial-crimes bureau turns crypto businesses into money transmitters with reporting duties, and where that line stops for users and software developers.

Education, not legal, tax or investment advice. Crypto law differs between countries and states and changes often. Check the current rules where you live with a qualified lawyer or tax adviser before you act.

The lean path

The cheapest, lowest-tax, simplest and most private route the law allows, best first. Each step names the rule it rests on and the condition that keeps it lawful.

  1. Buying, holding and spending crypto for yourself creates no FinCEN duty: FIN-2013-G001 says a user is not a money transmitter, so no registration, licence or reports; this ends once you exchange or transmit for others as a business.
  2. Self-custody keeps your data with fewer intermediaries, and FBAR rules (31 CFR 1010.350) still do not list foreign accounts holding only virtual currency as reportable, per Notice 2020-2; FinCEN plans to change that, and Form 8938 may still apply.
  3. A small US company owned by US persons no longer files beneficial-ownership reports with FinCEN, under the 2025 interim rule and the final rule of 11 August 2026; state filings, bank identity checks and tax reporting still apply.
  4. Dealing in cash above $10,000 triggers bank or business reports; this is lawful and costs you nothing, but splitting transactions to avoid them is the separate crime of structuring under 31 U.S.C. §5324, even when the money is clean.

MaterialsFinCEN guidance FIN-2013-G001 (18 March 2013) and FIN-2019-G001 (9 May 2019)FinCEN’s MSB Registrant Search on fincen.gov31 CFR 1010.410(f), the US ‘travel rule’ for transfers of $3,000 or more (on law.cornell.edu)

Wonder

  1. Does buying and holding crypto make me a money transmitter?
  2. Why do exchanges ask for my ID and question some of my transfers?
  3. Can writing wallet or privacy software be treated as running a money business?

Explore

  1. The Financial Crimes Enforcement Network (FinCEN) is a bureau of the US Treasury that administers the Bank Secrecy Act (BSA), a 1970 law that makes financial institutions keep records and file reports that help the government detect crime. ‘Anti-money-laundering’ (AML) means rules meant to stop criminals from disguising illegal money as clean money. FinCEN writes the rules, collects reports and can impose civil penalties. It does not prosecute; criminal cases go to the Department of Justice.
  2. FinCEN’s guidance FIN-2013-G001, issued on 18 March 2013, drew the basic line. A ‘user’ who obtains virtual currency to buy goods or services is not a money transmitter. An ‘exchanger’ or ‘administrator’ that accepts and transmits convertible virtual currency, or buys or sells it for any reason, is one, and so counts as a money services business (MSB). FIN-2019-G001, issued on 9 May 2019, applied the same rules to more business models, including unhosted wallets that users control themselves, decentralised applications and mixing services.
  3. Being an MSB brings duties. The business must register with FinCEN within 180 days of being established and renew every two years. It needs a written AML programme and customer identification. It must file a suspicious activity report (SAR) within 30 days on transactions of $2,000 or more that look suspicious, and transfers of $3,000 or more must carry information about the sender and recipient, often called the travel rule (31 CFR 1010.410(f)). Most states also require their own money transmitter licence (lesson 1.3.6). These duties explain the identity checks and questions customers see.
  4. Failures are expensive. On 21 November 2023 FinCEN announced a $3.4 billion penalty against Binance, the largest in its history, with a five-year monitorship. Treasury said Binance had operated as an unregistered MSB, failed to run an effective AML programme and failed to report more than 100,000 suspicious transactions linked to things such as ransomware and darknet markets. The settlement was coordinated with the Department of Justice, the CFTC (lesson 1.3.2) and OFAC (lesson 1.3.5). Separately, running an unlicensed money transmitting business can be a federal crime under 18 U.S.C. §1960.
  5. The hardest question is where software ends and money transmission begins. The founders of Samourai Wallet, a privacy-focused wallet, Keonne Rodriguez and William Hill, pleaded guilty in July 2025 to conspiring to operate an unlicensed money transmitting business; on 6 November 2025 Rodriguez was sentenced to five years in prison. In 2025 a jury convicted Tornado Cash developer Roman Storm of the same conspiracy charge but could not agree on the other charges against him. Whether people who write non-custodial software are transmitters is still argued, so the latest court record matters.
  6. The circle of covered businesses is growing. The GENIUS Act, signed on 18 July 2025, says a permitted payment stablecoin issuer is a financial institution under the BSA and must be able to block, freeze and reject transactions that break the law (lesson 1.2.5). It takes effect on the earlier of 18 months after enactment or 120 days after final regulations are issued. A practical check: search a crypto business’s legal name in FinCEN’s MSB Registrant Search. A listing only shows that a registration was filed; it is not a licence or a safety rating.

Key facts

  • The Bank Secrecy Act, administered by FinCEN, was enacted in 1970.
  • FinCEN guidance FIN-2013-G001 of 18 March 2013 says users are not money transmitters, but exchangers and administrators of convertible virtual currency are.
  • A money services business must register with FinCEN within 180 days of being established.
  • US rules require transmittals of funds of $3,000 or more to carry specified sender and recipient information.
  • On 21 November 2023 FinCEN announced a $3.4 billion penalty against Binance, the largest in its history.
  • The GENIUS Act treats a permitted payment stablecoin issuer as a financial institution for purposes of the Bank Secrecy Act.

Exercise nine, six, three, one

9CollectList up to 9 crypto services you use or have read about, such as exchanges, wallet apps, kiosks, payment apps, bridges, mixers or stablecoin issuers (some lists are shorter).
6ClusterSort them into 6 categories: custodial exchanges, self-custody wallet software, kiosks and payment apps, stablecoin issuers, privacy or mixing tools, and services you cannot place.
3DistillReduce the 6 to 3 groups: clearly money services businesses with AML duties, software that is probably not a transmitter, and services whose status is disputed.
1CrystallizeWrite 1 sentence explaining, in your own words, why FinCEN treats an exchange differently from a person who only buys and holds crypto.

Fact check

Dates, figures and claims checked against the published sources listed below.

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