FinCEN issues guidance on privacy coins, LocalBitcoins sellers, prediction markets, and other crypto businesses

US regulatory agency FinCEN released new guidance on whether certain crypto businesses are regulated as money services businesses.

Those who qualify fall under the scope of the agency and must comply with regulations that clash with user privacy.

FinCEN, a bureau of the US Department of Treasury which combats money laundering and terrorism financing, released new guidance on types of cryptocurrency-related businesses which are subject to regulations under the Bank Secrecy Act.

Privacy Coins: The operators of networks such as Zcash, Monero, and Verge are subject to FinCEN regulation.

It is impossible for these projects to fully comply with these regulations because, by nature, privacy coins conceal identifying information about transactions.

Internet Casinos and Prediction Markets: Blockchain platforms which facilitate betting and gambling, whether determined through chance or contingent on the outcome of certain events, also fall under money transmitter regulations.

Cloud Mining Contracts and Mining Pools: Leaders of mining pools are not subject to these regulations because, as stated by the guidelines, "These transfer are integral to the provision of services."

In addition to all the types of businesses described above, the sellers and developers of software, hardware, and other tools that transmit money are not considered money transmitters.

These rules pose another obstacle to cryptocurrency projects wishing to conduct business in the country, especially in conjunction with the United States' patchwork of state money transmitter laws-which is an additional layer of costly licenses and approvals on top of FinCEN regulations.

These regulations are sometimes at odds with the privacy of citizens and may impede innovation.