BitOoda Regulatory Analysis, 10/26/20: FinCEN pushes on multiple fronts, continuing broader cross-agency U.S. regulatory campaign

3 min readOct 25, 2020


Continuing the trend we analyzed last week, FinCEN has followed up on the recent BSA charges against BitMEX with its first enforcement against a Bitcoin mixing service, as well as proposed changes to the Travel Rule and how it applies to digital assets. These are the latest moves in the growing trend of precedent-setting enforcement actions, policy initiatives, and interagency coordination that we assess signal a conscious push by U.S. regulators to bolster clarity around jurisdictional boundaries, enforcement priorities, and policy intentions regarding digital assets.

· FinCEN levied a $60 million penalty against the head of Helix and Coin Ninja for BSA violations, specifically for operating an unregistered MSB and conspiring to launder monetary instruments. In its release, FinCEN emphasized that exchangers and administrators of convertible virtual currencies are considered money transmitters, and specifically noted that Helix’s role as a mixer or tumbler allowed its customers to anonymously conduct illegal activities, which in our view signals that the agency will have little tolerance for actors that enable the illicit use of cryptocurrencies.

· On Friday afternoon, FinCEN and the Federal Reserve jointly issued a call for comments on proposed changes to the BSA recordkeeping regulations. The changes lower the threshold for international transactions requiring recordkeeping and Travel Rule data transmission from $3000 to $250 (the domestic threshold remains $3000), and clarify that the regulation applies to virtual currencies and “digital assets with legal tender status” by changing the definition of “money” in the regulation.

We can only conjecture as to whether this proactivity is the result of a coordinated cross-agency push, the result of several years of deliberate education and government-industry engagement that has given regulatory personnel the knowledge they need to shape the governance landscape more intentionally, or the coincident completion of a string of investigations and policy explorations. Regardless of the reasons, we welcome the growing clarity within the digital asset regulatory environment and see it as a validation of BitOoda’s efforts since our founding to build an industry-best regulatory stack and offer solutions to institutional clients looking to engage in a compliant manner utilizing our innovative and bespoke products and strategies.

Our mission is to apply our decades of experience in traditional capital markets to advance the digital asset ecosystem as the global financial system becomes increasingly blockchain-based. We have been early visionaries in looking toward the increased adoption by mainstream institutions and veteran investors — such as Paul Tudor Jones, who last week commented that bitcoin is the best inflation hedge and that the current rally is just in the “first inning” — that are looking for orderly market conditions and compliant market participants.

· In the derivatives space, we continue to drive volumes on compliant exchanges such as CME as institutional interest grows.

· In our work with miners offering a comprehensive suite of mining services and bespoke hedging and risk management strategies, our deep capital markets expertise and focus on compliance ensures our clients optimize their positions while mitigating risk.

· Going beyond ensuring that our brokers are fully and appropriately licensed for the transactions they facilitate, we also are driving the discussion on the use of compliant messaging platforms within the crypto ecosystem, as we see even experienced participants in the traditional commodities world falter because of the unauthorized use of communication platforms.

As U.S. regulatory authorities continue to accelerate their enforcement actions, policy changes, and legislative proposals, we welcome these efforts as we follow the migration of digital asset market activity toward regulated players and platforms. While the very application of the Travel Rule to digital assets can be seen as being at odds with the crypto community’s emphasis on privacy, actions such as lowering the value threshold for international transactions down to $250 clearly are intended to target noncompliant foreign actors operating in the U.S. market, which is consistent with the CFTC/DOJ actions against BitMEX, the CFTC Chair’s subsequent comments against offshore exchanges flouting U.S. laws, and DOJ’s enforcement framework that specifically discusses its authority to prosecute foreign VASPs located outside the U.S.

We continue to encourage current and prospective clients to evaluate the platforms and firms they use for digital asset transactions, and to highlight the increasing scrutiny and action from U.S. regulators against unlicensed and unregistered market players.




A boutique digital asset investment bank focused on providing innovative and compliant capital markets solutions for institutional clients.