Ethics in Technology adoption

Dealing with ethical dilemmas in technology innovation and regulation

Dealing with ethical dilemmas in technology innovation and regulation is a critical aspect of ensuring that technological advancements are made responsibly. The rapid pace of technological innovation has led to a growing need for ethical considerations to be integrated into the development and deployment of technology. In this blog post, we will explore the importance of dealing with ethical dilemmas in technology innovation and regulation.

Dealing with ethical dilemmas in technology innovation and regulation

Ethical dilemmas arise when there is a conflict between the values and principles that guide the development and deployment of technology. These dilemmas can arise in various forms, such as privacy concerns, data security, algorithmic bias, and more – from both the normal operation of the technology and its failures. It is essential to address these dilemmas to ensure that technology is developed and used in a way that is responsible, transparent, and accountable.

One of the key benefits of dealing with ethical dilemmas in technology innovation and regulation is that it helps to build trust and confidence among users. By prioritizing ethical considerations, organizations can demonstrate their commitment to responsible innovation and build trust with their customers. Another benefit of dealing with ethical dilemmas is that it helps to ensure that technology is developed and used in a way that is fair and equitable. Ethical considerations can help to identify potential biases and ensure that technology is designed to benefit everyone, regardless of their background.

In conclusion, dealing with ethical dilemmas in technology innovation and regulation is essential for ensuring that technological advancements are made responsibly. These dilemmas can arise in various forms, and it is crucial to address them to ensure that technology is developed and used in a way that is responsible, transparent, and accountable. By prioritizing ethical considerations, organizations can demonstrate their commitment to responsible innovation and build trust with their customers. If you’re interested in learning more about the ethical considerations of technology adoption, you might want to check out the book “Ethics, Law and Technology Adoption: Navigating Technology Adoption Challenges” by Dr. Steven A. Wright. The book provides insights into the main ethical frameworks and principles that can inform decision-making and accountability in technology development and deployment, as well as the key legal issues and challenges that emerge from the interaction of new technologies and old laws. 

Dispute Resolution Mechanisms for Smart Contracts:

A Deep Dive into “Blockchain Smart Contracts and the Law"

As blockchain technology continues to evolve, smart contracts have emerged as a revolutionary tool in the digital landscape with applications from pharmacy to telecommunications . However, with their rise comes the need for effective dispute resolution mechanisms for smart contracts. The book “Blockchain Smart Contracts and the Law” provides an insightful exploration of this topic.

Smart contracts, self-executing contracts with the terms of the agreement directly written into code, are a key feature of blockchain technology. They automatically execute transactions when predefined conditions are met, reducing the risk of fraud and discrepancies. However, disputes can still arise, necessitating effective resolution mechanisms. Traditional dispute resolution methods, such as litigation and arbitration, may not be suitable for smart contracts due to their decentralized nature. Instead, innovative solutions are needed that align with the principles of blockchain technology.

Dispute Resolution Mechanisms for Smart Contracts:

One such solution is on-chain dispute resolution. This involves embedding dispute resolution mechanisms directly into the blockchain. It allows for disputes to be resolved within the blockchain ecosystem, maintaining the decentralization and transparency of the technology.

Another solution is off-chain dispute resolution. This involves resolving disputes outside the blockchain but in a way that respects the technology’s principles. This could involve third-party arbitration services that specialize in blockchain disputes.

The book “Blockchain Smart Contracts and the Law” delves into these dispute resolution mechanisms in detail. It explores their advantages and disadvantages, providing readers with a comprehensive understanding of how disputes related to smart contracts can be effectively resolved.

In conclusion, as smart contracts continue to gain popularity, the need for effective dispute resolution mechanisms will only grow. “Blockchain Smart Contracts and the Law” serves as a valuable resource for anyone looking to understand this complex landscape.

Ready to delve deeper into the world of smart contracts and their dispute resolution mechanisms? Equip yourself with the knowledge to navigate this landscape confidently and legally. Get your copy of “Blockchain Smart Contracts and the Law” today and take the first step towards understanding the future of smart contracts.

Ethics in Technology adoption

Understanding the ethical implications of technology development and deployment

Understanding the ethical implications of technology development and deployment is crucial in today’s world. As technology continues to advance at an unprecedented pace, it is essential to ensure that its development and use align with ethical and legal standards. In this blog post, we will explore some of the key challenges and considerations involved in understanding the ethical implications of technology development and deployment.

One of the primary ethical challenges of technology development is ensuring that it is transparent and accountable. This requires a clear understanding of the algorithms, data, and decision-making processes that underlie new technologies, as well as the mechanisms for oversight and redress when things go wrong. For example, the use of facial recognition technology by law enforcement agencies raises important questions about privacy, bias, and due process. It is essential to ensure that the use of such technologies is subject to appropriate legal and ethical standards and that there are effective mechanisms for accountability and redress when they are misused or abused.

"Understanding the ethical implications of technology development and deployment"

In addition to ethical considerations, technology development also raises important legal challenges. One of the primary legal challenges is ensuring that new technologies comply with existing laws and regulations. This requires a careful consideration of the legal frameworks that apply to new technologies, as well as the mechanisms for enforcing them. For example, the development of autonomous vehicles raises important legal questions about liability, insurance, and safety. It is essential to ensure that the development and use of such technologies comply with existing traffic laws and regulations, and that there are effective mechanisms for enforcing them.

In conclusion, understanding the ethical implications of technology development and deployment is a multifaceted and ongoing challenge that requires a careful consideration of the potential risks and benefits of new technologies, as well as the values and principles that should guide their development and use. It is essential to ensure that technology is developed and used in ways that respect human dignity, rights, and values, and that it is subject to appropriate legal and ethical standards. By doing so, we can help ensure that technology continues to advance in ways that benefit individuals and society as a whole.

If you are interested in learning more about the ethical and legal challenges of technology adoption, I recommend checking out the book “Ethics Law and Technology Adoption: Navigating Technology Adoption Challenges”. The book provides valuable insights and guidance on how to navigate the complex landscape of technology innovation and regulation, and how to ensure that technology is developed and used in ways that align with ethical and legal standards.

Blockchain Voting

A New Era of Democracy

In the digital age, blockchain technology is revolutionizing various sectors, from organizations  to IoT and voting systems are no exception. The book “Blockchain Smart Contracts and the Law” provides a comprehensive exploration of this topic, demonstrating how blockchain can transform the way we vote.
Blockchain voting refers to the use of blockchain technology to record and verify votes in an election. It offers a secure, transparent, and tamper-proof method of voting, addressing many of the challenges associated with traditional voting systems.

blockchain voting

One of the key advantages of blockchains for voting is its potential to enhance election integrity. With blockchain, each vote is recorded as a transaction on the blockchain, making it nearly impossible to change or delete votes. This feature can significantly reduce the risk of election fraud.

Another advantage is the potential for increased voter participation. Blockchain are decentralized so voting can be done remotely, making it more accessible to those who may find it difficult to reach polling stations. This could lead to higher voter turnout and a more representative democracy. However, the implementation of voting using blockchains is not without challenges. Issues such as voter privacy, system scalability, and legal compliance need to be addressed. The book “Blockchain Smart Contracts and the Law” delves into these challenges, providing valuable insights for anyone interested in the intersection of blockchain and voting.

In conclusion, blockchain voting represents a promising solution to many of the challenges faced by traditional voting systems. It has the potential to enhance election integrity, increase voter participation, and usher in a new era of democracy. The book “Blockchain Smart Contracts and the Law” serves as a valuable guide for navigating this new landscape. Ready to delve deeper into the world of blockchain voting? Equip yourself with the knowledge to navigate this landscape confidently and legally. Get your copy of “Blockchain Smart Contracts and the Law” today and take the first step towards understanding the future of voting.

Technology Adoption and Engineering Ethics: A Crucial Nexus

Engineers as agents of technological change

In today’s rapidly evolving technological landscape, the adoption of new technologies has far-reaching implications. Engineers, as the architects of these innovations, bear a significant responsibility to ensure that technology adoption aligns with ethical principles. Let’s delve into the intersection of technology adoption and engineering ethics.

engineers as agents of technological change

Ethical Challenges in Technology Adoption

As engineers design, develop, and deploy technologies, they encounter ethical dilemmas. Balancing progress with societal well-being is no easy task. Questions arise: Should we prioritize convenience over privacy? How do we address biases in AI algorithms? These challenges underscore the need for ethical frameworks that guide technological adoption.

Digital Transformation and Its Impact

Digital transformation is reshaping economies across sectors. From healthcare to finance, organizations are embracing automation, data analytics, and AI. This transformation affects not only businesses but also individuals. As technology becomes ubiquitous, engineers must consider its impact on privacy, security, and social equity.

Individual Choice vs. Collective Influence

Technology adoption is often seen as an individual choice. However, larger-scale initiatives—such as government policies or corporate strategies—shape this landscape. Engineers must navigate these external forces while adhering to their professional ethics. Striking a balance between innovation and responsibility is crucial.

The Role of Engineers

Engineers play a pivotal role in technology adoption. They bridge the gap between theory and practice, translating ideas into tangible solutions. Their decisions impact millions of lives. Whether it’s implementing renewable energy sources or developing smart cities, ethical considerations guide their actions.

Consequences of Ethical Failures

When ethical lapses occur during technology adoption, the repercussions can be severe. Data breaches compromise privacy, biased algorithms perpetuate discrimination, and unsafe designs endanger lives. Engineers must recognize that their choices reverberate beyond code and circuits.

AI Ethics Across Disciplines

The ethics of AI usage transcends specific engineering branches. Whether in software development, robotics, or biomedical engineering, discussions about fairness, transparency, and accountability are universal. Engineers must engage in these dialogues to shape responsible AI adoption.

Impact on Education

Technology adoption and digital transformation extend to education. Engineering curricula now emphasize ethics, sustainability, and social impact. Tomorrow’s engineers learn not only technical skills but also the ethical foundations that guide their work. Higher education institutions must prepare students for this evolving landscape.

In conclusion, technology adoption is not merely about functionality; it’s about the values we embed in our creations. Engineers must champion ethical practices, ensuring that innovation serves humanity without compromising our shared well-being. For further reading on this see:  Wright, S.A. (2024) Engineers as Agents of Technological Change: Ethical Challenges of Technology Adoption, ASEE Southeastern Section Conference or the book

Ethics, Law and Technology Adoption.

Leveraging Blockchain for Business Innovation

A Deep Dive into “Blockchain Smart Contracts and the Law”

In the ever-evolving digital landscape, leveraging blockchain technology for business innovation has emerged as a revolutionary tool that holds immense potential in industries as diverse as healthcare or telecommunications. The book “Blockchain Smart Contracts and the Law” provides an in-depth exploration of this topic, demonstrating how leveraging blockchain for businesses can create strategic advantage. At its core, blockchain is a decentralized and transparent ledger system. It offers a secure way to record transactions, eliminating the need for intermediaries. This feature is particularly beneficial for businesses, as it can streamline operations, reduce costs, and enhance transparency. It also fosters trust among stakeholders, as every transaction is verifiable and immutable.

leveraging blockchain for business innovation

One of the most promising applications of blockchain is in the realm of smart contracts. These are self-executing contracts with the terms of the agreement directly written into code. They automatically execute transactions when predefined conditions are met, reducing the risk of fraud and discrepancies. This automation can significantly improve efficiency and accuracy in business operations.

The book “Blockchain Smart Contracts and the Law” delves into the legal aspects of these smart contracts. It highlights the potential legal challenges and offers guidance on navigating the complex regulatory landscape. This knowledge is crucial for businesses looking to adopt blockchain technology, as it ensures they can do so in a legally compliant manner.

The book also explores the transformative potential of blockchain and smart contracts across various industries. From supply chain management to financial services, blockchain can disrupt traditional business models and pave the way for innovative solutions. It can enable real-time tracking of goods, facilitate cross-border payments, and much more. However, the adoption of blockchain is not without challenges. Issues such as scalability, interoperability, and data privacy need to be addressed. The book provides a balanced perspective, discussing these challenges and suggesting possible solutions.

In conclusion, “Blockchain Smart Contracts and the Law” serves as a valuable resource for businesses seeking to innovate using blockchain technology. It offers a comprehensive overview of the legal implications of blockchain and smart contracts, empowering businesses to harness the power of this technology while mitigating potential risks. Ready to leverage blockchain for your business innovation? Equip yourself with the knowledge to navigate the blockchain landscape confidently and legally. Get your copy of “Blockchain Smart Contracts and the Law” today and take the first step towards a blockchain-powered future.

Digitization and Remote Agency: A New Era

Insights from “Blockchain Smart Contracts and the Law”

Digitization and remote agency have continued to accelerate as software eats the world. With the advent of advanced technologies, businesses are now able to operate remotely, transcending geographical boundaries and time zones.

The digitization of business processes has revolutionized the way organizations operate. It has enabled them to streamline operations, improve efficiency, and deliver better customer experiences. From cloud computing to artificial intelligence, digital technologies are reshaping the business landscape. One of the most significant developments in this digital revolution is the emergence of blockchain technology. Blockchain, with its decentralized and transparent nature, offers a secure platform for conducting business transactions. It eliminates the need for intermediaries, thereby reducing costs and increasing efficiency.

A key application of blockchain technology is smart contracts. These are self-executing contracts with the terms of the agreement directly written into code. They automatically execute transactions when predefined conditions are met, eliminating the need for manual intervention. However, as with any new technology, blockchain and smart contracts present legal challenges. Understanding these challenges and how to navigate them is crucial for businesses looking to leverage these technologies.

This is where the book “Blockchain Smart Contracts and the Law” comes in. This comprehensive guide provides an in-depth understanding of the legal aspects of blockchain and smart contracts. It offers valuable insights into how businesses can mitigate risks and ensure compliance while reaping the benefits of these technologies. As we move further into the digital age, the role of remote agency will continue to evolve. Businesses that adapt to these changes and leverage new technologies will be the ones that thrive.

In conclusion, the digitization of business processes and the advent of technologies like blockchain and smart contracts are transforming the concept of remote agency. To navigate this new landscape, it is essential to understand the legal implications of these technologies.Equip yourself with the knowledge to navigate this new era. Get your copy of “Blockchain Smart Contracts and the Law” today and stay ahead of the curve.

Ethical considerations of technology adoption

for engineering students

Engineering students are the future of technology development and deployment. As such, they need to consider the ethical implications of technology adoption. Ethical considerations of technology adoption ensure that technology is used responsibly. One of the primary reasons why ethics is important in technology adoption is that technology can have significant impacts on society. For example, algorithms based on commercial data can allow firms to sell products they assume we can afford and avoid showing us products they assume we cannot. Technologies can also be morally contentious by “forcing deep reflection on personal values and societal norms”. Technologies have embedded values or politics, as they make some actions easier or more difficult, or even work differently for different groups of people. Therefore, engineering students must ensure that technology is developed and deployed in a way that is fair and equitable.

Another reason why ethics is important in technology adoption is that technology can have adverse effects on people. Technology can threaten individual autonomy, violate privacy rights, and directly harm individuals financially and physically. Therefore, engineering students must ensure that technology is developed and deployed in a way that is safe and secure for all.

If you’re an engineering student interested in learning more about the ethical considerations of technology adoption, you might want to check out the book “Ethics, Law and Technology Adoption: Navigating Technology Adoption Challenges” by Dr. Steven A. WrightThe book provides insights into the main ethical frameworks and principles that can inform decision-making and accountability in technology development and deployment, as well as the key legal issues and challenges that emerge from the interaction of new technologies and old lawsYou can purchase the book on Amazon.

Ethics is an essential consideration for engineering students when adopting new technologies. It is important to ensure that technology is developed and deployed in a way that is fair, equitable, safe, and secure for all. By considering the ethical implications of technology adoption, engineering students can help to ensure that technology is used responsibly. Ultimately, this will help to build trust between organizations and the public and ensure that technology is used to benefit society as a whole.

Deontic Ethics

Ethics in Action

A Deontic ethical framework is a normative ethical theory that judges the morality of an action based on whether it follows a set of rules or principles, rather than on its consequences. The word deontic comes from the Greek word deon, meaning duty or obligation. Deontic ethics is also known as duty-based ethics or deontology. According to deontic ethics, actions are morally right or wrong in themselves, regardless of the outcomes they produce. The motives of the agent who performs the action are also irrelevant to its moral value. What matters is whether the action conforms to a moral rule that is binding on all rational beings. For example, lying is always wrong according to deontic ethics, even if it saves someone’s life or prevents harm.

There are different versions of deontic ethics, depending on how they specify the source and content of the moral rules. Some deontologists derive the rules from a divine command, a natural law, a social contract, or a rational intuition. Some deontologists are monists, meaning they believe there is one supreme rule that governs all moral decisions, such as the categorical imperative of Immanuel Kant. Other deontologists are pluralists, meaning they believe there are multiple rules that sometimes conflict with each other, such as the prima facie duties of W.D. Ross (See e.g., [Ross 1939]).

Image Credit: Adobe StockDeontic Ethics - Duty

Deontic Ethics – Duty

The main advantage of deontic ethics is that it provides clear and objective guidance for moral action. It does not depend on subjective preferences, emotions, or consequences that are uncertain or unpredictable. It also respects the dignity and autonomy of rational agents by treating them as ends in themselves, not as means to an end. The main weakness of deontic ethics is that it can lead to morally problematic results when the rules conflict with each other or with common sense. It can also be rigid and inflexible in dealing with complex and changing situations. It may not account for the moral relevance of circumstances, intentions, or relationships. It may also be difficult to justify or agree on the origin and validity of the moral rules. The following are some of the different deontic ethic frameworks:

Kantianism: This is the most influential and well-known deontic ethic framework, developed by Immanuel Kant ( see e.g., [Kant 1785]). It holds that the only thing that is good in itself is a good will, which acts from a sense of duty. Duty is determined by the categorical imperative, a universal and rational principle that commands us to act in such a way that we can will our maxim to become a universal law. Kantianism respects the dignity and autonomy of rational beings by treating them as ends in themselves, not as means to an end.
Contractarianism: This is a deontic ethic framework that bases morality on a hypothetical social contract, a rational agreement among free and equal persons to abide by certain rules or principles for their mutual benefit. The contract can be seen as a way of justifying or deriving moral rules, or as a way of testing their validity. Contractarianism can take different forms, such as the original position of John Rawls (See e.g., [Rawls 1971]), the state of nature of Thomas Hobbes (See e.g., [Hobbes 1651]), or the veil of ignorance of John Harsanyi (See e.g.,Harsanyi 1977]).
Natural rights theory: This is a deontic ethic framework that holds that every individual has certain universal and inalienable rights, such as life, liberty, and property, that are inherent to human nature and independent of any actions or ethics. These rights are derived from natural law, a moral order that is discoverable by reason and binds all rational beings. Natural rights theory can be traced back to the works of John Locke (See e.g., [Locke 1689]), Hugo Grotius (See e.g., [Grotius 1625]), and Samuel Pufendorf (See e.g., [Pufendorf 1673]).
Divine command theory: This is a deontic ethic framework that holds that an action is right if and only if God has commanded it to be right, and wrong if and only if God has forbidden it. God’s commands are the ultimate source and standard of morality, and human reason and conscience are subordinate to divine revelation. Divine command theory can be found in various religious traditions, such as Judaism, Christianity, and Islam.
Pluralistic deontology This is a deontic ethic framework that holds that there are multiple moral rules or principles that sometimes conflict with each other, and that there is no single supreme rule that can resolve these conflicts. Instead, we have to use our judgment and intuition to weigh and balance the different rules in each situation. One example of pluralistic deontology is the prima facie duties of W.D. Ross, such as fidelity, gratitude, justice, beneficence, self-improvement, and non-maleficence.
Agent-centered deontology: This is a deontic ethic framework that focuses on the moral obligations and permissions of the agent who performs an action, rather than on the rights or interests of the patient who is affected by the action. Agent-centered deontology can include special duties to oneself or to specific others, such as friends or family, or special permissions to act in self-defense or out of partiality. Agent-centered deontology can also involve agent-relative reasons or values, such as honor, integrity, or loyalty.
Patient-centered deontology: This is a deontic ethic framework that focuses on the moral rights or interests of the patient who is affected by an action, rather than on the obligations or permissions of the agent who performs the action. Patient-centered deontology can include negative rights to be free from harm or interference, or positive rights to receive aid or assistance. Patient-centered deontology can also involve patient-relative reasons or values, such as dignity, respect, or welfare.
Monistic deontology: This is a deontic ethic framework that holds that there is one supreme moral rule or principle that governs all moral decisions, and that all other rules or principles are derived from or subordinate to it. The supreme rule can be formulated in different ways, such as the golden rule of doing unto others as you would have them do unto you, or the principle of universalizability of R.M. Hare (See e.g., [Hare 1981]).
Rule deontology: This is a deontic ethic framework that holds that morality consists of following a set of general and abstract rules or principles that apply to all situations and circumstances. The rules can be derived from various sources, such as reason, intuition, tradition, or authority.

Deontic ethics has some advantages over consequentialist and virtue ethics. One advantage is that deontic ethics can provide clear and objective guidance for moral action, based on a set of rules or principles that are binding on all rational beings. Consequentialist ethics – even the seemingly quantitative utilitarianism, by contrast, can be vague and uncertain, as it depends on predicting and evaluating the outcomes of actions, which can be complex and unpredictable. Virtue ethics, by contrast, can be subjective and relative, as it depends on cultivating and expressing certain character traits, which can vary across cultures and situations. Another advantage of deontic ethics is that it respects the dignity and autonomy of rational beings, by treating them as ends in themselves, not as means to an end. Consequentialist ethics, by contrast, can violate the rights and interests of individuals or minorities, by sacrificing them for the sake of maximizing the good for the majority or the whole. Virtue ethics, by contrast, can neglect the rights and interests of others, by focusing on one’s own moral excellence or happiness. A third advantage of deontic ethics is that it can account for strong and widely shared moral intuitions about our duties, such as not lying, stealing, killing, or harming others, even when good consequences are in the offing. Consequentialist ethics, by contrast, can justify immoral actions, such as lying, stealing, killing, or harming others, if they produce better consequences overall. Virtue ethics, by contrast, can ignore immoral actions, such as lying, stealing, killing, or harming others, if they are consistent with one’s moral character or ideals.

[Grotius 1625]     Grotius, H. (2005). The rights of war and peace (R. Tuck, Ed.). Liberty Fund. (Original work published 1625)

[Harsanyi 1977]  Harsanyi, J. C. (1977). Rational behavior and bargaining equilibrium in games and social situations. Cambridge University Press.

[Hare 1981]           Hare, R.M. (1981). Moral thinking: Its levels, method and point. Oxford University Press.

[Hobbes 1651]     Hobbes, T. (1996). Leviathan (R. Tuck, Ed.). Cambridge University Press. (Original work published 1651)

[Kant 1785]          Kant, I. (1998). Groundwork of the metaphysics of morals (M. Gregor, Trans.). Cambridge University Press. (Original work published 1785)

[Locke1689]         Locke, J. (1988). Two treatises of government (P. Laslett, Ed.). Cambridge University Press. (Original work published 1689)

[Pufendorf 1673] Pufendorf, S. (2003). The whole duty of man according to the law of nature (I. Hunter & D. Saunders, Trans.). Liberty Fund. (Original work published 1673)

[Rawls 1977]         Rawls, J. (1971). A theory of justice. Harvard University Press.

[Ross 1939]           Ross, W.D. (1939). Foundations of ethics. Oxford University Press

 

AML Primer for Crypto Enthusiasts

Money laundering is a process of taking the proceeds of criminal activity and making them appear as if they have been lawfully obtained (criminalized in the US under  18 U.S. Code § 1957). UNODC estimates the scale of money laundering at 2-5% of global GDP. Criminal activities in narcotics and later terrorism were the primary motivation for increased surveillance of financial transactions in the US and abroad under the rubric of Anti Money Laundering (AML) enabling legislation, starting with the Bank Secrecy Act of 1970 (BSA), (31 U.S.C.A. §§ 5311 et seq.). 

UN activities through the Office on Drugs and crime have a global program encouraging similar legislation and regulation in other countries as well as related UN conventions starting with the 1988 UN convention against Illegal traffic in Narcotic drugs. These international legal coordination activities are relevant for crypto enthusiasts because the peer-peer networks underlying many cryptocurrencies are inherently international.  UN resolutions in 2005 and 2006 also recognized the importance of more specific recommendations from the Financial Action Task Force (FATF). FATF recently issued their Guidance for a risk based approach to Virtual Assets and Virtual Asset Service Providers; this provides common terminology and interpretation of how other FATF regulations should be interpreted in the case of virtual assets such as crypto currencies (whether fiat backed or not) and considering the roles of virtual asset service providers that provide services to exchange cryptocurrencies (whether to fiat currencies or other virtual assets), as well as some comparisons of the relevant regulatory regimes in several different countries. All of the enabling legislation predates the release of Nakamoto’s Bitcoin whitepaper in 2008.

At the federal level, FINCEN  regulates  money transmission in coordination with State regulations and laws on money transmission. To the extent that a virtual asset is a security, the SEC has regulatory and enforcement authority and securities require registration with FINRA. Virtual assets that may qualify as commodities or derivatives (e.g. futures) would be within the jurisdiction of the CFTC; and require registration with the National Futures Association (NFA). US financial sanctions (which apply to transactions in cryptocurrencies as well as fiat currency)  are administered by OFAC.

Many cryptocurrency exchanges fall within the category of Money Transmitters under the BSA, thus requiring registration with FINCEN and additional state licensing. State money transmitter laws vary and not all State address cryptocurrencies explicitly. The money transmitter laws and regulations are not specific to cryptocurrencies and include some potentially broad categories such as Money Service Businesses (MSBs). The MSB definition in §1010.100 (ff) is fairly complex and broad interpretation may imply that even businesses accepting cryptocurrencies need to register as MSBs.

FINCEN registration and AML reporting  and other AML compliance program requirements are identified under 31 CFR Chapter X. In particular, reporting by MSBs is required for Currency Transaction Reports (CTRs) (under §1022.310) and Suspicious Activity Reports(SARs) (under §1022.320), with threshold transaction amounts and red flag indicators triggering reporting. Money transmitters have been required to submit electronic SARs and CTRs since 2013.  The number of CTRs is largely driven by economic transaction activity; SARs are more driven by the compliance programs of the Money Transmitters. While SARs are not specific to cryptocurrency transactions, FINCEN publishes aggregate statistics on SARs; and, 10s of thousands of SARs are generated in a year within a single state.

FINCEN also recently issued an advisory on illicit activity involving convertible virtual currency. They have also initiated enforcement actions against cryptocurrency exchanges that failed to register as MSBs.

Businesses involved with cryptocurrencies clearly need to review their registration and compliance procedures for conformance with the relevant AML regulations in their jurisdictions. This is not just a US phenomenon – since the FATF’s Guidance for a risk based approach to Virtual Assets and Virtual Asset Service Providers, other jurisdictions  (e.g., the Swiss FINMA) are issuing similar AML guidance even as they proceed with licensing crypto exchanges.