FinCEN's Evolving Role in Virtual Currency Oversight: From 2011 to 2021

As the digital currency landscape evolved, the Financial Crimes Enforcement Network (FinCEN) positioned itself early as a regulatory authority over the sector. In July 2011, it expanded the definition of “money services businesses” to include “other value that substitutes for currency,” setting the stage for a broader crackdown on virtual currency operations. By March 2013, FinCEN issued specific guidance clarifying that administrators and exchangers of convertible virtual currencies—not mere users—would be treated as money transmitters. This classification required them to register with FinCEN and adhere to anti-money laundering (AML) and counter-terrorist financing (CFT) measures, including recordkeeping and reporting obligations.

Jennifer Shasky Calvery, then-director of FinCEN, made clear the agency’s stance: virtual currencies were not exempt from the rules governing traditional finance. At a November 2013 Senate hearing, she emphasized that compliance with these regulations was a matter of corporate responsibility, directly challenging the decentralized ethos often championed by Bitcoin advocates. She also highlighted FinCEN’s close collaboration with several interagency bodies and working groups, including the FBI-led Virtual Currency Emerging Threats Working Group (VCET), which began in 2012, as well as the FDIC and the Department of the Treasury’s financial crime divisions.

This interagency coordination fed into a comprehensive AML framework that continued to tighten over the years. In 2021, FinCEN’s prior guidance was codified through amendments to the Bank Secrecy Act, officially bringing digital assets under its regulatory umbrella. The revised law reaffirmed FinCEN’s authority over “value that substitutes for currency,” mandating that digital asset exchanges formally register and comply with expanded reporting requirements.

That same year, FinCEN received over 1.1 million Suspicious Activity Reports (SARs) from both traditional banks and cryptocurrency platforms. These included nearly 8,000 reports of suspicious cyber events and more than 284,000 flagged for potential money laundering. The data underscored both the scale of virtual currency adoption and the increasing risks associated with its misuse—highlighting why FinCEN’s early intervention has become a cornerstone of U.S. crypto policy.

Disclaimer: This article is for informational purposes only and does not constitute financial, legal, or investment advice. Readers should conduct their own research or consult a professional before making decisions involving cryptocurrency or regulatory compliance.