Blockchain Applications in Financial Services BFC Practice Questions (Page 1)

Questions 1–5

1. 1foundation · easy

   What is a common regulatory challenge when applying blockchain to financial services?

   • ABlockchain is not allowed to be used in any regulated financial market.
   • BThe immutability of blockchain records conflicts with data privacy regulations that require the right to erasure.
   • CBlockchain transactions are always anonymous, making it impossible to comply with anti-money laundering (AML) rules.
   • DRegulators require all blockchain transactions to be processed by a central bank.
   Reveal Solution Discussion Select an answer first
2. 2foundation · easy

   In DeFi, how do users typically trade tokens without a traditional centralized exchange?

   • AThey rely on a broker to find a counterparty and settle off-chain.
   • BThey use a peer-to-peer network where trades are recorded in a private ledger maintained by the users.
   • CThey send tokens to the exchange's wallet, and the exchange matches orders manually.
   • DThey use a decentralized exchange (DEX) that executes trades via smart contracts.
   Reveal Solution Discussion Select an answer first
4. 3foundation · easy

   What is the primary function of a smart contract in a financial agreement such as a loan?

   • ATo replace the need for any legal contract or regulatory oversight.
   • BTo store the full legal text of the agreement in an encrypted database off-chain.
   • CTo automatically execute and enforce the terms of the agreement when predefined conditions are met.
   • DTo provide a graphical user interface for users to manually approve each transaction.
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5. 4foundation · easy

   How does tokenization of a commodity like gold improve liquidity compared to physical ownership?

   • AIt guarantees that the token price will always match the spot price of gold.
   • BIt enables trading of fractional units on digital exchanges, making it easier to buy and sell small amounts.
   • CIt eliminates the need for any storage or insurance of the physical gold.
   • DIt allows the gold to be physically moved to multiple locations simultaneously.
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6. 5application · medium

   A fintech company processes cross-border payroll for remote workers in 15 countries. They currently use correspondent banking, which takes 3–5 business days and incurs multiple intermediary fees. The company wants to reduce settlement time and fees while maintaining regulatory oversight. Which approach best meets these requirements?

   • AAdopt a private blockchain that only the company's internal IT team can access, with no external participants.
   • BUse a permissioned blockchain network with participating banks and a central bank digital currency (CBDC) for interbank settlement.
   • CContinue using correspondent banking but negotiate lower fees with a single intermediary bank.
   • DIssue a stablecoin on a public blockchain and require all recipients to convert to local fiat through a licensed exchange.
   Reveal Solution Discussion Select an answer first