Compliance, Regulatory Standards, and Legal Challenges BFC Practice Questions (Page 3)

Questions 11–15

1. 11expert · hard

   A fintech company is planning to launch a stablecoin pegged to a fiat currency. The company must decide whether to operate under a money transmitter license in the US or a payment institution license in the EU. The company has limited resources and wants to minimize regulatory risk while maintaining global operations. What is the most appropriate strategy?

   • AOperate only in the EU to avoid US regulatory complexity.
   • BUse a third-party licensed partner to handle all fiat transactions, avoiding the need for a license.
   • CObtain a money transmitter license in the US and a payment institution license in the EU.
   • DLaunch the stablecoin without a license, relying on the fact that it is not a security.
   Reveal Solution Discussion Select an answer first
2. 12application · medium

   A blockchain-based lending platform is implementing a new customer onboarding process. The platform operates in the EU and must comply with GDPR and AML directives. Which process design best balances both sets of obligations?

   • ACollect only the minimum personal data required for KYC, store it securely with access controls, and retain it only as long as AML laws require.
   • BCollect extensive personal data, including biometric and social media data, to strengthen KYC and prevent fraud.
   • CStore all KYC data on a public blockchain to ensure transparency and immutability for regulators.
   • DDelete all customer data immediately after onboarding to comply with GDPR, even if AML laws require longer retention.
   Reveal Solution Discussion Select an answer first
4. 13foundation · easy

   Which regulatory standard is primarily concerned with consumer protection in the context of payment services within the European Union?

   • ABasel III
   • BGeneral Data Protection Regulation (GDPR)
   • CPayment Services Directive 2 (PSD2)
   • DSecurities Act of 1933
   Reveal Solution Discussion Select an answer first
5. 14application · medium

   A fintech startup is launching a token that gives holders a share of the company's future profits. The startup is based in the EU and plans to offer the token to retail investors across multiple EU member states. The compliance team must determine the most appropriate regulatory path. What should they do first?

   • ASeek approval from the European Securities and Markets Authority (ESMA) for the token's white paper before any national regulator is involved.
   • BClassify the token under the EU Markets in Crypto-Assets Regulation (MiCA) and, if it qualifies as a financial instrument, also assess compliance with MiFID II.
   • CTreat the token as a utility token and issue a white paper under MiCA, then sell it to retail investors without further authorization.
   • DApply for a payment institution license under the Revised Payment Services Directive (PSD2) because the token will be sold to retail investors.
   Reveal Solution Discussion Select an answer first
6. 15application · medium

   A startup is building a smart contract-based insurance product that automatically pays claims when predefined conditions are met. The product will be offered to customers in the EU and the US. The legal team is reviewing the smart contract's enforceability. Which action is most important to support legal enforceability?

   • AEnsure the smart contract code is open-source and publicly audited to demonstrate transparency.
   • BUse an oracle that is decentralized to avoid any single point of failure in triggering claims.
   • CInclude a dispute resolution clause in the terms of service that specifies the governing law and jurisdiction for any disputes arising from the smart contract.
   • DRegister the smart contract as a copyright with the US Copyright Office.
   Reveal Solution Discussion Select an answer first