Compliance, Regulatory Standards, and Legal Challenges BFC Practice Questions (Page 6)

Questions 26–30

1. 26expert · hard

   A DAO operates a decentralized insurance protocol. The protocol's smart contract automatically pays claims based on oracle data. A dispute arises when an oracle provides incorrect data, causing a wrongful payout. The DAO has no legal entity, and the code is immutable. Which combination of legal challenges is most directly implicated?

   • ASecurities law compliance and consumer protection rules.
   • BData protection regulations and cross-border data transfer rules.
   • CSmart contract enforceability and liability for decentralized systems.
   • DAML/KYC requirements and payment services licensing.
   Reveal Solution Discussion Select an answer first
2. 27foundation · easy

   What is the primary role of a compliance committee within a blockchain fintech organization?

   • ATo execute smart contracts
   • BTo provide focused oversight and guidance on compliance matters
   • CTo manage customer support tickets
   • DTo develop the blockchain protocol
   Reveal Solution Discussion Select an answer first
4. 28expert · hard

   A DAO operates a decentralized lending protocol. The DAO is organized as a legal entity in the Cayman Islands. A user in Germany suffers a loss due to a bug in the protocol's smart contract. The user sues the DAO in a German court. The DAO's legal counsel is evaluating the situation. Which factor is most likely to determine whether the German court will recognize the DAO's legal personality?

   • AThe DAO's whitepaper states that it is not a legal entity and disclaims all liability.
   • BThe number of German users who hold the DAO's governance tokens.
   • CWhether the DAO's legal structure in the Cayman Islands is recognized under German private international law, and whether the DAO has sufficient connection to Germany to be subject to its jurisdiction.
   • DThe DAO's smart contract code is open-source and audited by a German firm.
   Reveal Solution Discussion Select an answer first
5. 29foundation · easy

   Which compliance framework primarily focuses on verifying the identity of customers before establishing a business relationship?

   • ABasel III
   • BKnow Your Customer (KYC)
   • CAnti-Money Laundering (AML)
   • DPayment Card Industry Data Security Standard (PCI DSS)
   Reveal Solution Discussion Select an answer first
6. 30expert · hard

   A global remittance company uses a blockchain to process cross-border payments. The company is subject to GDPR in the EU and the CLOUD Act in the US. The US government requests access to transaction data stored on nodes in the EU. The company's legal team is evaluating the conflict between these regimes. Which approach is most appropriate?

   • ARefuse the request entirely to avoid GDPR penalties.
   • BComply with the US request because the CLOUD Act has extraterritorial reach.
   • CAssess whether the data transfer can be done under a valid legal mechanism, such as an adequacy decision or standard contractual clauses.
   • DTransfer the data to a third country that is not subject to either law.
   Reveal Solution Discussion Select an answer first