Module G – Interactive Quiz – 20 Multiple-Choice Questions
Click an answer to check. Your score is tracked below.
0 / 20 answered
Q1Understand
[Understand] Which of the following is NOT one of the four main regulatory objectives for cryptocurrency?
Explanation
Innovation maximization is not a regulatory objective; the four core goals are consumer protection, AML/CFT, financial stability, and tax compliance.
Q2Understand
[Understand] What does AML stand for in the context of crypto regulation?
Explanation
AML (Anti-Money Laundering) targets illicit funds being layered through crypto to appear legitimate; CFT extends this to terrorist financing.
Q3Understand
[Apply] A government wants to prevent crypto from being used to finance terrorist operations abroad. Which regulatory objective primarily applies?
Explanation
Terrorist financing falls under CFT, the “FT” in AML/CFT; regulators require VASPs to screen transactions and report suspicious activity.
Q4Understand
[Apply] Country X prohibits all cryptocurrency trading, exchanges, and custody. Where does this policy fall on the regulatory spectrum?
Explanation
An outright ban sits at the most restrictive end of the spectrum; China’s 2021 ban and Algeria’s prohibition are examples.
Q5Understand
[Analyze] Why do most jurisdictions avoid outright crypto bans despite concerns about illicit use?
Explanation
Bans push activity to P2P markets and foreign VASPs; the coordination problem remains unsolved while the jurisdiction loses economic benefits.
Q6Understand
[Understand] Under the Howey Test, how many prongs must ALL be satisfied for an instrument to qualify as a security?
Explanation
All four prongs are required: (1) investment of money, (2) common enterprise, (3) expectation of profits, (4) from the efforts of others.
Q7Understand
[Apply] A new token promises 20% annual returns to holders, funded entirely from the founding team’s trading profits. Under Howey, is it likely a security?
Explanation
It satisfies all four prongs: money invested, common enterprise, profit expectation, from the team’s efforts, a textbook security under US law.
Q8Understand
[Apply] Which US federal agency classifies Bitcoin and Ether as commodities rather than securities?
Explanation
The CFTC (Commodity Futures Trading Commission) has jurisdiction over Bitcoin and Ether futures and spot markets as commodities.
Q9Understand
[Analyze] In SEC v. Ripple (2023), the court ruled XRP sold on public exchanges to retail buyers was NOT a security. What was the core legal reasoning?
Explanation
Retail buyers on secondary markets had no contractual relationship with Ripple, breaking the “efforts of others” prong required for the investment contract test.
Q10Understand
[Analyze] A utility token grants holders access to decentralized cloud storage with no profit-sharing or governance rights. Under Howey, is this token likely a security?
Explanation
Without an expectation of profits from others’ efforts, the third and fourth Howey prongs are not met; purely consumptive utility tokens generally fall outside securities law.
Q11Understand
[Understand] What does MiCA stand for?
Explanation
MiCA (Markets in Crypto-Assets) is the EU’s comprehensive regulatory framework, fully effective December 30, 2024, covering issuers and VASPs.
Q12Understand
[Apply] Under MiCA, a EUR-pegged stablecoin backed 1:1 by euro deposits held in regulated banks is classified as what?
Explanation
A single-fiat-pegged token backed by deposits is an E-money token under MiCA Title III; multi-asset-backed coins are ARTs under Title II.
Q13Understand
[Apply] Under Swiss FINMA’s token classification, a token representing equity ownership and dividend rights in a Swiss AG is what type?
Explanation
FINMA classifies tokens representing claims on assets, equity, or returns as asset tokens, subject to securities law and prospectus requirements.
Q14Understand
[Analyze] What is the primary advantage of MiCA’s rules-based approach compared to FINMA’s principles-based approach?
Explanation
A single MiCA license grants passporting across the entire EU single market; FINMA’s flexibility offers bespoke guidance but lacks cross-border automatic recognition.
Q15Understand
[Analyze] China’s e-CNY pilot has over 300 million registered users. What is the primary concern raised by privacy advocates?
Explanation
A government-issued CBDC provides a direct surveillance channel; unlike cash, every e-CNY transaction can be logged, analyzed, and potentially blocked by the state.
Q16Understand
[Apply] In 2023 Binance paid $4.3 billion in fines to US authorities primarily for violations of which regulatory area?
Explanation
Binance’s settlement with DOJ, FinCEN, and OFAC centred on AML failures: inadequate KYC and allowing sanctioned entities to transact freely on the platform.
Q17Understand
[Analyze] Why does regulatory arbitrage persist in global crypto markets despite increased enforcement?
Explanation
FATF recommendations are non-binding; without treaty-level coordination, exchanges migrate to Malta, Seychelles, or other light-touch regimes, perpetuating arbitrage.
Q18Understand
[Apply] The FATF Travel Rule requires VASPs to collect and transmit originator and beneficiary identity data for crypto transfers above what threshold?
Explanation
FATF Recommendation 16 sets the threshold at USD/EUR 1,000 for cross-VASP transfers; below this, identity sharing is encouraged but not mandated.
Q19Understand
[Evaluate] A country designing a retail CBDC faces a conflict: citizens demand transaction privacy, but the central bank must enforce AML law. Which design best balances both goals?
Explanation
Tiered privacy mirrors cash norms (small purchases anonymous, large transfers reported) and is the model explored by the Digital Euro proposal and BIS research.
Q20Understand
[Evaluate] MiCA requires stablecoin issuers to hold 1:1 reserves and allow on-demand par redemption. Does this make stablecoins safer or restrict innovation?
Explanation
MiCA’s reserve mandate protects consumers and removes systemic tail risk, but by design excludes algorithmic stablecoin models, a deliberate safety-over-innovation trade-off.