FBI’s FBOT Registry Unlikely to Compel Offshore Crypto Exchanges into US Compliance, Attorney States

Legal experts specializing in cryptocurrencies suggest the creation of a Foreign-Based Digital Asset Provider (FBOT) registry will not automatically force overseas crypto exchanges to adhere to U.S. laws. Justin Diaz, a partner at Grunfeld Desiderio Lebowitz Rosenberg & Klatt PC, explained that jurisdiction remains a significant hurdle in regulating foreign exchanges. Diaz clarified that simply being listed on the FBI’s registry doesn’t mean an exchange is automatically subject to U.S. laws. He added that American laws typically require a substantial connection to the U.S. before American courts can assert jurisdiction. Attorney Diaz pointed out that the FBI might be interested in gathering information about companies offering digital asset services in the U.S., but this doesn’t necessarily translate into the enforcement of U.S. laws against those companies. Separately, Carol Kikiachvili, a partner at Kozyak Tropin & Rockliff, stated that many overseas exchanges may not comply with the new registry. Kikiachvili mentioned that the challenge lies in how to enforce compliance on entities residing outside of U.S. jurisdiction. She pointed out that exchanges not planning to operate within the United States might not see any reason to register. Kikiachvili emphasized that international cooperation or economic sanctions may be required to compel these companies to comply. Ultimately, experts agree that the FBI registry may be a helpful tool for gathering information, but it alone won’t be enough to ensure that offshore exchanges comply with U.S. laws. A more comprehensive approach, including international cooperation and enforcement of existing laws, is required.