Micronesia (Federated States of)

Okay, here is the detailed report on the retail cryptocurrency trading status in the Federated States of Micronesia (FSM), structured as requested.

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## **Report: Retail Cryptocurrency Trading Status in the Federated States of Micronesia (FSM)**

**Topic:** Retail_Trading_Status
**Description:** Assess whether individual citizens and residents in the country are legally permitted to buy, sell, and hold cryptocurrencies. Detail the regulatory environment surrounding this activity (e.g., KYC/AML requirements imposed on platforms, general warnings issued).

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**1. Current Status:** **`Allowed-Unregulated`**

**2. Detailed Narrative Explanation:**

The Federated States of Micronesia (FSM) currently lacks specific legislation or regulations governing the buying, selling, or holding of cryptocurrencies by individual retail users. Cryptocurrencies do not possess legal tender status in FSM; the official legal tender is the United States Dollar (USD), as stipulated by FSM law [20].

There is no evidence of an explicit ban on individuals participating in cryptocurrency activities. However, this activity occurs within a regulatory vacuum. Key financial authorities in FSM, such as the FSM Banking Board (responsible for bank supervision) and the Financial Intelligence Unit (FIU) within the Department of Justice (responsible for receiving Suspicious Transaction Reports - STRs), do not appear to have established specific frameworks, licensing requirements, or targeted regulations for cryptocurrency exchanges or Virtual Asset Service Providers (VASPs) that cater to retail clients [9, 12].

FSM is an observer member of the Asia/Pacific Group on Money Laundering (APG), a FATF-Style Regional Body [6, 9, 12]. While APG promotes the implementation of international Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) standards, including those related to virtual assets (FATF Recommendation 15) [6, 14], the practical implementation of these standards specifically for the virtual asset sector within FSM appears minimal or non-existent based on available public information. Reports indicate FSM has established an FIU but faces capacity constraints and has not yet criminalized terrorist financing [9, 12]. The global implementation of FATF standards for virtual assets remains generally poor, with many jurisdictions lacking regulation [14].

Consequently, retail users in FSM engaging with cryptocurrencies likely do so through international platforms operating outside of FSM's direct regulatory oversight. This means there are no specific FSM-mandated consumer protection measures, investor safeguards, or KYC/AML requirements imposed *by FSM authorities* on platforms specifically concerning retail cryptocurrency trading. Individuals participating in such activities do so at their own risk, subject to the terms and conditions of the international platforms they use and the general AML/CFT laws that might apply to suspicious financial activities, although enforcement specifically related to crypto seems undeveloped [9].

The status is therefore best described as `Allowed-Unregulated` because while not prohibited, there is no specific legal or regulatory framework acknowledging, governing, or restricting retail cryptocurrency trading within FSM.

**3. Relevant Text Excerpts:**

*   **Source:** Cryptocurrency Regulation Tracker | Legal Advice, Specialist Investigations [1]
    *   **Excerpt (Summary):** Under Micronesia, Federated States of, the tracker notes: "Undecided. Cryptocurrency has no legal status; There is no cryptocurrency regulation." (Note: While the source uses "Undecided", the supporting details point towards a lack of regulation rather than active indecision or restriction, aligning better with 'Allowed-Unregulated' based on the provided definitions).
*   **Source:** FSM Law - Title 31: Money and Currency [20]
    *   **Excerpt:** "§ 101. Legal tender defined. The legal tender of the Federated States of Micronesia shall be the coins and currencies of the United States..."
*   **Source:** Micronesia, Federated States of - Asia / Pacific Group On Money Laundering [12]
    *   **Excerpt:** "The Federated States of Micronesia is currently strengthening its anti-money laundering system... The Federated States of Micronesia has recently established a Financial Intelligence Unit in the Department of Justice for reporting suspicious transactions. The Federated States of Micronesia became an observer to the APG in 2010."
*   **Source:** Micronesia, Federated States of - State.gov (2022 INCSR) [9]
    *   **Excerpt (Summary):** FSM is an APG observer but hasn't undergone a mutual evaluation. The FIU receives STRs via the DOJ but consists of a single officer and relies on DOJ/Police resources. Authorities haven't seized property under money laundering statutes, and non-conviction-based forfeiture isn't provided for. Terrorist financing is not yet criminalized.

**4. Source URLs:**

*   [1] Cryptocurrency Regulation Tracker | Legal Advice, Specialist Investigations: `[Link Not Provided in Search Result - Source is a general tracker, specific FSM details are minimal]` (Note: While the tracker provides a status, direct primary sources from FSM are lacking).
*   [20] FSM Law - Title 31: Money and Currency: `https://fsmlaw.org/fsm/code/title31/T31_Ch01.htm`
*   [12] Micronesia, Federated States of - Asia / Pacific Group On Money Laundering: `https://www.apgml.org/members-and-observers/observers/Federated-States-of-Micronesia.aspx`
*   [9] Micronesia, Federated States of - State.gov (Refers to the 2022 International Narcotics Control Strategy Report - INCSR - Volume II: Money Laundering): `https://www.state.gov/reports/2022-international-narcotics-control-strategy-report/micronesia-federated-states-of/`
*   [6] Asia/Pacific Group on Money Laundering (APG) - FATF: `https://www.fatf-gafi.org/en/countries/fatf-global-network/apg.html`
*   [14] Virtual Assets: Targeted Update on Implementation of the FATF Standards on VAs and VASPs (FATF Report, June 2023): `https://www.fatf-gafi.org/en/publications/Fatfrecommendations/targeted-update-virtual-assets-vasps-2023.html`

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**Disclaimer:** Financial regulations can change. This report reflects the status based on the information retrieved up to the current date (April 12, 2025). The lack of specific online documentation from FSM authorities regarding cryptocurrency makes definitive assessment challenging.