Key highlights:
- FinCEN has suggested new rules for private cryptocurrency wallets
- According to the proposed rules, cryptocurrency businesses would have to provide personal information about of wallets where withdrawals are sent to
- FinCEN believes the rules are useful against illegal activities
FinCEN, a part of the U.S. Treasury, proposed new rules that could substantially impact cryptocurrency users in the United States if they come into effect. According to the proposed rules, cryptocurrency businesses would have to report transactions from their platforms to private cryptocurrency wallets, and keep a record of the recipient’s identity.
Digital assets and virtual money are considered monetary instruments according to the rules, and they have to be covered by the Bank Secrecy Act. The new regulations say transactions that total more than $10,000 in 24 hours have to be reported to FinCEN.
FinCEN believes the new rules will reduce illegal activities
Just like with cash, cryptocurrency is sometimes used in illegal activities like money laundering or terrorism financing. FinCEN believes the new rules will help put a stop to unlawful financial activities facilitated through cryptocurrency. In FinCEN’s view, these kinds of reporting and report keeping are essential.
FinCEN believes rulemaking by using notice and comment is not practical in this case, and the issue has some dangerous aspects which are against the interests of the United States.
There were some rumors around these new proposed rules in advance. Coinbase CEO Brian Armstrong discussed the rumors previously, and he said the Treasury Department should reconsider the rumored rules.
Armstrong believes the new rules will create a hostile environment for cryptocurrency financial services, and result fewer transactions to decentralized crypto wallets. In his opinion, this means the US will be lagging behind the innovations of the other countries regarding decentralized wallets and services.
Even U.S. Senator Cynthia Lummis discussed the proposed FinCEN rules on crypto wallets. According to Lummis, the authorities are tackling the issue in the wrong way. Lummis thinks the rules have the potential for new kinds of transactions against the intent of Congress. In her opinion, transparency is required in lawmaking, and the new rules did not take the public’s feedback into account.
