The Electronic Frontier Foundation (EFF) raised concerns about strengthening financial surveillance through the proposed crypto regulations issued by the US Treasury Financial Crimes Enforcement Network (FinCEN).
The Non-Profit Organization is Concerned about New Rules on Self-Helping Crypto Wallets Proposed by FinCEN
According to the US-based not-for-profit organization, the FinCEN seeks to undermine “one of the most important aspects of cryptocurrencies from the standpoint of civil liberties,” which can provide privacy protections for its users.
Financial surveillance of the traditional banking system could be imported into cryptocurrencies through heavy oversight in crypto transactions on exchanges, the EFF said.
On December 18, 2020, the US Treasury office proposed new rules “aimed at closing anti-money laundering regulatory gaps for specific convertible virtual currencies [CVC] and digital asset transactions, ”amid rumors of Treasury Secretary Steven Mnuchin rushing out regulations for self-sufficient crypto wallets before Biden took office as president of the United States.
The not-for-profit organization explains that while they are still in the process of reviewing the full FinCEN proposal, they have commented:
The regulation is likely to cool the ability to use self-sustaining wallets to negotiate with cash privacy. (…) The requirement of the proposed regulation that money service businesses collect identification information related to wallet addresses means that the government may have access to a large amount of data beyond what the regulation requires. purport to cover it.
The EFF also believes that new rules could “prevent wider adoption” of self-sufficient crypto wallets in technologies that depend on them, as it could make it “significantly harder” for consumers to interact seamlessly “with other users who wallets provided by a service subject to the regulations. ”
Adopting the Proposed FinCEN Rules is Premature: A Bitcoin-Friendly Senator
In addition, the not-for-profit organization has concerns about the obligation of hosted wallet services to collect certain information about self-sufficient wallet users “who negotiate with their customers in certain circumstances.” The EFF adds:
While the proposed rules purport to simply apply existing regulations relating to cash transactions to cryptocurrencies, they ignore the existence of these digital financial tools in part to afford financial privacy and anonymity equal to and perhaps beyond traditional cash. In this regard, the proposed regulations are part of a larger troubled trend of the US government extending the financial surveillance of the traditional banking system to cryptocurrencies.
Cynthia Lummis, a Republican legislator and bitcoin-friendly senator for Wyoming, as well expressed her concerns about the Treasury Department’s new game rules for self-sustaining digital asset wallets:
Instead of prematurely adopting a rule on this complex subject, the Treasury should immediately embark on a transparent process to engage with Congress and industry, building consensus to drive America forward.
What do you think of the not-for-profit organization’s views? Let us know in the comments section below.
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