- FinCEN US released details of the rumor law for mandatory KYC / AML for self-sufficient crypto wallets.
- According to the proposal, crypto businesses will have to record and KYC all transactions above $ 3,000, and submit a currency transaction report (CTR) for transactions exceeding $ 10,000.
- Experts find the bill impractical and suggest “drawing up the midnight rules” of the outgoing Trump administration.
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US regulators finally published formal notice for KYC / AML registration of self-contained crypto wallets, the rumors of which has been making the rounds since last month.
Although the crypto bill is no different than current banking regulations, the speed of implementation raises concerns about discriminatory treatment.
Crypto Wallet Surveillance Bill
On December 18, the Financial Crimes Enforcement Network (FinCEN) proposed new legislation, extending the KYC / AML requirements of cryptocurrency businesses to self-storage.
These include standalone nodes like BTCPay server and crypto wallets like MetaMask, Electrum, and others.
The bill titled, “The Financial Crime Enforcement Network Proposes a Rule aimed at Closing Anti-Money Laundering Regulatory Gaps for Virtual Convertible Transactions and Digital Asset Transactions,” focuses on the “gaps ”Appears when reporting crypto transactions.
The state agency will be taking public comments on the proposal for the next fifteen days.
The US Treasury Department leading FinCEN sees “unidentified” crypto wallets as “loopholes that malignant actors can exploit.”
The current Bank Secrecy Act (BSA) requires banks and other money service businesses, including cryptocurrencies – to record individuals’ names and physical addresses for any transaction that exceeds $ 3,000.
Further, it requires the exchanges or banks to file a currency transaction report (CTR) for each transaction exceeding $ 10,000. Steven Mnuchin, US Treasury Secretary, noted:
“The rule, which applies to financial institutions and is consistent with current requirements, is intended to protect national security, assist law enforcement, and increase transparency while minimizing the impact on responsible innovation.”
Indeed, the law is the same for banking institutions.
However, the outgoing Trump administration is rushing a case without clear due diligence, displaying significant intolerance toward the industry.
“Making the Midnight Rules”
Regulators assert a neutral stance by highlighting equal treatment of the banking industry. However, experts say they could not be more ignorant.
First, the 15-day deadline.
Any formal caution of this nature, called NPRM, requires a 30- to 60-day incubation period for public comment. However, in this case, the regulators speed up the ruling. Much of it relates to the fact that the Biden administration will take over after the above period.
This borders on passing a temporary formal rule altogether. Counsel general for Compound Finance, Jake Cherbinsky, said regulators were supposed to give at least 60 days’ notice of “significant” laws.
15 / A regular order calls on an agency to receive public comment for at least 60 days for “significant” rules. It can be longer.
FinCEN gives us 15. at the end of December. With one month left before a new president takes an oath.
This is called “making the rules of midnight.”
– Jake Chervinsky (@jchervinsky) December 19, 2020
There are already Congress and crypto industry leaders opposition arose to the bill, but regulators are moving forward with complete disregard.
Second, its significance on privacy and freedom.
It threatens to infiltrate the privacy and security features of cryptocurrencies, making them no different than banks. Peter Van Valkenburgh, from CoinCenter, wrote in a blog post:
“Make no mistake, [Currency Transaction Reports] is a form of wireless search and seizure of private financial records. ”
Furthermore, the rule is impractical and just as easily avoided.
If an individual is moving crypto from one wallet to another, how are these decentralized services or wallets supposed to deliver records to the regulators?
The news didn’t affect the market overall as BTC continued to trade over $ 23,000 following a state agency press release. Charles Edwards, founder of Capriole Investment, He said:
“When the price [of Bitcoin] reacting against the expectation before the news, the trend in the direction that follows is usually violently enhanced. Bullish [Bitcoin]. ”
However, the law can still hurt the industry.
It’s going to make operations difficult for crypto exchanges in terms of administration and record keeping. It may also introduce general bans and restrictions on many DeFi applications or standalone nodes to comply with ignorant regulations.
Many of the critical features of the crypto space will need to make necessary changes, not all of which will push the industry forward.
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