The US Treasury Department’s Financial Crime Enforcement Network (FinCEN) has released a notice of proposed rulemaking that would require a money services business to report, keep records and verify customers’ identities as they relate to digital currency ”and kept in unoccupied wallets… or held in wallets maintained in a jurisdiction designated by FinCEN. ”
FinCEN defined “wallets not superseded” as a “software program or written record” where users store the private keys needed to access and exchange cryptocurrencies such as bitcoin.
The proposed rule would, in effect, require bitcoin exchanges to collect, store and share personal information from users who transfer their bitcoin private keys from those exchanges to their own private wallets, as well with transaction information.
The public has until January 4, 2021 to provide written comments to this rule, which can be submitted through the online federal rulemaking portal.
Such rules have been talked about for some time. For example, Brian Armstrong, CEO of large cryptocurrency exchange Coinbase, tweeted about its potential in late November.
Last week we heard rumors that the U.S. Treasury and Secretary Mnuchin are planning to rush out some new regulation regarding self-sufficient crypto wallets before the end of his term. I am concerned that this would have unintended side effects, and I wanted to share those concerns.
Some feared that the rule-making process would be more stringent than the proposed rule. While it breaks the privacy foundation that many within the Bitcoin community treasure, the fact that FinCEN feels the need to offer such regulation is indicative of the growing importance and adoption of cryptocurrency.
FinCEN rules formulation, which is rumored, is here.
Key takeaways:
1) It could have been a lot worse 2) It gives crypto parity with cash 3) Making the rules of the midnight rush is undemocratic https://t.co/WwPSNPqtKw
