The US Treasury Department proposed sweeping new rules late Friday (Dec. 18) that the government says would make digital currency convertible such as bitcoin less attractive to criminals involved in crimes like ransomware attacks.
The new regulations, if adopted after a comment period, would require banks and certain other organizations to obtain and report on the identities of parties involved in certain digital transactions, including charges involving the so-called “wallets not replaced” – essentially secret bank accounts that hold cryptocurrency. The rules effectively require financial institutions to report such digital transactions in the same way they have required to report cash transactions since 1970.
The proposed limits for reporting digital transactions are $ 10,000 for non-wire transactions and $ 3,000 for wire transactions – the same as with cash.
The rationale for the new regulations, as the government noted in the Federal Register, is that “US authorities have found that malicious actors are increasingly using CGS to facilitate international terrorist financing, proliferation of weapons, evade penalties and launder transnational funds, as well as to buy and sell controlled substances, identity documents and stolen and fraudulent access devices, counterfeit goods, malware and other computer hacking tools, firearms and toxic chemicals, as well as ransomware attacks and related calls for payment almost exclusively named CGS., increasing in severity. “
“CVC” stands for “virtual currency convertible” – a category of digital products that can serve as a currency. Bitcoin is a popular example.
United States Treasury Secretary Steven Mnuchin said in a prepared statement that the proposed new rule “addresses significant national security concerns in the CGS market and aims to close the gaps sought by malignant actors exploited in record keeping and reporting. 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. “
Information that the government has stated that it wants banks to collect and provide for certain transactions includes the name and address of the financial institution’s customer; the type of CGS or LTDA used in the transaction; how much CGS or LTDA is in the transaction; the time of the transaction; the assessed value of the transaction, in US dollars, based on the general exchange rate at the time of the transaction; any payment instructions received from the financial institution customer; and the name and physical address of each opposition party to the financial institution’s customer transaction.
Another provision in the measure would allow the Treasury secretary to add additional requirements.
The publication of the proposed new rules in the Federal Register triggers a comment period before a new regulation can become official. The comment period ends on Jan. 4, according to the Federal Register’s official posting.
The Treasury Department published a list of questions and answers relating to the proposal, arguing among other things that they would not stifle innovation or place unreasonable burdens on people who do not break laws.