US Treasury Unveils Stifling Crypto Pockets Regulation — Specialists Break Down the Guidelines
The Financial Crimes Enforcement Network (FinCEN), an office of the U.S. Treasury Department, has unveiled its proposed rules for cryptocurrency wallet transactions. Experts in the crypto community have weighed what the new regulation proposal means, what crypto owners should do, and which wallets are affected.
FinCEN’s new rules for crypto wallets
The US Treasury Department announced on Friday that the Financial Crimes Enforcement Network (FinCEN) has proposed new rules aimed at “closing regulatory loopholes in the fight against money laundering for certain convertible virtual currencies [CVC] and transactions with digital assets. The announcement came a few weeks after Treasury Secretary Steven Mnuchin reportedly issued regulations for self-hosted crypto wallets ahead of Trump’s term in office.
Mnuchin tweeted Friday:
FinCEN proposes a rule for certain digital currencies that will protect national security, aid law enforcement, and increase transparency while minimizing the impact on responsible innovation.
In its proposal, FinCEN stated that it “assesses that there are significant national security requirements that require an efficient process for the proposal and implementation of this rule”.
The US Treasury Department added that “US authorities have found that malicious actors are increasingly using CVC to facilitate international terrorist financing, arms proliferation, sanctions evasion and cross-border money laundering,” including ransomware Attacks.
Crypto experts are breaking the proposed wallet rules
A lot of people in the crypto community have commented on the proposed rules on social media. Anderson Kill partner Preston Byrne commented, “FinCEN accesses wallets that are hosted by a service like Coinbases. It does not use the term “self-hosted” but rather the term “not hosted” to refer to the bitcoiners’ DIY wallets and your nodes at home. “
Attorney Jake Chervinsky explained at length: “The rule would impose new obligations on Virtual Asset Service Providers (VASPs) such as exchanges and custodians.
For deposits and withdrawals> $ 3,000 with a non-custody wallet, VASPs would need to record the name and physical address of the wallet owner. VASPs would also have to report deposits or withdrawals> USD 10,000 to FinCEN in the form of a currency transaction report (CTR).
In contrast, he described: “So far, the travel rule has only imposed these record-keeping and reporting requirements on transactions from VASP to VASP.” from Switzerland, France and other countries. “
Chervinsky stressed the challenges VASPs would face in complying with FinCEN’s proposal, noting that the new rule was “vague and ambiguous”. He said it raises questions such as, “How exactly can a VASP obtain the name and physical address of the holder of a purse that is not in custody? How does someone prove they have a private key? What About Unsecured Smart Contracts – Who Do They Belong To? “The finance department provided a list of the information that needs to be gathered here.
Attorney Justin Winston Ono Wales shared his first thoughts, recommending:
TL: DR: Get your coins from the exchange.
Square Crypto’s Matt Corallo believes that “something like this goes horribly wrong, left and right. So much KYC / AML stuff only affects people who are accidentally screwed, and not really criminals. “
He continued: “The text is already vague and it all depends on how it is enforced and how brokers / exchanges react. If it’s kept vague and exchanges worried, there’s little reason they wouldn’t just disable withdrawals for non-exchanges – few customers would care. “
FinCEN pulls ‘Midnight Rulemaking’
The FinCEN is asking for public comments, which must be submitted before January 4th. However, Chervinsky stated that “a periodic appointment prompts an agency to accept public comments for” important “rules for at least 60 days.”
He pointed out that “FinCEN gives us 15. End of December. One more month before a new president is sworn in. There is a name for this: ‘Midnight Rule-making’. “The lawyer continued:
The making of rules at midnight implies that an agency is not giving the public a real opportunity to participate in the process of making rules, but rather tries to enforce a predetermined outcome.
In his opinion, “the courts are not taking this well. Midnight rules are often put down. “
A boost for self-hosted wallets: New rules hurt exchanges and hosted wallets
Famous speaker and author Andrea Antonopoulos responded to FinCEN’s suggestion with a series of tweets. First, he pointed out that “the big bait and switch that FinCEN pulled was to unveil a new policy for ‘regulated institutions’ but tell everyone that they regulated ‘non-hosted wallets’ what. .. they didn’t. “
In fact, he said, “FinCEN just announced its stimulus plan for DEX and privacy coins. Bullish. “He added,” Tightening the rules for exchanging cryptocurrencies will bring more people into self-government. “
The bottom line of the proposed rule is, “If you attempt to make payments through a regulated exchange, additional verification will be required and your transactions will be reported to the government.”
If you use your own wallet, they cannot and will not control or report on you. This will encourage users to withdraw funds immediately after exchanging and often like any money they have accumulated in a hosted wallet because it is less fluid and less bureaucratic.
He emphasized that the new rule “affects the exchanges and the hosted wallets because they have to do more compliance work and cause users to jump through more frames. This makes your “product” look less functional than a wallet you control … because it is less functional. “He reiterated,” By regulating the main thing that they can regulate, which is regulated institutions, they are inadvertently making them less attractive and pushing more and more people to decentralized alternatives and self-government. “
He also warned, “This year it will be $ 3,000. Next year they’ll lower it even though inflation has eroded it. Ultimately, all transactions must be reported and controlled. “
Antonopoulos reminded everyone:
Not your keys, not your coins, your barriers. Your keys, your coins, not your bureaucracy.
Pro-Bitcoin US Senator and other lawmakers are fighting for better crypto regulation
Several lawmakers have raised concerns about new regulations governing crypto wallets when it was rumored that the Treasury Department plans to restrict the use of self-hosted wallets.
Hours before FinCEN unveiled its proposal, Wyoming US Senator-elect Cynthia Lummis voiced her concerns in a series of tweets. While primarily concerned with rules governing “self-hosted digital asset wallets and the BSA,” she urged Finance to “immediately begin a transparent process of engaging with Congress and industry and reach consensus to move America forward. ”The senator-elected noted that” America competes with China and Russia over the future of finance for competitiveness, “added:
I spoke to Secretary Mnuchin last week and urged him to find a better way forward. Congress is best placed to weigh up competing political issues. A rule now passed could potentially extend the BSA to new types of transactions that are beyond the intent of Congress.
Lummis stated that “a hallmark” of Bitcoin is its ability to conduct transactions without intermediaries. She concluded, “This promotes financial inclusion and freedom. A rule adopted at this point would be a solution for finding a problem. There are more pressing issues related to BSA. “
What do you think of the new proposed rules for crypto wallets in the US? Let us know in the comments below.
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