10:44FinCEN unveils new rule for regulating Bitcoin and crypto wallets
In the midst of a wave of growing adoption for Bitcoin (BTC) and cryptocurrencies, regulators have turned their attention to the crypto space. U.S. Treasury Secretary Steven Mnuchin reveal a new rule that could affect users of those crypto wallets that have been classified as “self-custody” or “covered” wallets.
In the press release, the bureau operating within the U.S. Treasury, Financial Crimes Enforcement Network (FinCEN), alleges that there are “significant national security imperatives” that justify the application of the new rule. It will require that a transaction be recorded if it exceeds $3,000, including deposits and withdrawals.
The new rule applies to virtual asset service providers (VASPs), i.e. centralized exchanges and crypto custody service providers. The referred entities will have to keep a record of the name and physical address of the owner of the address that receives a transfer from a VASP.
In addition, providers of crypto-related services must report to FinCEN if a transaction exceeds $10,000. The regulator states the following:
The regulation is intended to reduce such criminal activity, as part of a series of measures that could also lead to a change in the “travel rule“. The change could require more information on international transactions exceeding $250.
Preamble for the introduction of more regulations towards Bitcoin?
The General Counsel for Compound Finance, Jake Chervinsky, has noted that the new rule “could have been much worse”. One of the concerns that had been raised about the rule was that exchanges would have to provide information about each transaction.
Coinbase CEO Brian Armstrong classified the measure as a “rush rule”. In addition, he had pointed out that the regulation would leave loopholes in relation to transfers to smart contracts in the DeFi sector and other applications.
Chervinsky adds that the regulation does not “achieve its intended goals” and finds no basis in FinCEN’s justification for illicit trade in cryptocurrencies. The General Counsel for Compound Finance believes that users will be the most affected. The new rule will force them to pay extra fees when making withdrawals from their wallets.
U.S. Treasury requirements on the identity of a wallet holder are already part of the information a user must provide when creating an account with an exchange. Therefore, the authorities will not have new data to conduct an investigation.
Chervinsky points out that U.S. citizens lose financial privacy with regulation. It also indicates that the regulation is “ambiguous and vague” because it cannot be proven that someone owns a private key. Concluding that the regulation has followed a “bad process,” the attorney says:
|Total comments: 0|
|Bitcoin falls 11% after report suggests a critical flaw in the cryptocurrency called 'double spend' may have occurred (0)|
|JPMorgan Names Three Reasons Why Bitcoin Is Good Fit for Your Portfolio (0)|
|Bitcoin News Roundup for Jan. 21, 2021 — [Markets Daily Crypto Roundup, EP. 300] (0)|
|Bitcoin Bears Back in Control; Is $20,000 BTC Really a Possibility? (0)|
|Why Everyone From Square to Facebook Is Now Hosting the Bitcoin White Paper (0)|
|Bitcoin falls more than 10 percent on fears of US crackdown (0)|
|Craig Wright ultimatum: Take ‘my’ Bitcoin whitepaper down or face lawsuit (0)|
|How To Play The Bitcoin Surge Without Taking Too Much Risk (0)|
|Bitcoin becoming a cyclical asset, not a hedge, according to JPMorgan strategists. (0)|
|Going long: 270K Bitcoin moved into storage in a month (0)|