The Financial Crimes Enforcement Network (FinCEN) under the U.S. Department of the Treasury announced its proposed rules for cryptocurrency wallet transactions. Experts in the crypto community have weighed the implications of the new proposed regulations, the measures that crypto owners should take, and the wallets affected.
FinCEN’s new crypto wallet rules
The U.S. Department of the Treasury announced on Friday that the Financial Crimes Enforcement Network (FinCEN) has proposed new rules “to bridge the anti-money laundering regulatory gap for certain convertible virtual currencies. [CVC] And digital asset transactions. The announcement follows rumors that US Treasury Secretary Steven Mnuchin hastily enacted regulations on self-hosted crypto wallets before Trump’s term expires.
Mnuchin tweeted on Friday:
FinCEN is proposing rules for certain digital currencies that will protect national security, assist law enforcement and increase transparency, while minimizing the impact on responsible innovation.
FinCEN explained in its proposal, “Assessing that there are important national security issues that urgently require an effective process for proposing and implementing this rule.”
The US Treasury Bureau added: “US authorities have found that malicious elements are increasingly using CVC to promote international terrorist financing, weapons proliferation, evasion of sanctions and transnational money laundering”, including ransomware attacks.
Crypto experts break down the proposed wallet rules
Many people in the crypto community have been commenting on the proposed rules on social media. Preston Byrne, partner of Anderson Kill, pointed out: “FinCEN calls wallets managed by Coinbase’s “custodial” service. It does not use the term “self-custodial”, but Use the term “non-custodial” to refer to Bitcoin DIY wallets and nodes in your home.”
Attorney Jake Chervinsky explained in detail: “This rule will impose new obligations on virtual asset service providers (VASP) such as exchanges and custodians,” elaborated:
For deposits and withdrawals of> $3k involving non-custodial wallets, VASP must record the wallet owner’s name and physical address…VASP must also report any deposits or withdrawals of $10,000 to FinCEN in currency. Transaction Report (CTR).
Instead, he said: “Prior to this, the travel rules only imposed these record keeping and reporting requirements on VASP to VASP transactions.” However, “today’s proposal follows the global trend of extending anti-money laundering regulations from VASP to wallets. Transactions, as we have seen from Switzerland, France and other countries.”
In highlighting the challenges that VASP will face when complying with the FinCEN proposal, Chervinsky also pointed out that the new rules are “ambiguous.” He said this has caused issues such as “how VASP accurately obtains the names and addresses of non-custodial wallet owners ?”The problem. How can someone prove that they “own” the private key? Who are non-custodial smart contracts? The Ministry of Finance here provides a list of what information must be collected.
Attorney Justin Winston Ono Wales shared his original intention and suggested:
TL: DR: Take your coins off the exchange.
Matt Corallo of Square Crypto believes, “This kind of thing will eventually cause serious errors on both the left and right. So much KYC/AML content will only affect those who are accidentally screwed up, not the real criminal.”
He further believes: “The text is already ambiguous and it depends entirely on how it is executed and the response of the broker/exchange. If it is ambiguous and involves exchanges, then there is no reason why they will not just close non-trading All withdrawals-very few customers care.”
FinCEN promotes “midnight rulemaking”
FinCEN requires public comments, which must be submitted by January 4. However, Chervinsky explained: “Regular orders require agents to accept at least 60 days of public comment for “important” rules.”
He pointed out, “FinCEN gave us 15 years old. There is one month before the new president is sworn in. The name is “Midnight Rulemaking”.
The midnight rule-making means that the agency is not giving the public a real opportunity to participate in the rule-making process, but trying to force people to pass predetermined results.
He believes that “the court is not kind to this. The midnight rule is often abolished.
Speeding up self-custodial wallets: new rules hurt exchanges and custodial wallets
The famous speaker and author Andrea Antonopoulos responded to FinCEN’s suggestions through a series of tweets. First, he pointed out: “FinCEN’s decoy and major changes are to announce new policies regarding “regulated institutions”, but to tell everyone that they have regulated “
In fact, he said, “FinCEN just announced their DEX and privacy coin stimulus plan. Bullish.” He added: “Strengthening the regulation of cryptocurrency transactions will encourage more people to self-defense.”
He explained that the bottom line of the proposed rule is: “If you try to pay from a regulated exchange, they will need further verification and will report your transaction to the government,” he asserted:
If you use your own wallet… they cannot and will not control or report to you… this will encourage users to withdraw frequently after making the exchange, often because of any funds they have deposited in the custodial wallet. This is because Liquidity is lower and bureaucratic constraints are greater.
He emphasized that the new rules “undermine exchanges and custodial wallets because they have to do more compliance work and make users faltering.” It makes their “products” look less functional than the wallets you control …Because its function is not strong. He reiterated: “By regulating the main things they can monitor, that is, regulated institutions, they inadvertently make those people less attractive to use, and push more and more people toward decentralized alternatives and Self-regulation. “
In addition, he warned: “This year it will be $3,000. Next year, even if inflation erodes the inflation rate, they will still reduce the inflation rate. Ultimately, all transactions need to be reported and controlled.”
Antonopoulos continues to remind everyone:
Not your key, not your coin, not your use barrier. Your keys, coins, not red tape.
Pro-Bitcoin U.S. Senator and other lawmakers fight for better cryptocurrency regulation
When there were rumors that the U.S. Treasury Department planned to restrict the use of self-custodial wallets, several lawmakers expressed concern about the new crypto wallet regulations.
The Law Enforcement Network released its recommendations a few hours ago, and the pro-Bitcoin U.S. Senator Cynthia Mis of Wyoming expressed her concern in a series of tweets. She is mainly addressing the rules of “managing self-custodial digital asset wallets and the Bank Secrecy Act” (BSA). She urged the Treasury Department to “immediately begin transparent procedures, engage with Congress and industry, and reach consensus to advance the United States.” The senator-elect pointed out that “the United States is fighting for the competitiveness of China and Russia and for the future of finance” and said:
Last week, I spoke with Secretary Mnuchin and strongly urged him to seek a better way forward. Congress is best able to weigh competing policy issues. The rules now passed may also extend the BSA to new types of transactions beyond the intent of Congress.
Lummis explained that the “signature” of Bitcoin is the ability to conduct transactions without intermediaries. She concluded: “This promotes financial inclusion and freedom. The rules adopted at this moment will be to find solutions to problems. There are more pressing issues related to BSA.”
What do you think of the newly proposed crypto wallet rules in the United States? Let us know in the comments section below.
Picture Credits: Shutterstock, Pixabay, Wiki Commons
Disclaimer: This article is for reference only. It is not a direct offer or solicitation of an offer, nor is it a recommendation or endorsement of any product, service or company. Bitcoin.com does not provide investment, tax, legal or accounting advice. The company or the author is not directly or indirectly responsible for any damage or loss caused or allegedly caused by the use or reliance on any content, goods or services mentioned in this article or related thereto.