By Shelly Melancon (Switzerland)
The report has it that active supporters of the crypto industry are displeased by a forthcoming rule that needs to be reviewed by the US Treasury Department this year. There has been a bit of heat regarding the government’s intention to curb money laundering and terrorist financing, which clashes with the cryptos industries’ desire to avoid monitoring.
The idea of crypto exchanges collecting names and addresses of customers wishing to transfer crypto holdings to some other private wallets may possibly come to stay. The Semiannual agenda and Regulatory Plan of the US Treasury Department contain this rule, and it happens to be the most crucial law expected to be legalized.
The rule was first proposed in 2020 by the Financial Crimes Enforcement Network (FinCEN), which is the money laundering watch facility in the US. It turns out that the rule may be under the probability of consideration again. At first, some industry advocates had said that some types of wallets might not fall under the control of individuals. In contrast, others argue that this rule might force individuals into undertaking a statement to ensure adherence.
Steven Mnuchin, the Treasury Secretary as of then, initiated the rule at first. It had initially appeared on the treasury website with the inclusion of a 15-day comment window which was then extended by an extra 15 days and then 60 days by FinCEN.
Understanding the New Rules
At first, FinCEN separated the rules into two separate issues. The first rule was meant to subject transactions to all hosted wallets that are over $10,000 to currency transaction reports, just like banks do for transactions that are over $10,000. The second rule was more like a personal data rule which suggests that banks are to take a record of customers’ details and the other party if they get involved in any transaction over $3000 involving an unhosted wallet.
This resulted from the Financial Action Task Force stating that unhosted wallets might make it possible for unregulated peer-to-peer transactions amongst people, which could be a sort of cover-up for illegal streams of digital currencies from authorities. FinCEN has gotten thousands of comments from the industry, and they may have to elongate the comment duration a bit further for this rule.
By September 2022, there are expectations for the rule to be finalized; however, this might change with the number of received comments. The Federal Reserve, as well as FinCEN, are on a quest to clarify the true meaning of money with regards to the Bank Secrecy Act to make sure that cryptocurrencies abide by the same rules as Fiat.
The document states that the agencies have plans of the revised proposal ensuring that the rules go for both domestic and cross border transactions inclusive of convertible virtual currency, which are technically a medium of exchange (just like cryptocurrency) that either possesses an equal value as currency or act as backup for currency but lacks legitimate tender status.
The chances of the crypto industry embracing surveillance by the government are pretty much on the low side. Nevertheless, the rate at which crypto is expanding may eventually leave it no choice but to play by the rules.
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