Twitter co-founder and Square CEO Jack Dorsey called the new crypto wallet regulation proposed by FinCEN as disastrous for the industry.
In mid-October, the Financial Crimes Enforcement Network (FinCEN) proposed that banks and financial institutions ask for the identity of the user of a cryptocurrency wallet if the transaction volume exceeds $ 3,000. If the transaction amount exceeds $ 10,000, firms must report to FinCEN.
These stricter rules are designed to prevent ransomware attacks, money laundering and sanction evasion. The department allocated only 15 days to receive comments on the proposed regulation (until January 4), instead of the standard 60 days. Such a short period, like the FinCEN proposal, caused bewilderment among lawyers and many members of the cryptocurrency community.
The Square chief also sent comments on the matter to the regulator. Dorsey believes that if the FinCEN rules are approved, it will encourage cryptocurrency users to use unregulated services and non-custodial wallets outside the United States. People will start to avoid regulated organizations to transact cryptocurrencies in order to make it easier to transfer their digital assets.
Technology constraints could make it difficult to identify and collect counterparty information that FinCEN will need, Dorsey said. As a result, FinCEN will completely lose the ability to track transactions in the cryptocurrency space. In addition, such an initiative of the regulatory body will “ruin in the bud” all innovations in the US in the field of blockchain and cryptocurrency.
In the fall, Square invested $ 50 million in bitcoin. Dorsey views the purchase of cryptocurrency as an alternative way to participate in the international monetary system. Therefore, Dorsey called FinCEN’s requirements “onerous” as they would prevent Square from using cryptocurrencies as a tool to empower economic opportunities and deprive the company of the ability to compete with other firms on a level playing field.
Analyst firm Elliptic also commented on FinCEN’s proposal. Elliptic believes that such rules may adversely affect the effectiveness of the current anti-money laundering and terrorist financing regulations. In turn, the management of the venture capital firm Andreessen Horowitz said that the actions of FinCEN “have all the hallmarks of a despotic and willful organization.”
Earlier, the cryptocurrency exchange Coinbase asked the US Treasury Department to extend the discussion period for the proposal, since decisions on such serious issues should not be taken in a hurry.
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