- FinCEN has proposed new regulation for crypto assets
- The proposed rules are set to be adopted under the Bank Secrecy Act
- FinCEN is seeking to create a new reporting requirement from banks and other money service businesses
- The proposed regulation is currently open for public comments
On Wednesday, the US Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) issued a proposed rulemaking for digital currencies. In the Federal Registrar, the issued rulemaking was entitled as Requirements for Certain Transactions Involving Convertible Virtual Currency or Digital Assets. It is known that the proposed rules seek to force banks and other currency service providers to submit reports, keep reports, and mandatorily use the KYC process to identify its customers concerning transactions involved in the conversion of cryptocurrencies.
FinCEN proposed rule is set to be adopted under BSA
From the release of FinCEN, it is found that the proposed rulemaking is set to be adopted under the Bank Secrecy Act (BCA). It is also declared by the agency that convertible virtual currencies (CVC), and legal tender digital assets (LTDA), will be considered as monetary instruments under the act. Additionally, anyone can move from dollars to another digital currency and vice versa via crypto exchanges.
What does the crime network seek with the proposed regulation?
FinCEN only seeks to remedy the illegal finance threat posed by a portion of the CVC market and the growth expected of LTDA. The crime network has now requested a new reporting requirement. According to FinCEN, the proposal came out with the agency’s assessment that found a national threat, as several bad actors are using cryptos to facilitate financing to international terrorists, the proliferation of illegal weapons, and the evasion of sanctions, and money laundering. FinCEN also highlighted the ransomware attacks and other things that demand payments via CVC.
However, the proposal specifically demands banks and money service businesses to file reports with the agency with certain information about their customers, including their name and physical address, and mandatorily verify their identity.
The proposed rulemaking is open for public comment
It is known that until next month, the proposed regulation is open for public comments. Indeed, firms like Coinbase and Electronic Frontier Foundation (EFF), have criticized the time-frame provided by FinCEN, due to the holidays. However, the EFF has also criticized the project mentioning that the proposal will remove cryptos’ anonymity. EFF also noted that some digital currencies, like the leading crypto-token, keep a public record of transactions. So if the name of the user gets connected with the particular wallet, then possibly several information about the account can be used for illegal use.