The Financial Crimes Enforcement Network (FinCEN), a bureau of the US Treasury Department, wants US citizens to report if they hold more than $10,000 in cryptocurrencies with foreign digital currency service providers.
FinCEN Notice 2020-2, filed on Thursday, would amend the Bank Secrecy Act's Foreign Bank and Financial Accounts (FBAR) regulations. The notice reads: "FinCEN intends to propose to amend the regulations implementing the Bank Secrecy Act (BSA) regarding reports of foreign financial accounts (FBAR) to include virtual currency as a type of reportable account."
The rule change would bring FBAR rules around crypto in line with those applying to cash held by US citizens outside the US. Under the current regulations, the notice states, "a foreign account holding virtual currency is not reportable on the FBAR."
The notice makes no mention of when the proposal is set to be implemented, or what information crypto holders would be required to report, such as blockchain addresses. At present, individuals filing FBARs must provide the name on the account, the account number, the name and address of the foreign bank where funds are held, the type of account and the maximum value held during the year.
FinCEN's flurry of crypto regulations
The move is part of a flurry of proposed crypto regulatory changes coming from the Treasury Department, just weeks before its leadership is expected to change under the incoming Biden administration.
Last month, FinCEN proposed a change to regulations that would classify "convertible virtual currency" and "legal tender digital assets" as "monetary instruments," making them subject to the requirements of the Bank Secrecy Act (BSA).
The move would require money service businesses to report certain crypto transactions to unhosted (in other words, private) wallets to FinCEN.
Privacy advocates, crypto businesses, and politicians have expressed concern about the proposed rule change, in particular the speed of the process.
Rather than prematurely adopting a rule on this complex topic, Treasury should immediately begin a transparent process to engage with Congress and industry, building a consensus to drive America forward. (3/8)
— Cynthia Lummis (@CynthiaMLummis) December 18, 2020
In a letter to Treasury Secretary Steve Mnuchin, a bipartisan group of Representatives has queried the "rushed process" and requested that the current 15-day review period be extended to 60 days. The letter argues that the American public has not been given "a reasonable opportunity to respond" to a "highly complex rulemaking".