Coinbase, Square, and other major crypto companies have rallied against crypto regulations proposed by the US Financial Crimes Enforcement Network (FinCEN).
Just before the Christmas holidays, the US Treasury announced new restrictions that would require relevant companies to file cryptocurrency transaction reports and verify the identity of customers who use unhosted crypto wallets.
FinCEN claims these changes will help stop illicit finance, citing examples where cryptocurrencies were used for various forms of financial crime. After a 15 day period for public comments, FinCEN has received over 6,000 responses, and some of the biggest crypto companies are unimpressed.
“The process itself is fraught with an ‘us-versus-them’ hostility to the industry’s views—as seen by the breakneck schedule for a major rule, the thinness of Treasury’s justifications, and the lack of meaningful engagement before the eleventh-hour holiday rulemaking,” cryptocurrency platform Coinbase said, in a prepared statement.
FinCEN is targeting unhosted crypto wallets. Image: Shutterstock
In summary, Coinbase’s opposition to the proposed rulemaking has a total of seven parts. The company argues the 15-day period for public comments is unjustified, and that a period of public consultation should last up to 60 days. Moreover, the proposed regulation is “impermissibly vague,” “imposes unnecessary, expansive privacy invasions on the public,” and “fails to provide the purported benefit.”
A series of other arguments claim the proposed regulation violates the US Treasury’s policy of being technology neutral, that the costs of the proposed regulation are unknown, and, lastly, Coinbase doubts the US Treasury will even use the new information it has collected during the period of public consultation.
Many dont get it still. What is it all for if you cant buy a house - shelter is a basic need according to Maslov. So, you become rich in fiat terms in crypto but cant spend it on quality of life, it is worth nothing. Zero. It is just numbers. Life is ALL that counts. Not taxes.
Square, a digital payments company led by CEO Jack Dorsey, has said the proposed regulation will drive US customers away from regulated cryptocurrency entities.
“[The proposal] creates unnecessary friction and perverse incentives for cryptocurrency customers to avoid regulated entities for cryptocurrency transactions, driving them to use non-custodial wallets or services outside the US,” Square said, in a statement.
For Square, FinCEN’s proposal also limits law enforcement and undermines American innovation. “The impact of the proposal would not only hamstring law enforcement capabilities, but also limit American innovation by hindering our ability to create a competitive service,” the company added.
Eight members of Congress have written to US Treasury Secretary Steve Mnuchin and FinCEN director Kenneth Blanco, criticizing the "rushed process" of a proposed FinCEN rule change that would see crypto exchanges forced to perform KYC checks on customers' private wallets.
In the letter, Reps. Tom Emmer, David Schweikert, Warren Davidson, Ted Budd, Bill Foster, Darren Soto, Susan K. DelBene and Tulsi Gabbard, along with Senator Tom Cotton, have requested that the current 15-day comment period on t...
Kraken, a popular crypto exchange, has also provided a response to FinCEN. “Kraken believes the proposed rule notice proposes a substantial departure from existing law,” the exchange’s policy team said, adding that it also places excessive demands on companies and cuts the poor off from critical money flows.
Kraken also took aim at the timing of the 15 day period for consultation offered by FinCEN. Despite FinCEN receiving over 6,000 comments from the public over the holidays, the exchange has criticized the timing of this 15 day period. “Seemingly recognizing these deficiencies, FinCEN timed the proposed rule notice’s publication to avoid scrutiny and all but eliminate public input,” the exchange said (although the plan clearly hasn’t worked).
1/ FinCEN is now accepting public comments on its proposal to extend AML regulation to non-custodial wallets.
The deadline is January 4. We have an unfairly (maybe illegally) short time for this, so we have to use it wisely.
Here's your ultimate guide on submitting a comment 👇
Andreessen Horowitz, a venture capital firm in Silicon Valley known as a16z, has described FinCEN’s proposed rulemaking as “substantively and procedurally defective in critical aspects.”
The venture capital firm criticized the broader impact of the proposed regulation. “The rule imposes a novel requirement—one found in no other Part of FinCEN’s regulations implementing the Bank Secrecy Act—to collect and potentially verify identifying information not about customers, but about the counterparties of customers,” the firm said.
Darknet markets have surpassed their 2019 revenue this year with a month to spare, according to a report published by Chainalysis yesterday.
Darknet markets have always commanded great interest in the crypto community, first sparked by the infamous Silk Road, which plagued Bitcoin’s reputation during its formative years. Silk Road might seem like a distant memory by now, but darknet markets have persisted. And while the number of markets appears to be on the decline, those that remain are makin...
In addition, Andreessen Horowitze criticized FinCEN’s proposal as not being clear enough to convey to relevant companies what would be necessary. “This lack of clarity will lead to inconsistent interpretations and implementation among state regulators—exactly the opposite of what FinCEN should want,” the firm added.
A question of civil liberties
The Electronic Frontier Foundation (EFF), a civil liberties organization, has emphasized the perceived impact FinCEN’s proposal would have on privacy.
“The proposed regulation would undermine the civil liberties of cryptocurrency users,” the EFF said in a prepared statement, adding, “Anonymity is important precisely because financial records can be deeply personal and revealing: they provide an intimate window into a person’s life, revealing familial, political, professional, religious and sexual associations.”
The US Department of Justice announced the results of a darknet market bust. So far, law enforcement have arrested 179 people and seized $6.5 million in crypto and cash, 500 kilograms of drugs and 63 firearms.
In Operation DisrupTor (a play on words; Tor is a privacy-first browser that acts as a gateway to the dark web), law enforcement used information obtained from the takedown of the darknet market, Wall Street Market, in May 2019, to trace criminals.
The operation is a joint strike from Eu...
To underline its point, the EFF pointed to photographs of Hong Kong protests that showed long lines of individuals trying to purchase subway tickets with cash so that electronic purchases would not place them at scenes of protests. “These photos underscore the importance of anonymous transactions for civil liberties,” the EFF said.
The EFF also urged FinCEN to allow at least 60 days for consultation in order to correct “the serious abnormalities of this rulemaking process.”
Daily Debrief Newsletter
Start every day with the top news stories right now, plus original features, a podcast, videos and more.
Coinbase CEO Brian Armstrong has revealed that the crypto exchange considered putting 80% of its balance sheet into Bitcoin—but decided against it over fears it could "kill the company."
During a question-and-answer session with customers, executives were asked whether they missed an opportunity to start amassing BTC sooner, given the company had an eight-year headstart on software firm Strategy.
We’re live with @brian_armstrong, @GregTusar, and Alesia Haas answering community questions followi...
BitGo has secured regulatory approval from Germany's Federal Financial Supervisory Authority, BaFin, enabling the U.S. crypto custody provider to expand its services across the European Union's member countries.
The license positions BitGo as one of the first American digital asset firms to gain recognition under the EU's Markets in Crypto-Assets (MiCA) framework, a unified regulatory system, rolling out crypto custody services for its institutional clients across the bloc this year.
BitGo has...
Publicly-listed Beat Holdings Ltd. said Thursday it will boost its investment in Bitcoin-related exchange-traded funds, becoming the latest Tokyo-listed firm to deepen exposure to digital assets amid renewed institutional interest in crypto.
The company, which is listed on the Tokyo Stock Exchange’s Standard Market, disclosed Thursday that its board approved raising the cap on crypto-related investments from $6.8 million to $34 million.
It has already purchased 131,230 units of BlackRock’s iSha...