In brief

  • President Biden today put a freeze on federal rulemaking.
  • This pauses progress of a proposed FinCEN rule that would regulate transactions to private crypto wallets.
  • Crypto industry players believe this will allow for better engagement with the US Treasury about crypto rules.

On his first day in office, President Biden has put a freeze on any "new or pending" Trump-era rules until members of his administration are able to review them.

That includes a rule proposed by the Financial Crimes Enforcement Network (FinCEN) December 18 under former US Treasury Secretary Mnuchin. The bureau's proposed rule would "require banks and money service businesses ('MSBs') to submit reports, keep records, and verify the identity of customers" who make transactions to private cryptocurrency wallets.

Cryptocurrency companies and advocacy organizations lobbied the Treasury to rethink the rule, submitting thousands of public comments within a shortened 15-day period, as the Treasury tried to force through through the regulations before the end of Donald Trump's term.

Part of the game plan for opponents of the rule was to run out the clock and await new referees. "Thanks in part to the community’s response, the rulemaking was extended into the Biden administration," Neeraj Agrawal, Communications Director at Coin Center, told Decrypt. "When a new administration takes office it's standard practice to freeze and evaluate ongoing rulemaking."

Today's memorandum from White Chief of Staff Ronald Klain asks all agencies to "consider postponing the rules’ effective dates for 60 days from the date of this memorandum, consistent with applicable law...for the purpose of reviewing any questions of fact, law, and policy the rules may raise."

It also asks agencies to consider allowing a 30-day comment period.

Ultimately, the memorandum is to ensure that any in-process rules are first vetted by President Biden's appointees. Biden has appointed Janet Yellen to take over as Treasury Secretary, whose nomination must first be approved by the Senate. FinCEN, the Treasury bureau that proposed the rule, is led by Mnuchin-appointee Kenneth Blanco.

Agrawal told Decrypt the freeze will give the cryptocurrency industry more solid footing when negotiating regulatory issues with the federal government. "Without the time pressure of a midnight rule we have a much better opportunity to engage thoughtfully with FinCEN," he said.