Treasury backs down: Crypto monitoring rule will wait until new administration
This is a big win for the crypto industry today, which was unanimous in opposition to a new anti-money laundering rule that many saw as rushed and draconian.
In response to a deluge of comments, the United States Treasury Department’s Anti-Money Laundering office is slowing its roll on a rushed proposal to monitor a whole new range of cryptocurrency transactions.
On Thursday, the Treasury’s Financial Crimes Enforcement Network, or FinCEN, announced that it was extending the window on comments in response to a rule originally announced two days before Christmas and less than a month before a new administration takes over.
The rule as originally proposed sought to add new thresholds for registered money services business — i.e., crypto exchanges — transacting with self-hosted wallets, which are only identifiable by their keys. The proposal provoked an uproar from the cryptocurrency community, which saw it as a violation of the tenets of peer-to-peer transactions as well as the procedural rules that govern U.S. regulators.
The original comment period extended for only 15 days, many of which were holidays. Today’s extension represents a huge victory for the crypto industry. By the office’s account: “FinCEN appreciates the robust responses already provided by commenters and has reviewed more than 7,500 comments submitted during the NPRM’s original comment period.”
With the inauguration of Joe Biden just six days away, the Treasury’s leadership is likely to see a major changing of the guard. Few predict Janet Yellen, Biden’s nominee to replace current Treasury Secretary Steven Mnuchin, to be as hawkish about such transactions.
FinCEN seems to have given special credence to arguments that there are different thresholds at play between applying bank-style provisions on cash transactions as opposed to foreign transaction-level thresholds to crypto wallet exchanges. Currently, a bank has a duty to report any withdrawal or deposit of more than $10,000 in cash. Meanwhile, the infamous Travel Rule dictates that any transaction of more than $3,000 coming into or leaving the United States needs to pass along identifying information about the transactors.
Consequently, FinCEN is giving an 15 days to respond to the $10,000 threshold and an extra 45 to respond to the $3,000:
“FinCEN is providing an additional 15 days for comments on the proposed reporting requirements regarding information on CVC or LTDA transactions greater than $10,000, or aggregating to greater than $10,000, that involve unhosted wallets or wallets hosted in jurisdictions identified by FinCEN. FinCEN is providing an additional 45 days for comments on the proposed requirements that banks and MSBs report certain information regarding counterparties to transactions by their hosted wallet customers, and on the proposed recordkeeping requirements.”
FinCEN had not responded to Cointelegraph’s request for comment as of publication time.
Joining the proposed crypto monitoring thresholds was another new proposal from FinCEN that would require disclosure of offshore crypto accounts holding more than $10,000.
