With the start of the presidential term of Joe Biden, the crypto-space might face some challenges in terms of rules and regulations. However, before Biden takes oath, a statement from the Financial Crime Enforcement Network (FinCEN) has ignited the crypto market. FinCEN wants crypto exchanges to share details of individuals who have transactions of more than $3000 in a day. Moreover, the unit of the U.S. Department of the Treasury seeks the submission of the Currency Transaction Report (CTR) on transactions of more than $10,000. FinCEN administered by the U.S. Department of the Treasury and operates to combat domestic and international financial crimes. It consists of three major players – the financial service community, law enforcement agencies, and regulatory communities. They are responsible for tracking suspicious persons and assets. Clearly, the rules are not in favor of investors connected with the crypto-sphere. According to the new proposed rule, investors must comply with the new KYC requirements. To put it simply, the investors associated with the centralized crypto-exchanges have to specify detailed personal information if they move their holdings to their private wallets for transactions exceeding $3000. And exchanges must store and submit reports if the transaction value is more than $10,000. Technical Difficulties in the Retrieval of Addresses and Reporting Activities This move by FinCEN not only increases the amount of work for individuals at exchanges to put into transferring the data but also the increased amount of data management [holding and reporting to FinCEN] will be a matter of concern for the exchanges. Another hassle is the retrieval of addresses from cryptocurrency. Implementation of the rule concerns the complete address of the user. It is worthy to note that cryptocurrency does not include a built-in mechanism of easily retrieving the addresses of the users. It will be challenging to fetch details for banks and other forms of business services for information like name, address, etc. The reasons for counterparty information for Convertible Virtual Currency, CVC, have not been clear yet. Also, there is no clear explanation by FinCEN for the reasons behind proposing these rules. [CVC is a treasury department term for virtual currencies that substitute fiat currencies]. It is extremely encouraging to see the amount of opposition to the “crypto-rule” proposed by FinCEN. Data Privacy Concerns in the FinCEN Rushed Rulemaking There are a large number of respondents who concern the assurance of their safety while sharing personal and financial details. Tallying the actual customers, we found that there is a threat to physical harm from bad entities, as their identity is revealed. According to the report filed on 20th September 2020, FinCEN says that suspicious payment flows around the world into countless industries. The report exposes the underlying truth of the modern era. – source BuzzFeed News. The investigation series by BuzzFeed focused on a large number of leaks and questions of data privacy. This concerning issue might prevent a large number of people from using the U.S.-based platforms. The bottom line For sure, the new crypto-rule is not in favor of crypto investors. Although, doing KYC is mandatory in the crypto exchanges, even before this crypto-rule. Comments on the FinCEN proposed arbitrary rules are giving FinCEN a tough fight. For those who don’t know, the proposed rulemaking is not published until 18th Dec 2020. And only a 15 day comment period was given for the industry. Since these 15 days contain Christmas and new-year holidays. This short period is not doing justice to the investors who want to raise their voices. A number of potential customers indicate severe concerns against the rule and believe that the rule does not imply the privacy of the crypto-space. As per the latest information, FinCEN has provided a 15 days extension after appeals by crypto exchanges.
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