US Treasury Unveils Stifling Crypto Wallet Regulation â Experts Break Down the Rules
The Financial Crimes Enforcement Network (FinCEN), a bureau of the U.S. Treasury Department, has unveiled its proposed rules on transactions involving cryptocurrency wallets. Experts in the crypto community have weighed in on what the new proposed regulation means, what crypto owners should do, and which wallets are affected.
FinCEN’s New Rules for Crypto Wallets
The U.S. Department of the Treasury announced Friday that the Financial Crimes Enforcement Network (FinCEN) has proposed new rules “aimed at closing anti-money laundering regulatory gaps for certain convertible virtual currency [CVC] and digital asset transactions.” The announcement came several weeks after Treasury Secretary Steven Mnuchin was rumored to be rushing out regulations for self-hosted crypto wallets before Trump’s term expires.
FinCEN Proposes Rule on Certain Digital Currencies
Posted on 12/18/2020
According to the press release from the U.S. Treasury Department, “The Financial Crimes Enforcement Network (FinCEN), a bureau within the U.S. Department of the Treasury, is requesting comments on proposed requirements for certain transactions involving convertible virtual currency (CVC) or digital assets with legal tender status (LTDA). Under the Notice of Proposed Rulemaking (NPRM) submitted to the Federal Register today, banks and money services businesses (MSBs) would be required to submit reports, keep records, and verify the identity of customers in relation to transactions above certain thresholds involving CVC/LTDA wallets not hosted by a financial institution (also known as “unhosted wallets”) or CVC/LTDA wallets hosted by a financial institution in certain jurisdictions identified by FinCEN.”
Seychelles, Longtime Home of BitMEX, Is Bending to US Pressure on KYC
Dec 17, 2020
Coconut drink, Port Victoria, Seychelles
(EyesWideOpen/Getty Images)
The Takeaway:
Out of a list of 26 crypto exchanges domiciled in the Republic of Seychelles, approximately half have poor know-your-customer (KYC) procedures, according to blockchain tracking firm CipherTrace.
Analysis of certain Seychelles-based exchanges reveals the proportion of funds flowing to and from “high risk” sources and dark marketplaces.
In an interview with CoinDesk, the Seychelles Financial Services Authority acknowledged that the U.S. crackdown on crypto derivatives exchange BitMEX in October was a “blowup” for the island.
A former FinCEN compliance and enforcement director expects more actions from authorities investigating the Seychelles jurisdiction.
A unique identifying number from an acceptable identification document.
In lieu of reporting this information for each entity they own, individuals and entities can obtain a unique identifying number from FinCEN.
13 Once available, these identifiers should reduce the reporting burden on companies.
Existing entities will have two years to report this information once the Treasury Department promulgates regulations implementing the Transparency Act. Entities formed after the effective date of those regulations will have one year to submit their reports to FinCEN.
Going forward, reporting companies are required to update FinCEN within one year of any changes to any of the reported information, including changes in ownership and ministerial changes in its beneficial owner’s address.
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On December 11, 2020, and by a veto-proof majority, the US Senate joined the House of Representatives in passing the National Defense Authorization Act for Fiscal Year 2021, which includes the Corporate Transparency Act (the Act). The Act requires a report be filed with the Financial Crimes Enforcement Network (FinCen) that identifies each beneficial owner of an applicant forming a reporting company. While questions remain as to the full implications of the Act, it represents an important step in the right direction for the United States in the battle against money laundering and terrorist financing.