The U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) has released a notice of proposed rulemaking that would require money services business to submit reports, keep records and verify the identity of customers as they relate to digital currencies “held in unhosted wallets … or held in wallets hosted in a jurisdiction identified by FinCEN.”
FinCEN defined “unhosted wallets” as a “software program or written record” through which users store the private keys needed to access and exchange cryptocurrencies like bitcoin.
The proposed rule would, in effect, require bitcoin exchanges to collect, store and share personal information from users who transfer their bitcoin private keys from those exchanges to their own private wallets, as well as transaction information.
The public has until January 4, 2021 to provide written comments to this rule, which can be submitted through the online federal rulemaking portal.
Such rulemaking has been rumored for some time. For instance, Brian Armstrong, the CEO of major cryptocurrency exchange Coinbase, tweeting about its potential in late November.
Last week we heard rumors that the U.S. Treasury and Secretary Mnuchin were planning to rush out some new regulation regarding self-hosted crypto wallets before the end of his term. I'm concerned that this would have unintended side effects, and wanted to share those concerns.
— Brian Armstrong (@brian_armstrong) November 25, 2020
Some feared that the rulemaking would be more strict than what appears in the proposed rule. Though it violates a bastion of privacy that many within the Bitcoin community cherish, the fact that FinCEN feels the need to propose such regulation indicates a realization of the growing importance and adoption of cryptocurrency.
The much rumored FinCEN rulemaking is here. Key takeaways:1) It could have been a lot worse2) It gives crypto parity with cash 3) A rushed midnight rulemaking is undemocratic https://t.co/WwPSNPqtKw
— Neeraj K. Agrawal (@NeerajKA) December 18, 2020
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