A controversial plan by the U.S. Financial Crimes Enforcement Network (FinCEN) that would enforce know-your-customer rules on crypto wallets may be under consideration for the second time by the U.S. federal government, CoinDesk reported Saturday (Jan. 29).
Originally recommended by former Treasury Secretary Steven Mnuchin in 2020, the rule would require crypto exchanges to collect names, addresses and other details from anyone seeking to transfer cryptocurrencies to their private wallets.
At the time of Mnuchin’s announcement, industry leaders objected. They said the rules could be impossible for some wallets to implement while others complained the compliance could be a burden for individuals.
The U.S. Treasury Department posted the proposed rule in the Federal Register on Monday (Jan. 31) as the comment period was extended.
“FinCEN is proposing to amend the regulations implementing the Bank Secrecy Act to require banks and money service businesses to submit reports, keep records, and verify the identity of customers in relation to transactions involving convertible virtual currency (CVC) or digital assets with legal tender status held in unhosted wallets, or held in wallets hosted in a jurisdiction identified by FinCEN,” according to the Federal Register post.
Treasury, now led by Secretary Janet Yellen, has not said whether the rules will be introduced.
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FinCen is not the only agency that could prescribe new rules for cryptocurrencies.
Read more: Citing Crypto Threats, ‘Must-Pass’ Bill Would Allow Broader Transaction Bans
A provision in the House version of the America COMPETES Act would strip the requirement for public notice and the time limit on the Treasury Department’s ability to ban financial transactions of any type.
The justification for the provision stems from cryptocurrency, which is why the warnings about the bill’s impact came first from an industry-backed cryptocurrency think tank, Coin Center.
Coin Center Executive Director Jerry Brito and Research Director Peter Van Valkenburgh warned in a blog post that the measure applies far beyond crypto.
