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Last minute rules proposed by the outgoing Trump administration on a requirement for financial organisations to record the identities of cryptocurrency holders, can have huge implications for exchanges and other financial entities in the cryptocurrency space.
As reported by Bloomberg, the rules could be seen as a measure designed to put the brakes on the rapidly growing virtual currency industry, under the name of negating any money laundering or other illegal activity. If implemented, the rules could have far-reaching consequences and even cause cryptocurrency prices to fall dramatically.
The industry isn’t taking this lying down, and major players in the sector are voicing their protests at these measures. Wall Street giants such as the US Chamber of Commerce and Fidelity Investments have voiced their concerns, while actors from the crypto sector such as the Winklevoss twins and Coinbase have also expressed their views on the subject.
In fact, the furore caused by the proposed measures led to so many negative comments and even a threatened lawsuit by a crypto trade group, that the Trump administration was obliged to halt the move, which has left the Biden administration to take up the gauntlet and make a decision.
What do the proposed new rules entail?
Part of the new proposal is that financial entities, such as cryptocurrency exchanges, would need to report to the treasury when a customer moves more than $10,000 in value of virtual currency to a wallet not owned by the exchange.
The other part of the proposal is for when an exchange’s customer sends more than $3000 in cryptocurrency to the wallet of any other person, whose wallet is not hosted by the exchange.
The proposed regulation would be there to oblige crypto financial organisations, such as exchanges, to identify the counterparties in the above circumstances. It is being argued that such a rule would be costly to implement and at times virtually impossible to uncover some of the identities.
FinCen (Financial Crimes Enforcement Network) appeared to be really rushing the process of implementing the regulation, given that comments were initially only allowed within a 15-day period. However, such was the barrage of public comments that FinCen has been obliged to give until the end of March for more consideration.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.