The U.S. Department of the Treasury (and its anti-crime bureau FinCEN) is preparing to introduce a set of surveillance rules that could threaten the future of cryptocurrency.
Rules Introduce Massive Surveillance
The pending regulations can be found under Regulation Identifier Number 1506-AB47, “Requirements for Certain Transactions Involving Convertible Virtual Currency or Digital Assets.”
The new rules require Bitcoin exchanges and other cryptocurrency companies to store and report extensive user information. Specifically, those rules require companies to collect identifying information about off-exchange, non-custodial wallets. Previous regulations only concerned on-exchange wallets.
These rules will introduce extensive surveillance. Under the current proposal, transactions over $3000 will be recorded, and transactions over $10,000 will be reported to FinCEN.
Though the rules are intended to prevent money laundering and terrorism funding, much of the crypto industry sees the proposed changes as rushed and overzealous.
Fallout of the Rules
Several organizations in the crypto industry have raised concerns over the Treasury’s plans. Monero Outreach has stated that the rules in their current form will allow FinCEN “to connect a cryptocurrency user reported to them to every purchase that user makes later.” This threatens the privacy of virtually every cryptocurrency user, it says.
Second-order effects beyond privacy have also been discussed. Kraken suggests that the new rules will “wall off the poor from our financial system forever.” Meanwhile, the Blockchain Association says that the proposed rules will “cripple the burgeoning cryptocurrency and blockchain ecosystem in the United States” in favor of China and other overseas competitors.
Coin Center, meanwhile, has focused on the rushed nature of the regulations, noting that those who wish to submit comments have only fifteen days over the winter holidays to do so. It adds that the transition from the Trump administration to the Biden administration is likely the reason that the proposal has been rushed.
These organizations do not oppose regulations entirely; they only oppose the regulations in their current form.
What You Can Do
If you are concerned about the Treasury’s upcoming regulations, you can respond to the government body in several ways.
- Send a letter directly to the Treasury.
- Send an email based on a template prepared by Coin Center.
- Use the template provided by Stop Financial Surveillance.
- Sign a petition on Change.org to extend the time frame for comment submissions from 15 to 90 days.
- Retweet messages from industry figures such as Denelle Dixon (Stellar), Jeremy Allaire (Circle), Brian Armstrong (Coinbase) and Marco Santori (Kraken).
Be sure to research regulations thoroughly and follow proper etiquette in your message. Submissions are open until Jan. 4, 2021.
At the time of writing this author held less than $30 of Bitcoin, Ethereum, and altcoins.