- Pending U.S. regulations could require exchanges to collect identifying data about off-exchange, non-custodial wallets.
- Much of the crypto industry is opposed to those regulations.
- Any individual can send a comment to the U.S. Treasury and express opposition to the new rules.
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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…