U.S. cryptocurrency users hoping to transfer their holdings from an exchange to their own personal wallets may need to comply with new know-your-customer (KYC) requirements under a rule proposed by the Treasury Department Friday.
Under the advanced notice of proposed rulemaking, users who want to send cryptocurrencies from centralized exchanges to a private wallet would need to provide personal information about the owner of that wallet to the exchanges, if the amount sent is greater than $10,000 in one day. The exchanges would also need to submit and store records involving such transactions with a total value over $10,000 in a given reporting period, or just maintain records for transactions over $3,000.
In other words, users of centralized cryptocurrency exchanges who want to move their holdings onto their own private wallet, or to someone else’s, would have to provide detailed personal information for transactions greater than $3,000, and exchanges would be required to report either individual or groups of transactions that add up to more than $10,000 to the Financial Crimes Enforcement Network (FinCEN).
Along with another recent proposal, the move would increase the amount of work individuals and exchanges must put into transferring cryptocurrencies, as well as increase the amount of personal data exchanges must hold onto or report to the Treasury Department.
This would bring crypto closer in line with the traditional banking system, perhaps giving greater comfort to institutional investors who are increasingly considering the asset class, but undermining the technology’s early promise of privacy and self-sovereignty.
At a minimum, privacy would require jumping through more hoops:
In a press release, the Treasury said the rule would close “loopholes” around virtual currency transaction reporting.
The general public will have until Jan. 4, 2021 to provide comments or feedback (although another part of the document says feedback can be submitted within 15…