In January 30, 2022, the new secretary of the US Treasury Department Janet Yellen shared in the Federal Register that the previously proposed crypto wallet rule would be considered again in the semiannual agenda of regulations this 2022.
This rule proposed by the US Financial Crimes Enforcement Network (FinCEN) in 2020 would require crypto exchange platforms to ask users their personal details including names and addresses when transferring to personal wallets resurfaced again. The agenda is set to be published on January 31 and would outline the priorities of the Treasury Department.
The document published on the Federal Registry on January 30 stated that ‘FinCEN is proposing to amend the regulations implementing the Bank Secrecy Act (BSA) to require banks and money service businesses (MSB) to submit reports, keep records, and verify the identity of customers in relation to the 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’. Based on the timetable found in the same document, FinCEN plans on finishing the rule by the end of August this year.
When the rule was first introduced by Treasury Secretary Steven Mnuchin, the legislation faced criticism and opposition from crypto users and was largely rejected by the crypto community since it negates the anonymity of crypto.
According to Brian Armstrong, CEO of the biggest US-based cryptocurrency exchange platform Coinbase in a tweet he published on December 11, 2020, the crypto wallet rule can have unintended side effects on cryptocurrency and ‘kill many of the emerging use cases’ of the digital coin.
The Treasury Department even received letters from the representatives of Ohio (Rep. Warren Davidson), Pennsylvania (Rep. Scott Perry), North Carolina (Rep. Ted Budd) and Minnesota ( Rep. Tom Emmer) that the Treasury Department should first consult the industry stakeholders and the Congress before taking any decisive action about the crypto wallet rule.
According to the article published by Yahoo Finance on January 30, some of the crypto industry advocates were concerned that the rule would be impossible for crypto users and platforms to comply with since crypto is not controlled by people and therefore it is not tied to personal information. Moreover, it would be burdensome for crypto users.
More information is still yet to be released by the Treasury Department and the finality of the proposed legislation would only be seen by August 2022 if the department manages to follow the set timeline.
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