Major venture capital firm Andreessen Horowitz, also known as a16z, is the latest crypto-related form to oppose a recently proposed regulation in the United States.
According to an blog post By a16z general partner Kathryn Haun, the Financial Crimes Enforcement Network has “issued a hurried, un-vetted rule under the guise of the holidays that violates the government’s own established regulatory procedures.”
FinCEN, which operates under the remit of Steven Mnuchin’s Ministry of Finance, submitted a proposal for a regulation late last month that limit money services, as well as US registered cryptocurrency exchanges, of transactions with so-called “self-hosted” wallets.
In fact, the new regulation would “require different cryptocurrency entities to collect and report detailed personally identifiable information from their clients’ counterparties.”
Haun noted that this standard “is not applied to any other sector of the financial industry today”.
In addition to failing to resolve any of the issues it claims to address, Haun says the rule violates the Fourth Amendment to the U.S. Constitution by expanding the powers of the Bank Secrecy Act.
In addition, in a16z’s official response Against FinCEN, counsel for the firm notes that the regulator gave only six working days during the holidays for feedback and comment on the proposed law, instead of the usual 60 days.
Some in the crypto community have characterized FinCEN’s move as just another part of President Donald Trump’s lame-duck administration last-minute rules.
Haun said, “FinCEN has proposed on the eleventh hour of an outgoing government a rule that has all the hallmarks of arbitrary and erratic agency action.”
Brian Armstrong, the CEO of the major US cryptocurrency company Coinbase, echoed this sentiment on Twitter.
It is not recommended and has not followed the correct procedure. FinCEN should revisit the new government, in consultation with industry, if it wants to pursue anything else in this area. It’s not even clear that they should anyway …
– Brian Armstrong (@brian_armstrong) January 5, 2021
Since FinCEN’s proposed rule was released, crypto industry leaders have been actively pushing back. Armstrong stated that Coinbase would be willing to do so bringing regulators to justice next other large companies, should legal action prove necessary.
Yesterday Twitter and Square CEO Jack Dorsey wrote a letter to FinCEN, stating that the rule would “not only hinder law enforcement capabilities, but also limit US innovation by hindering our ability to create a competitive service that allows customers to seamlessly transfer cryptocurrency and transact as the technology is designed . “