Major US crypto firms oppose FinCEN’s proposed regulations that would force crypto companies to collect information about the identities of non-customer counterparties.
A January 4 letter Jack Dorsey, CEO of financial services company Square, focuses on the proposal to impose reporting requirements that “ go far beyond what is required for cash transactions, ” and that Sqaure is expected to “ collect unreliable data about people who do not signed up for our service or signed up as our customers. “
“Collecting / reporting the counterparty’s name and address should not be required for [virtual currency] CTRs or record keeping, as cash is not needed these days. “
Square predicts that if passed, the law would drive cryptocurrency users towards unregulated and non-custodial crypto services based outside the US – impacting the nation’s global competitiveness and creating further challenges for regulators:
“By adding barriers that push more transactions from regulated entities such as Square to non-custodial portfolios and foreign jurisdictions, FinCEN will actually have less visibility into the cryptocurrency transaction universe than it does today.”
FinCEN has been widely criticized for the proposed rule change, with the regulator offering only 15 days instead of the usual 60 days for public comment after the proposal was published on December 18. Despite this, nearly 6,000 comments on the matter have been submitted to FinCEN.
The major US crypto exchange Kraken was among those who criticized the proposed regulation, slam shut FinCEN for not providing estimates for the cost of implementing the rule. Like Square, it warned that the law is driving users away from regulated platforms.
“It pretty much guarantees that the evidence available to law enforcement officials today will be put out of their reach tomorrow,” Kraken concluded, adding:
“It is clearly a politically motivated midnight rule, the publication of which diminishes the confidence we have in FinCEN.”
Coinbase published a submission that makes an exception to FinCEN’s proposal, describing the rule as “impermissibly vague,” suggests that it “imposes extensive privacy breaches on the public,” adding that it does not confer any public benefit.