In response to a deluge of comments, the U.S. Treasury Department’s Anti-Money Laundering Office is slowing its deployment over a rushed proposal to monitor a whole new range of cryptocurrency transactions.
On Thursday, the Treasury’s Financial Crimes Enforcement Network, or FinCEN, announced it was expanding the comment window in response to a rule originally announced two days before Christmas and less than a month before a new administration took over.
The rule originally proposed was intended to add new thresholds for registered money service businesses – that is, crypto exchanges – transacting with self-hosted wallets, which are only identifiable by their keys. The proposal sparked an outcry from the cryptocurrency community, who saw it as a violation of the principles of peer-to-peer transactions as well as the rules of procedure that govern U.S. regulators.
The initial comment period only lasted 15 days, many of which were vacations. Today’s expansion represents a huge victory for the crypto industry. From the office’s account: “FinCEN appreciates the strong responses already provided by commentators and has considered over 7,500 comments submitted during the initial NPRM comment period.”
With Joe Biden’s inauguration just six days away, Treasury management is likely to see a major change of guard. Few predict that Janet Yellen, Biden’s candidate to replace current Treasury Secretary Steven Mnuchin, would be so belligerent about such deals.
FinCEN seems to have given particular credibility to arguments that there are different thresholds at play between the application of banking-type provisions on cash transactions as opposed to thresholds at the level of foreign transactions to crypto-wallet exchanges. Currently, a bank has a duty to report any withdrawal or deposit of more than $ 10,000 in cash. Meanwhile, the infamous Travel Rule states that any transaction over $ 3,000 entering or leaving the United States must pass credentials on the transactors.
Therefore, FinCEN gives 15 days to meet the $ 10,000 threshold and an additional 45 days to meet the $ 3,000:
<< FinCEN allows an additional 15 days for comments on the proposed reporting requirements for information on CVC or LTDA transactions greater than $ 10,000, or totaling more than $ 10,000, that involve non-hosted wallets or hosted wallets. in jurisdictions identified by FinCEN. FinCEN provides an additional 45 days for comments on the proposed requirements for banks and ESMs to report certain information regarding the counterparties to transactions made by their hosted wallet clients, and on the proposed record keeping requirements. "
FinCEN had not responded to TBEN’s request for comment at the time of publication.
Joining the proposed crypto oversight thresholds was another new proposal from FinCEN that would require the disclosure of offshore crypto accounts holding more than $ 10,000.