Crypto exchange Coinbase and leading non-profit crypto advocate Coin Center are speaking out against the new set of rules proposed by the Financial Crimes Enforcement Network (FinCEN), an agency of the US Treasury.
Under FinCEN’s proposed rules, banks and money service providers would be required to provide personal information of wallet owners who transfer more than $10,000 in a 24-hour period. Exchanges will also be required to maintain records of transactions by private and unhosted wallets amounting to $3,000.
The agency has set a 15-day public consultation period, drawing the ire of crypto exchange giants including Coinbase.
In a letter shared with FinCEN director Kenneth Blanco, Coinbase notes that 15 days spanning public holidays is not sufficient time to conduct detailed analysis and extensive cost assessments.
“In the notice, FinCEN asks for comments on 24 separate questions (more than three pages of the notice alone). Based on our initial review over the weekend, responding to those issues will require Coinbase and many other companies to undertake detailed technical analyses, extensive costs assessments, and complex balancing of privacy interests for the customers whose personal information would now be required to be turned over automatically to a government agency.”
Coinbase requests that FinCEN provide the typical 60-day consultation period in order to create effective regulation acceptable to all stakeholders.
“Coinbase requests that FinCEN apply the traditional 60-day notice-and-comment period to this notice, at a minimum, to ensure that Coinbase and other industry stakeholders have a true opportunity to engage in the review and comment process with respect to the proposed rule as the law requires.”
Coin Center is also vocalizing its discontent with the reduced consultation period, deeming the truncated timeline shameful, arbitrary and undemocratic.
“In practice, regulatory agencies provide about 49 days on average. Executive Order 12,866, which is binding on FinCEN, instructs agencies to ‘provide the public with meaningful participation in the regulatory process,’ including a ‘meaningful opportunity to comment on any proposed regulation, which, in most cases should include a comment period of not less than 60 days.’”
Aside from being rushed “midnight rule-making” by an outgoing administration, says Coin Center, the proposed rules appear to be a quick-fix double standard that’s prejudiced against the crypto market.
“Unlike the proposed CTR requirement, the proposed recordkeeping rule change is not technology neutral. The new rule obligates financial institutions to collect specific types of information if and only if the transaction is being made with cryptocurrency.”
Coin Center claims the proposed rules mandate an unconstitutional warrantless search and seizure, and forces identification and surveillance of persons exercising assembly rights.
“Another effect of the proposed rule would be to make significant anonymous donations to charitable organizations using cryptocurrency impossible. The proposed rule will obligate financial institutions to keep lists of customers who are members of certain political associations or otherwise associate with certain charitable or public causes whenever they make contributions over $3,000.”
The public has until January 4th, 2021 to provide public comment on the US Treasury’s proposed legislation.
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