Payments giant Square is pushing back against proposed regulation from the U.S. Financial Crimes Enforcement Network (FinCEN) that would require stricter oversight of cryptocurrency transactions.
In a letter addressed to FinTech’s Policy Division, Square says the record-keeping and reporting requirements under the proposed policy are far beyond what is currently required for cash transactions.
“Instead of leveraging blockchain tracing with wallet addresses (which to date has proven effective in tracking the unlawful activity cited in the Proposal leading to indictments and convictions), FinCEN proposes a static requirement that would have us collect names and physical addresses from non-customers…
Square would be required to collect unreliable data about people who have not opted into our service or signed up as our customers.”
Square says that the proposed regulation will cause users to move away from regulated crypto transaction services and resort to non-custodial wallets and crypto services outside the country.
“By adding hurdles that push more transactions away from regulated entities like Square into non-custodial wallets and foreign jurisdictions, FinCEN will actually have less visibility into the universe of cryptocurrency transactions than it has today.”
The firm calls on FinCEN to consider “principle-based regulations,” and says that the proposed new rule will actually limit the nation’s law enforcement capabilities, in addition to hurting crypto adoption and invade people’s privacy.
“This Proposal will inhibit financial inclusion, present practical problems, is arbitrary and unduly burdensome, and will drive innovation and jobs outside of the U.S. and regulated institutions. We believe the work that industry and law enforcement have done and continue to do together has been effective and should be supported and strengthened.”
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