There have been so many discussions concerning regulations for cryptocurrency. Countries have come together to see how cryptocurrencies might have contributed to the rise in cybercrimes and also its use for malign and illicit purposes.
The anonymous feature of wallets has made it difficult to trace where transactions are going to or coming from especially when it involves ransomware by hackers or scammers who convince victims to send them cryptocurrency to bypass stringent international rules and a possible arrest—the US. Financial Crimes Enforcement Network (FinCEN) has noticed that some elements in the space are using the blockchain technology to commit financial crimes such as wire fraud, ransomware and money laundering and have proposed a KYC regulation.
The new regulation would involve adequate record-keeping
The new rule that the US. Body proposed would make sure banking or other institutions such as digital wallets would be required to keep adequate records of transactions. The body stressed the need for private or an ‘unhosted wallet’ to have a transparent transaction framework.
The proposed regulation would have stringent requirements for digital wallets to uncover such private wallets to meet anti-laundering standards. The body explained that if the proposal is put to law, it will check the anonymity of the network.
FinCEN explained the wallets as wallets held in a financial institution that is not subjected to the Bank Secrecy Act, and that is located in a foreign jurisdiction. The body further explained that a $3,000 limit would be given to ensure meeting Know-Your-Customer requirements.
FinCEN has to check transactions larger than $10,000 before it can take place. The know-your-customer rule will force banks and other financial institutions to keep a record of transactions, with the names of the two parties involved and their locations to identify the individuals sufficiently. Crypto experts are in disagreement with the new proposed law since it breaches the usual anonymity of transactions the crypto space enjoys.
The new rule will check anonymity of transactions
Some claims suggest that the financial body is also proposing in new kind of restructuring, which will break down large transactions into smaller ones to have a detailed report of the transactions. The agency is working relentlessly to remove every quality of anonymity from the platform to reduce the use of the platform to commit a crime. The new regulations follow the Travel Rule put in place for Exchanges to share information on the two transacting parties for trading more significant than $10,000. The new law is not without its problems, as the crypto space is struggling to adjust to the new rule.
The public can also write to this proposal which is on the online federal rulemaking portal. The public comments would end by January 4, 2021, so interested parties can share what they think of this proposal. The intense rise of cryptocurrency has led to a series of regulations proposal that may affect the privacy crypto traders enjoy. Coinbase CEO, Brian Armstrong, predicted a possibility of regulation on cryptocurrency and his fear concerning what the new laws will mean for the future of digital assets.