United States crypto community criticises new FinCEN proposal

The US crypto users have criticised the new FinCEN proposal that aims to reduce the monetary threshold for collecting information on international transactions  

The United States Federal Reserve and the Financial Crimes Enforcement Network (FinCEN) published a notice of proposal last month pitching for modification of a long-standing rule according to which all financial institutions in the US are required to exchange client information for all international transactions greater than $3,000.

The proposal suggested lowering this monetary threshold to $250 and specifically mentioned that the regulation is applicable to “transactions involving convertible virtual currencies and digital assets with legal tender status”. The proposal to acquire more information on smaller value international transactions has been heavily criticised by crypto users who have termed it as an “invasion of privacy”.

The proposal, if approved, would require crypto exchanges to store a great deal of personal information from users in order to comply with the changes. As the proposal was opened for public comments, users have argued that the proposal is antithetical to the fundamental nature of cryptocurrency.

“The whole point of Bitcoin is to remain decentralised and unregulated — by creating rules, laws and regulations, you are defeating the purpose of its use”, said an anonymous comment.

Fight for the Future, a digital rights group based in Massachusetts is one of the many advocacy groups encouraging US citizens to speak out against the “unreasonable” nature of the proposal.  The group claimed to have encouraged over 3000 people to submit comments to the Fed and the FinCEN, asking the regulatory authorities to “stop attacking crypto and our privacy rights”.

Kyle Cribbins from Dallas was one of the users who pointed out that such a law would be a major challenge to crypto exchanges in terms of securing large amounts of personal data. “In terms of digital assets, crypto exchanges are not held accountable in the same way that other financial institutions are, and have a track record of bad operational security with regard to securely storing client information”, he said.

“At a time when many countries and institutions are pushing for the outright end of physical cash, it is not at all appropriate to increase restrictions that make it more difficult for Americans to transact in and transfer [convertible virtual currencies],” said Grant Dever regarding the proposed rule.

The proposed regulation will increase the burden on entrepreneurs and is counterproductive, a user explained. America must be a pioneer in adopting emerging technology and such restrictive measures will only leave the country vulnerable to technological advances by rival nations, the comment added. Public comments for the proposed rule is expected to close this week after which the future of the proposal will be determined by the regulatory authorities.

Written by Harshini Nag 

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