Cryptocurrencies still lie in the legal grey area but the growing popularity and increasing prices of cryptocurrencies have compelled the regulators to address this situation. On that note, the Financial Crimes Enforcement Network (FinCEN) proposed a set of policies that require banks and money services businesses (MSBs) including cryptocurrency companies to “submit reports, keep records, and verify the identity of customers in relation to transactions above certain thresholds.”
The regulator then went on to invite comments on the proposed controversial surveillance rule that had shaken the crypto industry. The 15-day time period set by the regulator was considered too short for those willing to respond and as such, FinCEN is now extending the comment period.
Per a press release made public this Thursday, the regulator has announced that it would reopen its proposed rulemaking period for another 15 days for its proposed reporting requirements, and another 45 days for the requirement on recordkeeping and counterparty reporting requirements.
The fact that the feedback period is too short was first echoed by popular crypto exchange Coinbase’s CEO Brian Armstrong. In an open letter to Kenneth Blanco, the director of FinCEN, Armstrong had stressed that if the regulator rushes this it “would have unintended side effects.”
Within the first 15 days, the proposal had received more than 7000 comments from the industry. Majority of those who responded critiqued the rule along with the fact that the regulator was trying to rush this.
Several critics have outlined that some projects and businesses would be unable to comply with this new policy because, in the case of smart contracts and author decentralized tools, information like names and addresses are not provided.
In simple terms, the proposed rule would require cryptocurrency exchanges to collect all the aforementioned information about customers who transfer more than $3,000 in crypto per day to private crypto wallets, and also file transaction reports for customers who transact more than $10,000 per day.
However, it must be noted that the 15-day extension would mean that by the time comments close, Treasury Secretary Steven Munchin, who is currently heading this effort, would be out of office. As such, FinCEN might be able to better incorporate industry feedback.
Crypto owners must report offshore holdings
As previously reported by The Daily Chain, on New Year’s Eve, FinCEN announced its plans to amend the Bank Secrecy Act’s Foreign Bank and Financial Accounts (FBAR) with a rulemaking notice.
The amendments would bring FBAR rules around digital asset holdings in line with cash held outside the United States by citizens or other U.S. persons. Customers of crypto exchanges like Bitstamp and Bitfinex are expected to be affected the most.