Crypto industry leaders have raised concerns over the U.S. Treasury’s proposed reporting requirements for crypto mixers transactions.
They argue that the rules lack specificity, are overly burdensome, and could lead to unnecessary bulk data reporting, risking privacy and security.
Concerns over proposed reporting requirements
Cryptocurrency companies have voiced their apprehensions regarding the U.S. Treasury Department’s Financial Crimes Enforcement Network’s (FinCEN) proposed reporting requirements for crypto mixers.
The firms argue that the regulations are inadequately defined and could pose significant challenges to the industry.
In response to FinCEN’s notice of proposed rulemaking, it highlighted its concerns about the proposed reporting requirements. One of the main objections is the perceived lack of specificity in the proposed regulations. The firm argues that these requirements are overly broad and could burden the crypto industry.
Regulated entities already adhere to stringent reporting standards and regularly file Suspicious Activity Reports (SARs) on illicit crypto mixing activities exceeding $2,000. The company believes that the existing framework is sufficient to address concerns related to money laundering and illicit activities within the crypto space.
Bulk reporting and privacy concerns
Another significant concern is the potential for the proposed rules to lead to bulk data reporting that may not significantly assist law enforcement agencies. This bulk reporting approach could infringe on individuals’ privacy and pose security risks by centralizing sensitive information.
In their letter to FinCEN, Coinbase stated, “This is not simply a misuse of VASPs’ [virtual asset service providers] finite compliance resources; it is exactly the kind of bulk reporting that Congress has explicitly discouraged.”
FinCEN, in its October proposal, designated cryptocurrency mixing as an area of “primary money laundering concern.” The agency expressed concern over the increasing percentage of crypto transactions processed by mixers that originated from likely illicit sources.
As a response, it proposed requiring domestic financial institutions and agencies to implement specific recordkeeping and reporting requirements for transactions involving crypto mixers.
Call for a detailed implementation plan
In light of their concerns, called upon FinCEN to provide a comprehensive plan detailing how the crypto industry can effectively collect, store, and report the required data. They argue that such a plan is essential before any new rules are finalized and implemented.
It is important to note that the proposed regulations are still in the comment period, allowing for public input and potential revisions before FinCEN decides on their approval and implementation.