- FinCEN proposes new crypto regulations that would enforce KYC rules
- The proposed rule is in line with FATF’s travel rule
One of the top financial regulators in the United States, the Financial Crimes Enforcement Network (FinCEN), has proposed a new set of crypto regulations that would mandate crypto wallets to enforce Know Your Customer (KYC) rules.
This new KYC rule is expected to make financial institutions like banks and crypto wallets keep better records and also report the requirements for any transactions they might be involved in. This would lead to self-hosted wallets having an improved anti-money laundering standards when it is enacted.
The new crypto regulations is titled “Requirements for Certain Transactions Involving Convertible Virtual Currency or Digital Assets.” The regulation could also lead to the end of anonymous transactions that are currently common in the crypto space.
FinCEN proposes that transactions worth over $3,000 should have the newly proposed KYC rules. While those worth over $10,000 should be reported directly to the regulators. The new rule would require the institutions involved in the transaction to verify the identities of the parties involved in the transaction.
The verification must confirm the name and the physical addresses of the both parties.
It should be noted that this new proposed crypto regulation would compromise the privacy that crypto transactions tend to give its users.
FinCEN’s proposed crypto regulation echoes FATF’s Travel Rule
The Financial Action Task Force (FATF) has proposed a travel rule which asks trading venues to give information of the initiator and recipient of transactions that are over $10,000 to the authorities.
According to this travel rule, it mostly covers exchange to exchange transactions in the United States.
FinCEN’s newly proposed crypto regulation also tows the line of the FATF rule. The agency is further proposing rules against breaking transactions into smaller units in order to beat the eyes of the agency.
To put it simply, financial authorities in the United States are trying as much as possible to avoid anyone carrying out transactions anonymously.