WASHINGTON—A “controversial” proposed rule that would enforce Know-Your-Customer rules on unhosted or self-hosted crypto wallets may again be under consideration by the U.S. federal government, according to one new report.
The rule was first proposed at the end of 2020 by the Financial Crimes Enforcement Network (FinCEN), the U.S. money laundering watchdog. If enacted, crypto exchanges would be required to collect names and home addresses, among other personal details, from anyone hoping to transfer cryptocurrencies to their own private wallets, CoinDesk reported.
CoinDesk quoted industry advocates as saying they are concerned the rules might be impossible for certain wallets to comply with because they are not controlled by people and therefore are not tied to this personal information. Others were also concerned the compliance requirement might be overly burdensome for individuals, CoinDesk added.
Former Treasury Secretary’s Role
“The rule was driven by then-Treasury Secretary Steven Mnuchin rather than FinCEN itself. The original proposal was published on the Treasury Department's website, not FinCEN's. The watchdog only posted the proposed rule when the comment period was extended,” CoinDesk stated.
The Treasury Department, which is now overseen by a new secretary in Janet Yellen, said the rule might be considered in this semiannual agenda of regulations.
"FinCEN is proposing to amend the regulations implementing the Bank Secrecy Act (BSA) to require banks and money service businesses (MSB) to submit reports, keep records and verify the identity of customers in relation to transactions involving convertible virtual currency (CVC) or digital assets with legal tender status ('legal tender digital assets' or 'LTDA') held in unhosted wallets, or held in wallets hosted in a jurisdiction identified by FinCEN," the agenda document said, according to CoinDesk.
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