Most of the major US crypto companies are now united in opposition to the new AML laws proposed by FinCEN. They warned that the new regulations may push users away from regulated platforms and limit innovation.
Official reports state that the new laws would force companies operating with cryptocurrency to collect data and information on the identities of non-customer counterparties.
The CEO of financial services firm Square, Jack Dorsey, in his January 4 letter aims at the proposal for looking to impose reporting obligations that move “far beyond what is required for cash transactions.” In that context:
“Square would be expected to collect the unreliable data about people who have not opted into our service or signed up as our customers. Counterparty name and address collection/reporting should not be required for [virtual currency] CTRs or recordkeeping, as it’s not required for cash today.”
Square forecasts that if passed, that law would push many crypto users toward the unregulated and non-custodial crypto services that operate outside of the United States. That may impact the nation’s global competitiveness and create more challenges for the authorities and regulators:
“By adding hurdles that push more transactions away from regulated entities like Square into non-custodial wallets and foreign jurisdictions, FinCEN will have less visibility into the universe of cryptocurrency transactions than it has today.”
The proposed rule change has brought heavy criticism to FinCEN since the regulator announced that it will offer 15 days instead of the usual 60 days for public comment after the proposal was published on December 18. Despite that, almost 6,000 comments have already been submitted to FinCEN on this issue.
Crypto Exchanges Have Their Say
Kraken, a major US-based crypto exchange, was among the entities that criticized these proposed regulations. It slammed FinCEN for failing to offer estimates for the cost of implementing this rule. Just like Square, it warned that the law would push users away from the heavily regulated platforms. Kraken concluded:
“It virtually guarantees that the evidence available to law enforcement today will be placed outside their reach tomorrow. It is quite clearly a politically-motivated piece of midnight rule making, the publication of which diminishes the trust we have placed in FinCEN.”
On its part, Coinbase published a submission that took exemption to FinCEN’s proposal. It described the rule as impermissibly vague. Coinbase went on to suggest that the new law imposed extensive privacy invasions on the public market, and it failed to offer a public benefit.