US treasury extends consultation period on regulation of digital assets

Tuesday, 19 January 2021
The US Department of the Treasury's Financial Crimes Enforcement Network (FinCEN) has proposed that banks and money services businesses (MSBs) start reporting on certain virtual currency and crypto-asset transactions.
Digital Assets

As part of a move to curb money laundering and increase transparency in digital currency transactions, FinCEN is proposing that banks and MSBs will be required to submit reports, keep records, and verify the identity of customers in relation to transactions above USD10,000 involving convertible virtual currency (CVC) or digital assets with legal tender (LTDA) status. Banks and MSBs will have 15 days after a CVC or LTDA transaction to report it to FinCEN.

Secretary of the Treasury Steven Mnuchin said that the proposal “addresses substantial national security concerns in the CVC market, and aims to close the gaps that malign actors seek to exploit in the recordkeeping and reporting regime,” adding that it is “intended to protect national security, assist law enforcement, and increase transparency while minimizing impact on responsible innovation.”

However, the crypto industry has criticized the proposal, with the Chamber of Digital Commerce saying that implementation of the proposals as they stand raise “serious privacy concerns.” Many in the industry also commented on the short timeframe for comments.

Accordingly, last week (January 14, 2021) the Department of the Treasury extended its consultation. The notice in the Federal Register provides an additional 15 days for comments on the proposed reporting requirements, until February 1, 2021. Further, it gives an additional 45 days for comments on the proposed requirement to report counterparty information and the proposed recordkeeping requirements, with a deadline of March 1, 2021.

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