FinCEN’s proposed crypto regulations filed on Dec 18 targets private cryptocurrency wallets to undergo intensive KYC procedures for transactions over $3,000. The proposed regulation further includes crypto exchanges to store transaction records amounting to $10,000 in a day. After a 15 day public consultation period, FinCEN received comments from some of the biggest industry names including Coinbase, Square, and Kraken opposing the regulatory agency’s proposed regulations. FinCEN, however, claims that the proposed crypto regulations are necessary to stop illicit financial activities where cryptocurrencies are often used as an enabler of financial crimes.
Coinbase Criticizes the Duration of Public Consultation Period by FinCEN
As per the company, the public consultation should have lasted up to 60 days and not during the holiday season where industry experts might miss out on the consultation. The statement read:
“The process itself is fraught with an ‘us-versus-them’ hostility to the industry’s views, as seen by the breakneck schedule for a major rule, the thinness of Treasury’s justifications, and the lack of meaningful engagement before the eleventh-hour holiday rulemaking.”
Square Says FinCEN’s Regulation Will Hinder Innovation
Jack Dorsey’s Square too released its own statement highlighting that such kinds of regulations will only drive users away from regulated entities in the United States.
For Square, the proposed regulation will hinder innovation and capabilities in the American ecosystem. Square’s statement on FinCEN read:
“The proposal creates unnecessary friction and perverse incentives for cryptocurrency customers to avoid regulated entities for cryptocurrency transactions, driving them to use non-custodial wallets or services outside the US,” Square said, in a statement.”
Kraken Sees Marginalized Sections to Be Affected
Meanwhile, Kraken also released a statement highlighting that the regulation, if implemented will cut the marginalized sections from the financial system. Kraken like Coinbase, too criticized the short 15-day timing duration, saying:
“Seemingly recognizing these deficiencies, FinCEN timed the proposed rule notice’s publication to avoid scrutiny and all but eliminate public input.”