On his first day of office as the U.S. President, Joe Biden has taken to freezing all the Federal agency regulatory processes. Among them includes the regulations on self-hosted crypto wallets proposed by the former Treasury Secretary Steven Mnuchin. The freeze is effective from now until the proposed regulation undergoes further review.
General Freeze on All Agency Rulemaking
The announcement came in a White House memorandum for the heads of various federal agencies, including the Financial Crimes Enforcement Network (FinCEN).
The memorandum doesn’t exactly specify only the proposed rules on self-hosted crypto wallets. Although, it places a general freeze on all agency rulemaking. The freeze will be subjected to review effective for 60 days from the date of the memorandum.
On Dec. 18, FinCEN made the proposed regulations on self-hosted crypto wallets under the former U.S. Treasury Secretary Steven Mnuchin. If the regulation comes into effect, then banks, money service businesses (MSB), and crypto exchanges need to submit reports and keep them while verifying the identity of customers who make transactions to and from private cryptocurrency wallets.
The rule will be effective for those who transfer over $3,000 in cryptocurrencies per day to private crypto wallets. Meanwhile, customers have to file currency transaction reports (CTRs) for transacting over $10,000 in cryptocurrencies per day.
FinCEN’s Self-Hosted Crypto Wallets Proposal Draws Fire
The administration proposed a 15-day comment period on the rule during the holiday period between Christmas and New year. However, the agency had to extend the comment period earlier this month, after receiving backlashes in the review comments for keeping such a short notice that too during the holiday time when industry players will be too busy to take notice.
Crypto advocates have been opposing the stringent proposed regulations on self-hosted crypto wallets. They also criticized the previous administration rushing to implement the regulation without further study.
The proposal has also been widely criticized by many industry leaders, including the CEO of Twitter and financial services firm Square, Jack Dorsey. According to him, collecting and keeping records of names and addresses should not be required for cryptocurrencies in the same way it’s not required for cash.
Some of the critics even highlighted that such kinds of regulations would be impossible to apply as smart contracts do not have name or address information to provide.