The U.S. Treasury has issued a proposed ruling for self-hosted crypto wallets. The new rule will now require money service businesses to report their cryptocurrency transactions to FinCEN, a part of the U.S. Treasury Department. The issued ruling also signifies that convertible virtual currency and legal tender digital assets will be classified under monetary instruments. Hence, they will be subjected to the Bank Secrecy Act (BSA).
U.S. Lawmakers to Regulate Self-Hosted Crypto Wallets
Lately, there had been rumors circulating for quite some time that the U.S. government has been working on stringent crypto regulations that could harm the financially excluded.
It came out largely true when the Financial Crimes Enforcement Network (FinCEN) issued the proposed rules requiring banks and money service businesses (MSBs) to submit reports, keep records, and verify customers’ identities making crypto transactions into self-hosted wallets.
It signifies money services businesses (MSB’s) will now need to file a currency transaction report (CTR) if a customer conducts a crypto transaction to or from a self-hosted wallet involving their service. The proposed rule will be available for public notice until Jan 4. 2021.
Fighting Against Malign Actors
The proposed rule further includes that FinCEN regulated financial institutions are required to report currency transactions conducted by, or on behalf of, one person aggregating over $10,000 in a single day. However, many of the transactions would even require a lower threshold of $3,000.
Besides, there would be the application of verification of the customer’s identity and Know-your-customer (KYC) rules even pertaining to private cryptocurrency wallets (self-hosted wallets).
The intention behind the regulatory agency involves combating illegitimate activities and crimes. The notice further read:
“U.S. authorities have found that malign actors are increasingly using CVC to facilitate international terrorist financing, weapons proliferation, sanctions evasion, and transnational money laundering, as well as to buy and sell controlled substances, stolen and fraudulent identification documents and access devices, counterfeit goods, malware and other computer hacking tools, firearms, and toxic chemicals.”