FinCEN’s recently proposed crypto wallet regulations has been the subject of major criticism from major players in the crypto industry as many experts believe it would be technically almost impossible for many crypto projects to comply.
Financial Crimes Enforcement Network (FinCEN), has seen its proposed crypto wallet regulations put on hold by President Biden. President Biden’s decision was announced in a White House memorandum which was addressed to many federal agencies including FinCEN. The memorandum also stated that President Biden has frozen all Federal regulatory processes including that of FinCEN which was proposed by Steven Mnuchin, former US Treasury Secretary. The order places a general freeze on all agency rulemaking pending review, which will be effective for 60 days from the date of the memorandum.The edict which is one of President Biden’s actions on his first day has been met with praises from crypto industry insiders with Jake Chervinsky, the General Counsel of Compound Finance stating that ”We fought hard & earned the right to take a breath & reset. Janet Yellen isn’t Steve Mnuchin. I’m optimistic.”Chervinsky’s comments however were met with diverse reactions from the crypto community as Janet Yellen, the newly-appointed Treasury Secretary by President Biden caused a stir in the crypto scene earlier this week with her comments on cryptocurrencies, describing them as something “mainly used for illicit financing.” Chervinksy stated later that Yellen may not be that bad and will circle back on her comments with time. “First, anyone is better than Secretary Mnuchin, who decided long ago that he hated everything about crypto. Second, although Dr. Yellen may not be a fan now, I expect she’ll be open to learning & listening, & will follow regular orders in deciding on new regulations. That’s good,” he said. FinCEN’s recently proposed crypto wallet regulations have been the subject of major criticism from major players in the crypto industry as many experts believe it would be technically almost impossible for many crypto projects to comply. FinCEN’s crypto wallet regulations proposal was made on December 18, 2020, under the leadership of former US Treasury Secretary Mnuchin. The proposal required various banks and money service businesses to submit and keep records as well as verification requirements including the identity of customers who make transactions to and from private cryptocurrency wallets. This proposal was tagged as almost impossible as smart contracts do not contain the name or address information of customers involved.Many critics highlighted the burden this could present for banks and other financial institutions as well as money service businesses that engage in cryptocurrency transactions with unhosted wallets or wallets held in FinCEN’s specified jurisdictions. Jack Dorsey, CEO of financial services company Square, has been one of the people who over and over again publicly voiced his displeasure for FinCEN’s proposed crypto wallet regulations saying that “counterparty name and address collection should not be required for cryptocurrency just as it’s not required for cash today.” FinCEN was also criticized for the short comment period it provided on its proposal as many crypto experts believed that it would deprive them of the necessary and important feedback.
