Republican Senator Asks FinCEN to Reconsider Controversial Crypto Rule

Friday 11 June 2021, 7:18 AM AEST - 1 week ago

Sen. Pat Toomey (R-Pa.) speaks in Washington, D.C., May 27, 2021.

A proposed U.S. regulation around cryptocurrencies might be counterproductive, the top-ranking Republican on the Senate Banking Committee said Thursday.

A proposed Financial Crimes Enforcement Network (FinCEN) counterparty rule would impose a heavy burden on cryptocurrency firms but may not actually combat illicit activity, Sen. Pat Toomey (R-Pa.) wrote in a letter to Treasury Secretary Janet Yellen.

Cryptocurrencies stand to dramatically improve consumers privacy, access to financial services, and power to make decisions for themselves, the letter said. Some have argued that cryptocurrency is a technology that could be as revolutionary as the internet.

The statement comes a day after Sen. Elizabeth Warren (D-Mass.) railed against bitcoin as a potential tool for criminals that also carries environmental and consumer-protection issues.

The controversial FinCEN rule was proposed by Yellens predecessor, former Treasury Secretary Steven Mnuchin, in the waning days of the Donald Trump presidency. Under its provisions, any crypto exchanges or financial institutions would be required to keep name and physical address information for transactions above $3,000, and file reports for transactions above $10,000.

Opponents to the rule say this could impact decentralized finance (DeFi) products, as many smart contracts that store funds do not require names or addresses. DeFi aside, simply maintaining excess records beyond typical know-your-customer (KYC) requirements may prove a burden to smaller exchanges. A public comment period was extended immediately before Trump left office, and again after current President Joe Biden took over, but the actual proposal is still pending.

While I recognize that FinCEN and FATFs proposals are seeking to address the misuse of cryptocurrencies for illicit activity, if adopted, they would have a detrimental impact on financial technology (fintech ...

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