The US Treasury Department presented new KYC requirements for cryptocurrency users in the country to combat the potential involvement of digital assets in illegal activities. The crypto exchanges are required to verify the identity of the wallet owner if the transaction exceeds $3,000.
According to the official press release by the US Treasury Department, the proposed rule requires cryptocurrency exchanges to submit the information of transactions above $10,000 to the Financial Crimes Enforcement Network (FinCEN).
The Department raised concerns regarding the potential use of digital currencies in terrorist financing and asked financial firms to verify the identity of customers. The US cryptocurrency users trading with an exchange are required to provide details including name, address and purpose of the transaction.
Commenting on the recent proposal, Steven Mnuchin, Secretary of the US Treasury Department, said: “This rule addresses substantial national security concerns in the convertible virtual currency (CVC) market, and aims to close the gaps that malign actors seek to exploit in the recordkeeping and reporting regime. The rule, which applies to financial institutions and is consistent with existing requirements, is intended to protect national security, assist law enforcement and increase transparency while minimizing the impact on responsible innovation.”
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The crypto community reacted strongly against the recent proposal and expressed concerns about the potential regulation which can impact the growth of digital currencies negatively. Jeremy Allaire, the CEO of Circle said that the proposal is a personal mission of Secretary Mnuchin.
“His own view is far more aggressive than the proposed rule put forward. His original plan was to just drop this as a final rule with zero notice for public comment, as a ‘midnight rulemaking’ on his way out of office. This actually didn’t have broad support, in fact, very few people were even aware of this plan,” Allaire added.
“In the world of crypto assets, a report that includes a blockchain address essentially gives law enforcement a data feed that includes identity + blockchain addresses and the ability to monitor, in real-time, all of that customer’s flows. This is without any consent,” he tweeted.