Jack Dorsey warns that FinCEN laws will drive crypto customers offshore
Large U.S. crypto firms are opposed to FinCEN’s proposed regulations that would force companies working with crypto to gather information about the identity of non-customer counterparties.
A letter dated Jan. 4 from Jack Dorsey, CEO of the financial services company Square, proposes to impose reporting requirements “well beyond what is required for cash transactions” and Sqaure is expected to provide “unreliable data” collects about people who did not choose our service or who have signed up as our customers. “
“The collection / reporting of names and addresses of the counterparty should not be required for [virtual currency] CTRs or records as they are no longer needed for cash today. “
Square predicts that if the bill were passed, it would lead to unregulated and undocumented crypto services outside of the US – which would hurt the country’s global competitiveness and create more challenges for regulators:
“By adding hurdles that drive more transactions from regulated companies like Square into unprotected purses and foreign jurisdictions, FinCEN will actually have less insight into the universe of cryptocurrency transactions than it does today.”
FinCEN has received widespread criticism of its proposed rule change as the regulator only offers 15 days instead of the usual 60 days for public comment after the proposal was published on December 18. Even so, FinCEN received almost 6,000 comments on the matter.
The US-based major crypto exchange Kraken criticized the proposed regulations and criticized FinCEN for failing to provide estimates of the cost of implementing the rule. Like Square, it warned that the law will drive users off regulated platforms.
“It practically guarantees that the evidence available to law enforcement today is out of their reach tomorrow,” concluded Kraken, adding:
“It is clearly a politically motivated piece of midnight regulation, the publication of which diminishes the trust we have placed in FinCEN.”
Coinbase released a statement making an exception to FinCEN’s proposal, describing the rule as “unduly vague,” suggesting that it “imposed far-reaching invasion of privacy on the public,” adding that it did offered no public benefit.