Treasury proposes rule to watch crypto going to self-hosted wallets
The Treasury Department has released its long-awaited proposal to prevent money services companies, including U.S.-registered crypto exchanges, from dealing with self-hosted wallets.
In an announcement on Friday evening, the Treasury Department’s Financial Crimes Enforcement Network (FinCEN) announced proposed rules requiring registered crypto exchanges to verify the “identity of their customers” when a counterparty uses an unhosted or otherwise covered wallet and the transaction is longer than $ 3,000. “”
The rule is currently only a suggestion. The Treasury Department gave stakeholders 15 days to respond with comments.
Rumors have been circulating about the proposed rules for a month. With Treasury Secretary Steven Mnuchin heading for the door as a new government walks in, they have been viewed as a farewell shot on crypto. About the announcement, he said:
“This rule addresses significant national security concerns in the CVC market and aims to address the loopholes that malicious actors seek to exploit in the record-keeping and reporting system.”
A number of leading lawmakers have already spoken out against the proposed rule, which many see as an attack on the nature of peer-to-peer transactions. However, in the absence of a formal law, the Treasury Department has considerable decision-making powers in this area.
However, the current proposal is not as radical as some have feared. Rather, it would apply existing requirements to keep reports of transactions – the $ 3,000 threshold of the travel rule – for registered businesses that interact with self-hosted wallets. For registered companies, this threshold would instead be $ 10,000.
This story breaks and is updated.