Proposed regulations on crypto assets could be counterproductive-a big Republican lawmaker warned at the US Senate Banking Commission yesterday.
Republican Pat said that the rules on counterparties proposed by the Financial Crimes Enforcement Network (FinCEN) would put a heavy burden on crypto asset companies, but may not be a countermeasure against illegal activities. Senator Toomey (Pennsylvania) insisted in a letter to Treasury Secretary Janet Yellen.
Congressman Toomy further described the draft guidance of the Financial Action Task Force (FATF) on money laundering as “worrisome.”
Too heavy burden
“Cryptocurrency assets can dramatically improve consumer privacy, access to financial services, and the ability to make decisions,” Toomy said. “Some people say that crypto assets could be as revolutionary as the Internet.”
The day before the letter was sent, Democratic Senator Elizabeth Warren (Massachusetts) said it could be a criminal tool as well as environmental and consumer protection issues. He criticized Coin (BTC).
The FinCEN rule in question was proposed by Treasury Secretary Janet Yellen’s predecessor, Treasury Secretary Steven Mnuchin, towards the end of President Trump’s term. According to the regulations, all cryptocurrency exchanges and financial institutions may store information on the names and addresses of persons involved in transactions over $ 3,000 and submit reports for transactions over $ 10,000. It will be obligatory.
Opponents of the rule argue that decentralized finance (DeFi) is affected because many smart contracts that store funds do not require the provision of names or addresses.
Aside from DeFi, maintaining excessive records beyond the general customer confirmation (KYC) requirements can be a burden for small exchanges. Just before President Trump’s term ended, and after President Biden took office, the public comment period was extended, but the proposal is still pending.
“We recognize that the FinCEN and FATF proposals seek to address the misuse of crypto assets associated with illegal activity, but if applied, address FinTech, the basic privacy of the American people, and illegal activity. It will have a detrimental effect on efforts to do so, “warned Congressman Toomy. “I urge you to make a major revision,” he continued.
In addition, criminals may find it easier to operate outside the regulated financial sector once these rules are enforced, Congressman Toumi argued.
The same is true of the guidance provided by the FATF, which will impose reporting requirements on DeFi. Congressman Toomy expressed concern that setting “cumbersome records management requirements” that do not apply to the US dollar could hurt the crypto asset sector.
Aiming for more efficient regulation
In addition, Congressman Toomy suggested that FinCEN consider renewing its currency reporting obligations on the dollar. The reporting requirements for dollar trading were set 40 years ago and are based on the standards of the time.
Congressman Toomy argued that asset tracking and analysis of suspicious activity should be more effective than it is now, including crypto assets. Congressman Toomy pointed out that the FBI recently succeeded in regaining much of the crypto assets paid by Colonial Pipeline in a ransomware attack.
“Instead of trying to impose awkward regulatory requirements on crypto assets, FinCEN is now present or emerging to work with stakeholders and analytics companies to identify cryptocurrency-related illicit activity. You should understand the function, “said Congressman Toomy.
CoinDesk tried to interview a FinCEN spokeswoman, but no comments were received.
｜ Translation / Editing: Akiko Yamaguchi, Shigeru Sato
｜ Image: Senator Pat Toomey (Shutterstock)
｜ Original: Republican Senator Asks FinCEN to Reconsider Controversial Crypto Rule