On January 30, the US Department of Treasury listed two important crypto-related draft legislation under its ‘Semiannual Regulatory Agenda and annual regulatory plan’. Of the two proposed rules, the treasury has included the contentious bill that would require non hosted or self-hosted crypto wallets to implement KYC registration.
The bill, called “Requirements for Certain Transactions Involving Convertible Virtual Currency or Digital Assets”, was first introduced in December 2020 but was temporarily suspended after the Biden Administration froze all federal regulatory proposals after taking charge at the time. CoinDesk was the first to report the news Sunday.
The draft legislation, if approved, would establish a reporting requirement for banks and cryptocurrency exchanges with the Financial Crimes Enforcement Network (FinCEN), requiring them to report certain information related to CVC/LTDA transactions and counterparty. CVC stands for convertible virtual currency and LTDA stands for legal tender digital assets.
In addition, the bill would also require them to implement KYC rules if the counterparty is an unhosted or self-hosted crypto wallet or the transaction size is greater than $10,000.
When introduced in 2020, the bill was met with apprehension from crypto advocates who highlighted the privacy issues and mass surveillance that might come with it. They also noted that certain wallets will be unable to meet the reporting requirements as many of them use DeFi technology to offer services.
It was also revealed that the draft regulation will be finalized by September 2022. The bill also comes as the Biden Administration looks to accelerate forming a regulatory framework on crypto assets. The White House is planning to release an executive order on cryptocurrencies next month.