U.S Treasury drafted a new rule to regulate, prevent crimes and protect national security. However, certain cryptocurrency groups are referring to it as infringement of privacy rights.
U.S Treasury recently planned a new rule, which shall help the department in finding out illegal crypto transactions and trades. This new rule has kindled a new fire among many cryptocurrency groups. The groups while opposing it are accusing the Treasury of its attempt to cast shadow over the success of cryptocurrency.
The future rule would require the users and exchanges to gather and submit to government, information regarding large transactions. This rule would be applicable on all accounts or wallets that are not in control of financial institutions.
Financial Crimes Enforcement Network (FinCEN) said this rule would play an important role in identifying illicit activities. They also believe that such rules would also help in ensuring national security.
However, over 7,000 different groups related to the trade of cryptocurrency are negating this new rule. These groups accused the national Treasury in destroying the digital currency world. The groups have also accused the Treasury to be engaged in “midnight rulemaking”.
Gus Coldebella, Counsel of Paradigm said that everyone who has traded in cryptocurrency knows that this new rule is wrong.
Jack Dorsey Chief Executive of Square also raised his concerns against the proposed rule. He said that such rule would affect the capacity of people from participating in the trade of the cryptocurrency.
Coinbase and one of its investors Andreessen Horowitz both wrote letters to Treasury regarding the legality of such rule.
Paradigm said that such would make the crypto trade “burdensome and unprecedented”. It suggested that imposing such requirements on crypto trade would make it harder to catch malefactors.
The responses of the exchanges however, seem to be affected by their stakes in the crypto industry. US’s largest crypto exchange is also looking forward to get itself in public listing, after the surges of Bitcoin. The increasing trend of cryptocurrencies, Coinbase is also planning to go public to expand its business.
Crypto analysts said that the attempt of Treasury to put these requirements on exchanges would not bode well. They believe these traditional requirements would over burden the digital currency system.
Reportedly in 2019 1.1% of the crypto transactions involved illegal activities with was equivalent to $10 billion. U.S. regulating agencies used an application named Chinalysis to monitor crypto trades.
However, the Treasury said that the rule is only for un-hosted wallets used through apps for direct trading. It explained that such accounts are dangerous and it is necessary to verify or get some information about such users. It also argued that such rules would also protect the interest of other investor and exchanges. Treasury concluded that regulators around the globe are concerned of possibility of illegal activities and money laundering.