Crypto Firms Urge US Treasury to Reconsider Reporting Requirements for Crypto Mixers
Summary:
Cryptocurrency companies Coinbase, Paradigm, and Consensys are urging the US Treasury to reconsider proposed reporting requirements for transactions involving crypto mixers. They argue the requirements would be resource-intensive and lack specificity. The suggested rules are crimes enforcement regulations that call for recordkeeping and reporting requirements on transactions involving cryptocurrency mixers. Criticisms include suggestions of violation of privacy, security risks, and ineffectiveness. These proposed rules are currently pending public input, revisions, and formal approval by Financial Crimes Enforcement Network (FinCEN).
Cryptocurrency companies Coinbase, Paradigm, and Consensys have requested that the U.S Treasury reassess its intended reporting obligations for transactions included in cryptocurrency mixers, on the grounds that these obligations lack precision and would require a vast amount of resources. On January 22, Coinbase responded to the U.S. Treasury Department's Financial Crimes Enforcement Network's (FinCEN) suggestion of new regulations that entail "establishing record keeping and reporting demands for transactions connected with the conversion of virtual currency."
Coinbase rebuted the regulations, labeling them as expansive, challenging, and unproductive. There are two main reasons that they used as their arguments. Firstly, they argue that there is no "regulatory void" with respect to cryptocurrency mixers, as regulated organizations like Coinbase file detailed reports about any dubious cryptocurrency mixing transactions above $2,000. The second argument voiced was that the suggested regulations would further bequeath broad data reporting that wouldn't serve in aiding law enforcement and would violate privacy while posing a security risk as it centralizes confidential information.
Paul Grewal, the Chief Legal Officer at Coinbase, noted in a January 22 thread on Twitter that the dumping of massive data is a waste of time and resources according to Congress, and he concurred.
Meanwhile, in October, FinCEN proposed legislation designating cryptocurrency mixing as a crucial area of concern in money laundering. The institution pinpointed that the percentage of crypto transactions via mixers originating from potentially illicit sources was on the rise. Thus, the proposals involved that domestic financial establishments and agencies keep records and file reports related to transactions involving cryptocurrency mixers.
Before any rules are finalized and aspects of them implemented, FinCEN advised that the crypto industry needs a detailed scheme to collate, store, and offer reports. The proposed rules are currently in a public comment period, pending revision and FinCEN's formal endorsement.
Furthermore, Coinbase was not the only opponent to these reporting requirements. On January 22, Ethereum software solutions provider Consensys penned a letter to FinCEN, stating that a securing option respecting privacy is crucial. Moreover, Blockchain Association criticized FinCEN's "cryptocurrency mixer" definition, arguing it was too inclusive, unsupported by adequate evidence, and consequently filed a response. Cryptocurrency venture capital firm Paradigm also resisted the rule, calling it ill-suited to handle the stated concerns of FinCEN, while Coin Center criticized the rulemaking process as "unprecedented and exceedingly broad.
Published At
1/23/2024 7:00:40 AM
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