FinCEN’s Treasury Suggests Rule To Monitor Crypto Going To Self-Hosted Wallets

FinCen’s treasury suggests rule to monitor crypto going to self-hosted wallets. The Treasury announced its long-awaited proposal to prohibit money services companies, including U.S.-registered crypto exchanges, from dealing with self-hosted wallets.

On Friday, the Treasury’s Financial Crimes Enforcement Network, or FinCEN, announced proposed rules requiring registered crypto exchanges to verify the “identity of their customers, if a counterparty uses an unhosted or otherwise covered wallet and the transaction is greater than $3,000.” 

At present, the law is just a suggestion. The Treasury gave stakeholders 15 days to respond with comments. Rumors of the draught rules have been circulating for the last month. With Treasury Secretary Steven Mnuchin on his way out of the door when the new administration moves in, they were seen as a parting shot at crypto. Of the announcement, he said “This rule addresses substantial national security concerns in the CVC market, and aims to close the gaps that malign actors seek to exploit in the recordkeeping and reporting regime.”

A number of leading lawmakers have already opposed the proposed rule, which many see as an assault on the nature of peer-to-peer transactions. However, in the absence of a formal law, the Treasury has considerable rulemaking power in this area.

Having said that, the current proposal is not as radical as some feared. It would, rather, apply existing requirements to keep reports on transactions — the $3,000 threshold of the Travel Rule — to registered entities interacting with self-hosted wallets. Among registered entities, that threshold would instead be $10,000.

[image: Dmitry Demidko]

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