Regulations globally must evolve as times change. Therefore, this time the Financial Crimes Enforcement Network (FinCEN) and the Federal Reserve of the United States seek to obtain more information on small international transactions with cryptocurrencies. The proposed rule is to lower the threshold to US $ 250.
According to a proposed rulemaking notice, the agencies want to lower the threshold from $ 3,000 to $ 250 for international transactions.
This means that financial institutions would need to exchange customer information along with all transactions over US $ 250. But not just any transaction, but rather those that enter or leave the United States, which is their jurisdiction.
Specifically, they want information on all international crypto transactions over US $ 250. The proposed change would lower FinCEN’s old US $ 3,000 threshold.
Where does this FinCEN cryptocurrency proposal come from?
In theory, what is sought is that there is more information on small transactions with cryptocurrencies convertible to fiat money. Therefore, the proposed change specifically applies to «convertible virtual currencies«, Saying that they would also fall into the category of money for the purposes of this rule.
According to this, financial institutions must exchange various data such as the name and address of the sender or recipient; the amount of the payment or the transfer order. They are even asked for the payment execution date and the identity of the beneficiary’s bank or the recipient’s financial institution.
The Financial Action Task Force is working to apply a similar rule around the world. It is very controversial within the cryptocurrency industry. The mandate to collect and exchange customer information seems diametrically opposed to the “peer to peer electronic money system” that Bitcoin stood for from its inception.
Therefore, it can be understood that cryptocurrency exchanges would now require more information from their users than they are asking for today. For many, it would even represent the loss of much of the appeal that the cryptocurrency sector has, which is security and privacy.
Also, this change has a second implication: financial institutions can know the geographic origin of each transaction above the threshold of $ 250.
What we can say is that any rule in this area and sector will continue to be controversial, because in theory it calls for regulation in a sector that was born to make things more decentralized. However, updating this transfer rule is still only a proposal.
For their part, the Financial Crimes Enforcement Network (FinCEN) and the United States Federal Reserve are inviting public comments from all stakeholders during the next 30 days. Do you think it would be a positive update if it is approved and executed?