Recently, FinCEN proposed new regulations that would force crypto firms to collect information regarding the identities of non-customer counter parties. The new regulation, however, could severely backfire — at least according to Twitter CEO, Jack Dorsey.
Jack Dorsey says that the new AML rules are unnecessary
According to Dorsey’s letter, published yesterday, January 4th, 2021, his other company, Square, is among those who will have to abide by the new regulation, if it passes. Dorsey claims that the proposal imposes a reporting obligation that goes beyond what is required for cash transactions.
More than that, he points out that Square — and other firms dealing with crypto — would be expected to collect data about people who never opted into their services. These would not be Square customers, but 3rd parties that technically do not have any ties to the company.
Such data would also be unreliable, at best, and Dorsey continues to stress that it is unnecessary. An even bigger problem, however, is that Square predicted that the law, if passed, would have a very negative impact on the crypto users, and also — the companies. The company believes that such users would start seeking unregulated and non-custodial crypto services offshore.
FinCEN faces major criticism for the proposal
This is a problem, as Dorsey and Square have noted, as it would impact the country’s competitiveness on a global level. Furthermore, it would put users in danger, and even create new and unnecessary challenges for regulators.
Dorsey further stresses that FinCEN will have even less visibility into crypto transactions than right now.
Dorsey and Square are also not the only ones to criticize FinCEN and the new proposal. Particularly after the regulator only offered 15 days for public comment, rather than 60, which is the norm. But, despite the holiday season and the short period that the crypto community had to react — over 6,000 comments were submitted on the matter.
Some, like the crypto exchange Kraken, even slammed FinCEN for not bothering to provide estimates of how much implementing the new rule would cost. Kraken also said that this is a “politically-motivated piece of midnight rulemaking,” and that the move will diminish the trust in FinCEN.
Even COINBASE responded to the rule, calling it “impermissibly vague,” suggesting that it will mean invading the privacy of the public, while failing to offer any public benefit.
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