Biden halts FinCEN’s Crypto Wallet proposed rule

Featured: President Biden, FinCEN, Bank Secrecy Act, Gary Gensler

U.S. President-elect Joe Biden took oath as the 46th President on Wednesday. On the first day of his new innings as the President of America, he had put a general freeze on all new or pending rules and proposals recommended under the Trump administration, effective for 60 days from the date of the memorandum. Thus, the implementation of the rule proposed by the Financial Crimes Enforcement Network (FinCEN) under former US Treasury Secretary Mnuchin on December 18, 2020, which would “require banks and money service businesses to submit reports, keep records, and verify the identity of customers’’ who transact to private cryptocurrency wallets has been brought to a standstill.

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The Rule

The rule proposed by FinCEN, part of the US Treasury Department stated that “convertible virtual currency” and “legal tender digital assets” be classified as “monetary instruments” and therefore will have to abide by the conditions prevailing under Bank Secrecy Act (BSA). According to FinCEN, the rules were proposed to stop illicit financing through cryptocurrency and therefore recommended to put barriers like limits on transactions carried out in a 24- hour period and KYC necessary to private crypto wallets. The proposal was opposed by the CEO of Square- Jack Dorsey, who said that name and address collection of the users should not be required for cryptocurrency transactions similar to cash transactions. However, it seemed technically impossible for the blockchain projects to comply as smart contracts do not store the name and address information of the sender and receiver. Thus, the rules were considered as a hit for the crypto economy to flourish.

Conclusion

With incoming Wyoming Senator, Cynthia Lummis stating Bitcoin is a better store of value, and according to the media reports, President Biden will choose Gary Gensler as the SEC chairman because he is considered to be supportive of the cryptocurrency ecosystem as he has taught courses about Bitcoin and blockchain at MIT and has stated positively about crypto, including Bitcoin calling it as a “modern form of gold”. Therefore, prima facie, the members of the Biden administration seem to be supportive and open-minded to the idea of cryptocurrency and it seems, the Biden regime could prove out to be a blessing in disguise for the crypto ecosystem to prosper.

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