Crypto executives face off with FinCen over proposed KYC requirements

On Friday, a proposed rule by FinCen requiring mandatory Know Your Customer (KYC) for all crypto exchange withdrawals over $3,000 was met with backlash from crypto community, including Jeremy Allaire, CEO of stablecoin provider Circle.

Crypto executives face off with FinCen over proposed KYC requirements

On Friday, a proposed rule by FinCen requiring mandatory Know Your Customer (KYC) for all crypto exchange withdrawals over $3,000 was met with backlash from crypto community, including Jeremy Allaire, CEO of stablecoin provider Circle. Users of centralized cryptocurrency exchanges who want to transfer their crypto holdings off exchanges and into their own private wallets would have to provide detailed personal information for transactions greater than $3,000, and exchanges would be required to report transactions to FinCen that add up to more than $10,000. The law would let the government build a massive database of wallet owners without relying on data from Chainalysis so they can attach citizens to wallets more easily. On December 9, Circle CEO Jeremy Allaire preemptively sent a letter to senior staff of the United States Department of the Treasury appealing for regulators to collaborate with the industry better in adopting crypto regulations. Allaire warned U.S. regulators that some of its proposed rules like mandatory KYC over $3,000 and reporting rules over $10,000 pose a direct risk to the country’s competitiveness, “I believe the proposal would inadequately address the actual risks that are at issue, would significantly harm industry and American competitiveness, would continue to yield economic and industry advantage to Chinese firms, and would have significant unintended consequences around the broader use-cases for this technology,” he said. Other executives pointed out on Twitter that lawbreakers could easily bypass the rule by sending two or more transactions to sidestep the requirement. Allaire said that both the industry and regulators need some time (one to two years) to allow the industry and financial regulators to collaborate together on best practices. Blockstream Chief Strategy Officer Samson Mow stated in a tweet that it's not even sure what a self-hosted wallet means, referencing the "not your keys, not your coins" phrase that is often passed around. FinCen briefly references themes from central bank digital currencies (CBDCs) for the first times in the agency's history.