FinCEN Extends Comment Period by 45 Days for Digital Asset Focused AML Rulings

(Last Updated on January 14, 2021)

FinCEN extends the comment period another 45 days for the new anti-money laundering regulations for digital assets. This will place the new AML rulings for digital assets beyond the inauguration and place the oversight into the hands of the Biden cabinet with Janet Yellen at the helm.

What are the proposed anti-money laundering regulations?

-> Notice of Proposed Rulemaking (NPRM), banks and money services businesses (MSBs) would be required to submit reports, keep records, and verify the identity of customers in relation to transactions above certain thresholds involving CVC/LTDA wallets not hosted by a financial institution (also known as “unhosted wallets”) or CVC/LTDA wallets hosted by a financial institution in certain jurisdictions identified by FinCEN. 

The biggest FEAR from the anti-money laundering regulation is the BANNING of “self-hosted” wallets or self-custody of digital assets.

“Specifically, FinCEN is providing an additional 15 days for comments on the proposed reporting requirements regarding information on CVC or LTDA transactions greater than $10,000, or aggregating to greater than $10,000, that involve unhosted wallets or wallets hosted in jurisdictions identified by FinCEN.”

Many of us are terrified that this is primarily an attack on our financial sovereignty due to the proposed regulation banning the self-custody of any digital asset.

This is being proposed because under the AML and KYC laws, a self-hosted wallet is basically “anonymous” and can be used for criminal acts and money laundering.

Giving up the ability to self-custody your digital assets = losing financial sovereignty.

AML laws want to remove the ability of an individual to have full control and financial freedom with their digital wealth.

What are they attempting to regulate?

-> Digital assets wallets are restricted to licensed banks and financial companies only

-> No self-custody of digital assets

-> Withdrawal and deposit limits above $10,000 to include additional regulation

-> More identification requirements = more difficult account access and higher friction for transactions

-> Delays in settlement to include more tracking and transaction history

What has happened so far regarding this ruling?

->7,500+ comments in the first round

->Next round should see even more comments flood in as awareness grows

->Biden cabinet with Janet Yellen *seems* more dovish on digital assets (especially compared to Mnuchin’s harsh rhetoric)

This looks to be a GOOD move for cryptocurrency as Janet Yellen should be less aggressive and more “dovish” than Mnuchin for regulations on digital assets. Generally many in the crypto industry prefer the new democratic cabinet but that remains to be seen.

I’m looking forward to seeing the digital banking industry continue to grow and help shape smarter, more equitable policies before the Federal government makes any big move.

This may establish a more transparent history of digital assets and hopefully limit any major regulatory attack on Bitcoin.

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