The United States Department of the Treasury, FinCEN, and the Federal Reserve System (FED) presented a proposal for regulations that seek to include smaller transactions within their regulatory controls, applicable to international operations carried out with cryptocurrencies and digital assets within their jurisdiction.
Según un Press release issued by the United States Federal Reserve (FED), this body, together with the Treasury Financial Crimes Enforcement Network (FinCEN), attached to the Department of the Treasury, presented a proposal for an amendment that seeks to modify the Bank Secrecy Act to include transactions with cryptocurrencies, and digital assets from $250 USD to its regulatory controls. The agency reported that the proposal seeks to reduce the threshold that currently exists for international transactions with these assets, which is located at $3.000 USD, and apply the new regulations to all those operations that are carried out with "convertible virtual currencies" and other digital assets from $250 USD.
The proposal of both organizations is focused on companies and businesses that provide financial services providing these government agencies with information about their clients and the financial and commercial transactions they carry out, in order to have greater control and surveillance over international transactions that exceed the threshold of $250 USD.
“Under current recordkeeping regulations and travel rules, financial institutions are required to collect, retain, and transmit certain information related to funds transfers and funds transfers greater than $3.000. The proposed rule reduces the applicable threshold from $3.000 to $250 for international transactions.”
The entity also reported that the threshold for domestic transactions will continue to be $3.000 USD.
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New regulations, greater financial control
As indicated in the FED press release, financial institutions that provide services with cryptocurrencies and digital assets will be required to exchange information with these agencies about their clients along with all transactions they carry out that are equal to or greater than $250 USD, in accordance with the Bank Secrecy Act and the United States Travel Rule.
The Travel Rule is a requirement for financial service providers and money transmitters with digital assets, in compliance with the regulations of the Financial Action Task Force (FATF). This rule aims to collect the personal data of all those who make transactions with digital assets to share them with regulators in various countries around the world. The FATF Travel Rule requires that exchanges, cryptocurrency exchanges and custodial services track their clients’ transactions, from when they receive the money to where they send it, to prevent misuse of digital assets and money laundering.
This rule requires knowledge of data such as: the name and address of the originator or transmitter of the payment or transaction; the amount involved in the transaction or in the transmission order; the date of execution of the transaction; any payment instructions received from the originator or transmitter with the payment order; and the identity of the bank or financial institution of the beneficiary and the recipient of the transaction, as explained in the Travel Rule. Now, with the modifications to the transaction threshold proposed by FinCEN and the FED, there will be greater controls and implications that put the privacy and security of users' data at risk.
Risks for users
In order to comply with the agencies' requirements, if the proposed amendments are approved and included, cryptocurrency and digital asset exchanges, exchange houses, and custodians must store a large amount of information, according to the parameters established in the Travel Rule. Therefore, to protect this data, exchanges must strengthen their platforms and security systems in order to avoid cyberattacks that put this information at risk.
On the other hand, strict regulatory controls regarding the use of cryptocurrencies and digital assets constitute a violation of citizens' rights to privacy and civil liberties, as pointed out Marta Belcher, special counsel to the digital rights advocacy group Belcher recently criticized the Department of Justice's (DOJ) actions to impose a new regulatory enforcement framework for cryptocurrencies, particularly privacy cryptocurrencies.
The advisor explained that the use of cryptocurrencies and digital assets in illicit activities is low, so the DOJ's actions are a complete affront to the privacy and civil liberty rights of citizens, who have the right to use cryptocurrency exchanges to carry out their commercial operations and transfers, in the same way as they do with cash, without the need to keep any kind of record of the operations carried out.
Continue reading: US DOJ prepares new attack against digital privacy
