US regulators have received overwhelming opposition to their proposed “impractical” crypto rule, which does little to fight money-laundering and infringes on law-abiding citizens’ basic rights.

In brief

  • FinCEN’s newly proposed crypto rule for mandatory KYC of self-hosted wallets is ridiculous.
  • The proposal was open for public comments until Jan. 4, 2021, just 15 days (normally it’s 60 days)
  • The regulator received over 65,000 comments, including open letters from leading businesses in the space.

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FinCEN’s regulatory proposal for mandatory KYC of self-hosted crypto wallets received over 65,000 comments demanding the agency reconsider the

FinCEN’s beta regulatory proposal for mandatory KYC of self-hosted crypto wallets and nodes received over 65,000 comments, demanding the agency reconsider the “devastating” effects it would have on the industry.

Crypto Industry Requires Time for FinCEN Ruling

From day one, the FinCEN legislative proposal has been strongly opposed and criticised across the board. The official site for public comments received over 65,617 responses from individuals and companies reiterating their strong objections to this one-sided bill.

It’s quite rare for the entire crypto industry to unify against something given the huge disparities and allegiances in the space. However, the main concern is that this bill would violate fundamental privacy rights and could even render users vulnerable to identity theft while doing very little to combat terrorism or money laundering.

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In fact, this bill would hurt ordinary law abiding citizens most. There have been several instances of data leaks from centralized services according to a report from cryptobriefing, the latest of which came from hardware wallet manufacturer Ledger.

Several members of the U.S. Congress also wrote to the Treasury Secretary Steven Mnhuchin multiple times, asking the federal agency not to rush an “impractical” rule.

Additionally, over 24 crypto businesses and organisations, including the US Chamber of Commerce, appealed to the Treasury Department to reconsider proposal.

Given the scale of the opposition, the least FinCEN could do is to grant an extension for deliberating on the proposal to 60 days, as is standard procedure.

Should the bill pass without significant amendments, then it’s very likely that US-operating exchanges will be unable to comply and would simply disable withdrawals for all their users in order to remain within their legal remit.

If this situation is neither tenable nor enforced in any traditional financial market then why should it be different for crypto?

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