U.S. Cryptocurrency Firms Unite Against Overreaching Regulations by FinCEN

Background on FinCEN’s Proposed Regulations

The Financial Crimes Enforcement Network (FinCEN) has recently stirred the cryptocurrency pot with its new proposed regulations. These proposed rules would require crypto businesses to gather personal information about non-customer counterparties — a measure many see as overstepping. It’s like making a cash register ask for the ID of everyone passing by—not quite the point of cash, right?

Square’s Stance on the New Regulations

In a recent letter dated January 4, Jack Dorsey, CEO of Square—sorry, I mean ‘financial services firm’ Square—voiced strong opposition to these proposals. He argued that the reporting obligations FinCEN seeks would “far exceed” those required for traditional cash transactions. Dorsey asserted that requiring businesses to collect data on individuals not opting for services creates a liability nightmare.

The Data Dilemma

Square emphasizes the absurdity of needing to compile information from individuals who aren’t even customers, likening it to asking a store for the addresses of people just browsing the aisles. Their perspective is simple: why collect unreliable data when that’s not even the status quo for cash transactions?

The Ripple Effect on Cryptocurrency Users

Square isn’t just concerned about paperwork; the potential fallout could push users toward unregulated and non-custodial crypto services based outside the U.S. Dorsey predicts that such a move would harm the U.S.’s competitive stance in the crypto realm. He points out that more barriers might actually reduce visibility for regulators, creating a slippery slope.

What’s at Stake?

• Increased anonymity for transactions
• Reduced governmental oversight
• Heightened risks in tracking illegal activities

Kraken and Coinbase Join the Rally

The criticism isn’t just echoing from Square. Crypto exchange Kraken chimed in too, expressing concerns over the lack of transparency from FinCEN regarding the potential costs of enforcing such rules. Not surprisingly, they believe it could lead to less cooperation with law enforcement. As they put it, this proposal could transform regulated entities into obsolete relics of the past.

A Call for Reason

Along with Kraken, Coinbase submitted its own critiques, describing the proposal as “impermissibly vague” and a potential invasion of privacy. Both companies share a common message: regulations need reasonable foundations and proportions, not hastily crafted mandates that could push users into the dark corners of the crypto world.

FinCEN’s Short Comment Period

In what can only be described as a questionable approach to public input, FinCEN has only allowed 15 days for feedback on the proposal—way shorter than the typical 60-day window. Yet, nearly 6,000 comments indicate that the cryptocurrency community is indeed paying attention and isn’t pleased. Who knows, perhaps they’re just trying to get a reaction out of everyone on purpose?