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FinCEN Kills Proposed Crypto Rules After Commenters Warn of Chilling Effect

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FinCEN Kills Proposed Crypto Rules After Commenters Warn of Chilling Effect

The Financial Crimes Enforcement Network (FinCEN) has withdrawn two rules proposed years ago that would have imposed certain regulatory requirements on financial institutions’ handling of convertible digital assets.

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FinCEN said in a Monday (Oct. 5) press release that it withdrew the proposals after considering public comments on them and as part of the Trump administration’s deregulatory agenda.

One proposal would have imposed recordkeeping, verification and reporting requirements on certain transactions involving convertible virtual currencies and unhosted wallets, according to the release.

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This proposed rule was published by FinCEN on Dec. 23, 2020, according to a FinCEN document announcing its withdrawal.

In a Dec. 18, 2020, press release announcing the proposal, the Treasury Department said FinCEN aimed to increase transparency in digital currencies and close loopholes that may be exploited by malign actors.

In the Monday document announcing its withdraw of the proposal, the regulator said: “As stated in the report issued by the President’s Working Group on Digital Asset Markets established by Executive Order 14178, ‘Strengthening American Leadership in Digital Financial Technology,’ FinCEN is withdrawing the NPRM [notice of proposed rulemaking] as part of the Trump Administration’s ongoing efforts to ensure digital asset regulations are fit-for-purpose. FinCEN will take no further action on this NPRM.”

The other withdrawn proposal would have imposed a special measure with regards to convertible virtual currency (CVC) mixing, per the release.


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