Coinbase and Kraken Vows to Fight FinCEN’s New Proposed Crypto Regulation
Crypto exchanges believe these new rules can have “long-lasting, detrimental side effects” on the industry and further “wall off the poor from our financial system forever.”
Last week, the US announced its long-awaited wallet regulations just as Bitcoin rallied past its all-time high of $24,000.
FinCEN and the US Treasury put forth the new rules, requiring banks and money service businesses to verify customers' identity, keep records, and submit reports. While initially feared to target private wallets, these new rules are mostly geared at centralized institutions — exchanges and lending businesses.
This week, San Francisco-based Coinbase sent out a letter to Kenneth Blanco, Director, FinCEN, in which it says that these proposed rulemakings could have “long-lasting, detrimental side effects on the crypto ecosystem.”
Paul Grewal Chief Legal Officer at Coinbase
“As a leader in the cryptocurrency industry, Coinbase routinely provides input, and formal comments as agencies consider and develop new regulations.”
Grewal, who previously worked at Facebook as Vice President & Deputy General Counsel and before that worked in United States Magistrate Judge capacity, asked FinCEN to “reconsider its haste and provide the typical 60-day period for such significant proposed rulemaking.”
“There is no emergency here,” to bypass the required consultation with the public and treat the crypto industry differently from traditional finance, said Grewal.
Another crypto exchange, Kraken, shares its concern about the new rule, which it says will “wall off the poor from our financial system forever.”
The rule would further prohibit financial institutions from sending money to smart contracts, which are designed to eliminate the costly middlemen, said the exchange adding, “worse yet, FinCEN is trying to sneak the rule into law over the holiday season.”
FinCEN is trying to justify the proposed rule, which requires customers who wish to send digital currency to a recipient to report the latter’s name and physical address, by likening it to the “venerable” Currency Transaction Report (CTR). CTR has been applied to cash and coin (paper and metal) transactions for decades but even they “never required reporting information about the recipient.”
As such, “Kraken will fight to stop this.”