Reportedly, the US Department of Treasury may once again consider FinCEN's controversial proposal to require verification of users of unhosted or self-hosted crypto wallets. Earlier, this issue was the reason for a heated debate between the US Department of Treasury and FinCEN.
"FinCEN proposes changes to the rules implementing the Bank Secrecy Act (BSA) to require banks and money services to report, maintain records, and verify the identity of customers in transactions with convertible virtual currency (CVC) or digital assets with legal tender status, stored in non-hosted wallets or wallets hosted in a jurisdiction determined by FinCEN," the US Department of Treasury said on the Federal Register website.
FinCEN put forward this proposal in late 2020. The document was developed by Steven Mnuchin, the former Secretary of the Treasury. However, many policymakers criticized this initiative as the lion’s share of digital wallets were technically unable to meet KYC requirements.
If the proposal is accepted in its initial form, then cryptocurrency exchanges will need to collect the personal data of users transferring virtual assets to non-custodial wallets.
"According to the agency, the revised proposal will ensure that the rules apply to domestic and cross-border transactions with a convertible virtual currency that is a medium of exchange (for example, cryptocurrency), has an equivalent value as a currency, or acts as a substitute for a currency, but does not have the status of legal tender", the agency noted.
Importantly, in November 2021, US Treasury Secretary Janet Yellen emphasized that the FATF rules were consistent with the FinCEN rules on the crypto regulation. FinCEN will complete the revision of the document in August 2022.
