U.S. Financial Crimes Enforcement Network presented new KYC requirements for cryptocurrency users in the country to combat the potential involvement of crypto in illegal activities. The crypto exchanges are required to verify the identity of the wallet owner if the transaction exceeds $3,000. The proposed rule requires cryptocurrency exchanges to submit the information of transactions above $10,000 to the FinCEN. The U.S. Treasury Department is concerned over the use of cryptocurrencies in terror financing and other illegal activities.
The proposed rule is in line with FATF’s travel rule.
The U.S. crypto users trading with an exchange are now required to provide details, including name, address, and purpose of the transaction as per the new regulations. Commenting on the proposed KYC regulations, Steven Mnuchin, Secretary of the U.S. Treasury Department, said: “This rule addresses substantial national security concerns in the convertible virtual currency (CVC) market, and aims to close the gaps that malign actors seek to exploit in the recordkeeping and reporting regime. The proposed rule is in line with the Financial Action Task Force’s travel rule that also requires crypto exchanges to tighten KYC guidelines.
The U.S. Treasury Department wants to make sure no one transacts anonymously.
As reported earlier, FinCEN is also proposing rules around “structuring,” which entails breaking large transactions into smaller ones in order to get around reporting requirements. The U.S. Treasury Department wants to make sure no one transacts anonymously. FATF’s travel rule calls for trading venues to share exchange originator and beneficiary identity information for exchange-to-exchange transactions greater than $10,000. U.S. exchanges have been working to meet the challenges presented by the rule. The crypto community reacted strongly against the recent proposal and expressed concerns about the potential regulation that can negatively impact the growth of digital currencies.