US regulator to require verification of identity of cryptocurrency wallet holders


The US Financial Crimes Enforcement Network (FinCEN) has published rules that introduce new record-keeping and reporting requirements for banks and money operators that interact with „offline or otherwise unregulated wallets“.


If the rules, entitled „Requirements for Certain Convertible Virtual Currency or Digital Asset Transactions,“ are implemented, standalone wallets will begin to be subject to stringent anti-money laundering standards, meaning that anonymous transactions will become a thing of the past.


FinCEN defines standalone wallets as „those wallets operated by a financial entity that is not subject to the ‚Bank Secrecy Act‘ and is located in a foreign jurisdiction identified by FinCEN.


The document argues that „convertible virtual currencies“ are increasingly being used for „international terrorist financing, arms proliferation, sanctions evasion and money laundering operations“.


The rules call for the introduction of identity verification (KYC) procedures for withdrawals of more than $3,000. If the amount of the transaction exceeds $10,000, firms will have to report to FinCEN. In this case, banks and money operators will provide information relating to the customer and counterparty transaction, including names and actual addresses to identify those involved in the transaction.


In order to ensure that no one engages in anonymous transactions, FinCEN will require identifying the breakdown of large transactions into smaller transactions in order to circumvent reporting requirements.


The new rules are consistent with FinCEN’s current regulation, which requires regulated financial businesses to report currency transactions „conducted by or on behalf of one person, as well as multiple currency transactions with an aggregate value exceeding $10,000 in a single day.


FinCEN has announced that it will accept public comment on the published rules until 4 January. This is an opportunity for cryptocurrency companies and the general public to put forward arguments against the new rules.


The Financial Crimes Enforcement Network is an agency within the US Treasury Department. FinCEN is focused on combating money laundering, terrorist financing and financial crime.


The day before it was reported that the US Department of Treasury was going to introduce new rules for money operators that carry out transactions involving standalone cryptocurrency wallets.


Rumours of regulation of individual cryptocurrency wallets in the US first emerged in November, when Coinbase CEO Brian Armstrong tweeted about it.


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