Bitcoin community cringes as federal reserve & the treasury look to crack down
The Bitcoin community is cringing as the Federal Reserve and the Financial Crimes Enforcement Network, a branch of the U.S. Treasury, looking to decrease the reporting requirements imposed on financial institutions.
BITCOIN COMMUNITY DOESN’T LIKE THE RECENT “TRAVEL RULE” MOVES
These two entities are specifically targeting the so-called “Travel Rule,” which requires institutions to collect, retain, and share information about their clients. Those that have to abide by the Travel Rule include crypto exchanges. Integration of the Travel Rule into exchanges and other Bitcoin service providers is expected to take place next year.
The Fed and FinCEN are looking to reduce the threshold of the Travel Rule from $3,000 to $250. This means that if you bought $250 worth of Bitcoin from exchanges under this new rule, the exchange would be required to collect information regarding you.
A statement from the two authorities reads:
“Under the current recordkeeping and travel rule regulations, financial institutions must collect, retain, and transmit certain information related to funds transfers and transmittals of funds over $3,000. The proposed rule lowers the applicable threshold from $3,000 to $250 for international transactions. The threshold for domestic transactions remains unchanged at $3,000.”
Bitcoin investors and the crypto community believe that this is clearly an unneeded encroachment of privacy.
Matt Odell, an early Bitcoin adopter, commented:
“The travel rule will require invasive information sharing between companies for transactions greater than $250. The travel rule is extremely dangerous for users. Any company that chooses to comply without pushing back against regulators is part of the problem. It is that simple.”
Preston Byrne, a crypto-focused lawyer, echoed this. He said that “it should be $25,000,” not $250.
PART OF A WIDER CRACKDOWN
This appears to be part of a wider crackdown against financial crimes, especially those enabled by crypto assets.
Jake Chervinsky, the general counsel for the developers of the DeFi app Compound Finance, said that a war is being waged against Bitcoin self-custody and privacy:
“I fear we’re heading for a world where withdrawing crypto from exchanges to self-custody is restricted as a means of attacking privacy. We’d have two separate crypto markets: one of ‘clean’ custodial coins & another of ‘dirty’ self-sovereign ones, with no bridge between."
This has been made clear by a number of recent enforcement efforts. Spain is looking to require all those that own Bitcoin or altcoins to report their holdings, while the U.S. DOJ and other agencies are releasing reports highlighting cryptocurrencies as a threat.