FinCEN Regulations will drive users offshore, says Jack Dorsey

Many of the US crypto firms are opposing the new AML laws proposed by FinCEN. FinCEN proposed regulations that would force businesses who are operating with crypto to gather informationon the identities of non-customer counterparties. 

Jack Dorsey, CEO of financial services firm SQAURE released a letter on January 4 that takes aim at the proposal to impose reporting obligations that go “far beyond what is required for cash transactions”. The letter further portrays that Square would further collect “unreliable data about people who have not opted into our service or signed up as our customers.”

“Counterparty name and address collection/reporting should not be required for [virtual currency] CTRs or recordkeeping, as it’s not required for cash today.”

As per a few predictions from Square, if the law is passed it would drive cryptocurrency users towards unregulated and non-custodial crypto services located outside of the U.S. Hence, influencing the nation’s global competitiveness and generating more challenges for regulators: 

“By adding hurdles that push more transactions away from regulated entities like Square into non-custodial wallets and foreign jurisdictions, FinCEN will actually have less visibility into the universe of cryptocurrency transactions than it has today.”

FinCEN is constantly facing criticism for the change in its proposed rule. FinCEN released the rule on Dec. 18 to announce that the regulator will offer only 15 days rather than 60 days for public comment. Despite this rule, 6,000 comments are submitted to FinCEN on this matter. 

Kraken exchange was also one among those who criticisex the proposed regulations. Alike SQUARE, Kraken warned that this law will drive the users away from the regulated platforms. 

Kraken stated that, 

“It virtually guarantees that the evidence available to law enforcement today will be placed outside their reach tomorrow. It is quite clearly a politically-motivated piece of midnight rulemaking, the publication of which diminishes the trust we have placed in FinCEN.”

Coinbase depicted the rule as “impermissibly vague”. Later, it also suggested that it imposed “expansive privacy invasions on the public,” and added that it failed to offer any public benefits.