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According to the new cryptocurrency regulation proposed by Financial Crimes Enforcement Network (a US agency that collects and analyzes information about financial transactions in order to fight crime), it could make it much easier for the government to track bitcoin transactions. With an open comment period of just 15 days, the cryptocurrency exchange Coinbase and Electronic Frontier Foundation are complaining about the short deadline to comment on the new regulation and cryptocurrency investors are worried that the digital currency will lose all the anonymity it has always provided. 1g1s36
The new cryptocurrency regulation 29376x
The proposed regulations only concern private cryptocurrency wallets. To understand how this will work, let's say you are a famous cryptocurrency investor and you do some trading on the Coinbase (largest cryptocurrency exchange currently). If you have your own private wallet that you want to transfer your money to, you will need to identify yourself as the owner of the wallet if you are sending more than $3 in a transaction.
Also, if you want to do business with someone else who has a private wallet, you will need to provide some very detailed personal information in that transaction. Transactions are then required to store records of all this and deliver them when requested. Also under the proposed regulation, a financial transaction would need to report their personal information if the makes a total of more than $10 worth of transactions in one day.
Cryptocurrencies without anonymity 6o1a1a
The new regulation proposed by the US government is a “step in the opposite direction” in the ironic history of cryptocurrency. Born from a strange group of libertarians, anarchists and utopians, cryptocurrency promised to be a way to carry out transactions in an absolutely private way, in a trustless system.
O Bitcoin, the world's largest cryptocurrency, emerged shortly after the 2008 financial crisis as an alternative to banks — but these new regulations will make cryptocurrency exchanges act much more like banks. In conjunction with another rule change regarding cross-border transactions, this could signal that cryptocurrency’s wild years are over and anonymity will be harder to come by.
Cryptocurrency exchanges make it easy to switch from dollars (or any other currency) to cryptocurrencies and vice versa. It also means that they make cryptocurrency accessible to more people. The current proposal of FinCEN make trading for these exchanges and the people who trade on them more labor intensive, as well as undermining the anonymity that cryptocurrency is famous for. For this reason, some cryptocurrency enthusiasts are nervous.
The proposed new regulations make anonymity more difficult in a transaction between a private wallet and one hosted by an exchange, as well as making having a private wallet less attractive.
But the biggest problem is that some cryptocurrencies, including bitcoin, record all transactions publicly. This means that if you are exchanging bitcoins into your private wallet from an exchange, you will need to submit a lot of identifying information about that wallet, which will potentially be available to the United States government.
That way, if someone else knows that a specific wallet address is yours, they will know all the bitcoin transactions that have ever been made with that wallet. In other words, this means that the government can have access to a great deal of data beyond what the regulation is intended to cover. Therefore, bitcoin, a cryptocurrency created to guarantee anonymity, would guarantee the exact opposite under these rules.
Controversies of the new cryptocurrency regulation 405e2c
Recently, Coinbase's chief attorney, Paul Grewal, issued a response to FinCEN, complaining about the 15-day comment period on this rule change:
“FinCEN asked the public to provide in just 15 days, spanning Christmas Eve, Christmas Day, New Year's Eve and New Year's Day, in the midst of a global pandemic – leaving only a few actual working days for comment. ”
Coinbase is asking for a 60-day review period — which is the standard norm. The shorter review period of just 15 days is due to the fact that the US Treasury Department assert that “important national security imperatives” mean this needs to be done faster. The proposed rule says that cryptocurrencies “facilitate the international financing of terrorism, the proliferation of weapons, the evasion of sanctions and transnational money laundering”, among its lists of potential crimes.
But it's hard to know how serious this is, since 60 days from now, cryptocurrency exchanges would be dealing with President-elect Joe Biden's istration rather than Donald Trump's istration. Paul Grewal further comments:
“There is no emergency here; there is only one government that is leaving office trying to circumvent the necessary consultation with the public to finalize a hasty rule before its term ends”
Regardless of the 15 or 60 day period, it seems like the US Treasury Department is trying to send a message to any aspiring cryptocurrency investor: you cannot defeat the existing financial world, you can only it.
Source: The Verge
