Since the introduction of the proposed rule by FinCEN, many entities in the crypto-space have issued statements staunchly opposing it. The latest crypto company to release a statement is Bitcoin CoinFlip. The company is speaking out against the rule proposed by the US Treasury.
CoinFlip says the agency’s self-imposed rush results in a flawed proposal. This will impose new and unnecessary burdens in key respects, heavier than the traditional money transfer regime. He adds that the proposed rule assumes that financial institutions are able to determine whether a wallet is hosted or not. It is up to financial institutions to be able to make this distinction.
However, this is difficult for a financial institution. This is because cryptocurrency blockchains have limited information about cryptocurrency transactions, often only a wallet address.
Regulation would have a negative impact
CoinFlip argued that the proposed rules also impose a compliance framework for virtual currency transactions. Which is more expensive than the existing regulations for traditional currency transactions.
This lack of clarity is sure to create several compliance issues. This will likely lead ESMs and financial institutions to refrain from executing virtual currency transactions. Which would undoubtedly have a negative impact on the industry.
He also said that if this regulation would have a negative impact on the entire crypto industry. The place where it would have the most negative impact would be in the area of DeFi and decentralized exchanges.
According to Weiss, the government has not thought about the unintended consequences of such regulations. He claims this will affect people with self-hosted wallets. It could also affect entirely new technologies ”.
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