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U.S. FinCEN Unveiled a New Crypto Wallet Rule that might beat DeFi

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Vandana Mrigwani Follow

INDIA

Jan, 27 2021

Jan, 27 2021

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The Financial Crimes Enforcement Network (FinCEN) of U.S. proposed a rule. The proposal was unveiled last Friday, according to which crypto exchanges are required to accumulate the personal information from the customers who are willing to transfer c into their own wallets.


The proposed rule is for those customers who transfer an gross amount of $3000 per day to unhosted wallets. These wallets are also named as self – custodied or self – hosted wallets.


On December 23, the proposed rule was published in the Federal Register and in a very less time, it has drawn an extensive Industry backlash.

According to the Chief Executive Officer of USDC stablecoin co-issuer Circle, Jeremy Allaire, the disputed rule is claimed to be a private proposal of Steven Mnuchin, United States Secretary of the Treasury.


Initially,  it was assumed to be a way more stringent and inflexible than the final version issued last Friday. As per reports, various key details of the proposed rule have not been defined splendidly.


In the proposed rule, there are  numerous pages giving explanation of the regulations and discussing unhosted wallets but it is not clearly specified what unhosted wallets are, said Jacobson.


According to Kim, the proposed rulemaking have also not stated that the financial institutions are required to collect the personal information of the customers from counterparties or the customers can themselves submit their information.


Apart from this, the most glaring exclusion of FinCEN is that the term unhosted wallets used for keeping one’s own crypto is not elucidated in the proposed rule.


Improbably, the rule itself will have an impact on end – users. Initially,  there were rumours that the proposed rulemaking by Treasury would be way more inflexible & stringent and is likely to ban unhosted wallets outright.


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Vandana Mrigwani

CBW - External Analyst

INDIA

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