Cryptocurrencies could come under renewed regulatory scrutiny over the next four years if Janet Yellen, chosen by Joe Biden to lead the Treasury, can make her way. During Tuesday’s hearing before the Senate Finance Committee, Senator Maggie Hasan (DN.H.) Yellen asked About the use of cryptocurrency by terrorists and other criminals.
“Cryptocurrencies are of particular concern,” Yellen responded. “I think many – at least in terms of transactions – are used mainly for illicit financing.”
She said she wanted to “examine and verify the ways in which we can reduce their use.” [money laundering] It does not happen through those channels. “
Blockchain-based financial networks are attractive to criminals because they do not require users to identify themselves – most traditional financial networks are required by law to do so. Since no individual or organization has control over these networks, there is no easy way for governments to force them to comply with money laundering laws.
So rather than trying to force the networks themselves to comply, regulators in the US – and many other jurisdictions – have focused on regulating bitcoin exchanges that help users trade between dollars and cryptocurrencies. Once the Bitcoin exchange determines who initially received a certain bitcoin payment, law enforcement can often track subsequent payments through the open ledger of payment in the blockchain network.
In December, Trump’s outgoing team at the Financial Crime Enforcement Network – a Treasury Department unit focused on money laundering – wasHe proposed a new set of rules To tighten the screws on cryptocurrency-based money laundering.
Under the new rules, cryptocurrency-based exchanges will need to submit transaction reports to FinCEN anytime a customer makes a cryptocurrency transaction worth more than $ 10,000. This would reflect current rules requiring traditional banks to report when customers withdraw cash or deposits in excess of $ 10,000.
What’s most controversial in the cryptocurrency world, FinCEN wants to impose new record-keeping requirements for transactions involving users who manage their own keys – which FinCEN calls “non-hosted wallets”. Under FinCEN’s proposal, if a cryptocurrency exchange client sends more than $ 3,000 to a non-hosted wallet, the exchange would be required to maintain a record of the transaction, including the identity of the customer who initiated the payment.
These new rules did not go into effect before Trump left office, so the incoming Biden team will need to decide what to do with them. The Biden administration could sign the existing rules, rewrite them, or cancel them altogether. Yellen’s comments on Tuesday indicate that she is unlikely to repeal the rules. If anything, the Treasury Department is likely to consider additional regulations for the blockchain economy over the next four years.