On Monday, we submitted a letter to the US Treasury on the proposed rulemaking by FinCEN. We are committed to working with FinCEN to facilitate the adoption of digital assets along with widespread compliance and AML regulations.

Some highlights from the letter:

The limited time to provide comment deprives FinCEN of important feedback from the industry, resulting in less effective rules that create significant barriers to widespread compliance. This is a sharp departure from ordinary comment procedures and established practice.

The proposed rule raises serious practical and technical concerns that reveal robust industry feedback and industry engagement is necessary before effective implementation is possible. Some key concerns raised in our letter include….

The recordkeeping and reporting requirements mandate that Virtual Asset Service Providers differentiate between hosted and “unhosted” wallets without defining these terms and acknowledgement of the challenges faced in differentiating transactions that involve unhosted wallets.

A mandate that VASPs obtain name, address, and other unique counterparty info to unhosted wallet transactions would be the first Bank Secrecy Act rule commanding an institution to obtain specific info about customers’ counterparties with whom the institution has no relationship.