Just as the timeline for commenting on the newly proposed crypto wallet rules comes to an end by January 4 midnight, Jack Dorsey-owned crypto trading platform Square Inc. has issued a fresh statement on the matter.
The crypto wallet rules proposed by FinCEN last month ask exchanges to reported any transaction above $10,000 done through “unhosted” crypto wallets. Such “unhosted” crypto wallets are basically software allowing individuals to store and use their crypto instead of relying on any third-party services. This rulemaking by FinCEN extends the regulator’s reach reporting and KYC obligations to parties who are not even the customers of the exchanges.
Square Inc says that FinCEN’s proposed rules allow the platform to collect details of non-customers which seems to be a clear case of breaching someone’s privacy. Square notes that the newly proposed rules will create “unnecessary friction” and rather incentivize customers to avoid regulated crypto trading platforms for any crypto transactions.
The crypto firm further says that the “non-custodial crypto wallet” holders will rather opt for services outside the U.S. for easy and hassle-free transfer of their assets.
FinCEN is Shooting In Its Own Foot
Square hints that such measures won’t at all serve FinCEN’s intended purpose but rather do the opposite, says Jack Dorsey in his latest tweet.
Our comments on FinCen’s rule proposal on #bitcoin and “cryptocurrency.”
We believe this rule will do the opposite of what it intends, will leave people out of participating fully in the economy, and that it being rushed prevents better solutions.https://t.co/VRXYpLg8Mw
— jack (@jack) January 4, 2021
The official statement from Square reads:
“By adding hurdles that push more transactions away from regulated entities like Square into non-custodial wallets and foreign jurisdictions, FinCEN will actually have less visibility into the universe of cryptocurrency transactions than it has today.
The impact of the Proposal would not only hamstring law enforcement capabilities, but also limit American innovation by hindering our ability to create a competitive service that allows customers to seamlessly transfer and transact in cryptocurrency the way the technology was designed.
The burdensome information collection and reporting requirements deprive U.S. companies like Square of the chance to compete on a level playing field to enable cryptocurrency as a tool of economic empowerment.”
Square is not the first crypto firm to voice against the newly proposed rule and FinCEN’s attempt to have a tighter grip on the U.S. crypto market. Previously, Coinbase CEO Brian Armstrong explained in detail why such rules will hinder innovation in the industry. Also, crypto lawyer Jake Chervinsky explained the loopholes in the crypto rules and how they fail to address the intended purpose.