Ex-FinCEN Officials Urge Calm After US Treasury’s 'Unhosted Wallet' Regulation Proposal Returns

cryptonews.com:

American crypto users could face new scrutiny, as much-derided Treasury Department proposals to regulate the industry have resurfaced for the first time since 2020 – but experts have warned observers not to panic.

The proposals, dismissed as “shortsighted” and “not [made] in good faith” back in 2020, seek to compel crypto exchanges to collect the names and addresses of customers who transfer tokens to private wallets: “unhosted” or just regular crypto wallets controlled by crypto users.

The plans were first formulated under the former Treasury chief Steven Mnuchin, under whom they were posted online for comment. But the plans were then taken up by the staff of the current Secretary Janet Yellen.

In essence, the plans seek to apply to the crypto industry the same sort of Financial Crimes Enforcement Network (FinCEN, a Treasury-run regulator)-enforced regulations that apply to conventional financial institutions. Institutions of this sort are obliged to report all transactions above a certain monetary worth.

The proposal has been included in the Treasury’s Semiannual Agenda and Regulatory Plan, which although not finalized at this stage, usually lists the Department’s most crucial regulations expected to be issued.

In the Federal Register, an official government document, the Department referred to the proposal as the “Clarification of the Requirement to Collect, Retain and Transmit Information on Transactions Involving Convertible Virtual Currencies and Digital Assets With Legal Tender Status.”

The Department noted that regulators “intend to issue a revised proposal” that will “clarify the meaning of ‘money’” as used in the existing Bank Secrecy Act (1970). 

The regulators, it added, “intend that the revised proposal will ensure