The crypto wallet proposal by the U.S. Financial Crimes Enforcement Network [FinCEN] has received severe backlash from the community. The Chamber of Digital Commerce advocacy group became the latest to respond to the controversial notice.
The proposed rule in question essentially requires crypto exchanges to collect personal information, including names and home addresses, from users seeking to transfer cryptocurrencies into their own wallets. Many industry players have deemed this proposal as poorly defined which could have widespread repercussions.
Chamber of Digital Commerce, for one, said that giving the government the ability to track every financial transaction made by users make was a “shocking invasion of privacy”. While acknowledging there are good reasons to report certain transactions, especially if suspicious or illegal activity is detected. Enabling such “granular tracking” of individuals’ transactions could be considered lawful, however, monitoring daily financial activities are beyond common principles of government oversight, stated the blockchain trade association.
The Chamber further stressed that FinCEN’s proposed rule could also enable a counterparty to a transaction, who never had an account relationship with the bank or MSB, will have users’ entire wallet history and future transactions exposed to both that financial institution and the government.
“The proposed rule could spell the end of financial privacy for CVC and LTDA users (including CBDCs) [..] Quite simply, this action would open the door to unprecedented personal data collection, individual monitoring, and a tremendous loss of privacy for millions of investors, businesses, and consumers.”
Apart from emphasizing the extraordinary expansion of information provided to third parties about non-customers, the advocacy group also questioned the rushed affair by FinCEN for the comment period. Considering the significant impact of the proposed rule, the Chamber also stated that the NPRM’s 12-day/6 business day comment period was “wholly inadequate” and that it raises serious process concerns under the APA.
Furthermore, it requested a 90-day extension of the comment period to permit the ecosystem to fully address the concerns by FinCEN. SF-based cryptocurrency exchange, Coinbase had previously questioned FinCEN’s expedited timeline and urged for an extension of the comment period.
Besides, Jerry Brito, the executive director of the non-profit crypto policy advocate group Coin Center, had also urged the community members to comment against the agencies’ proposed crypto regulations.
