HomeNewsCrypto Industry Leaders Challenge US Treasury's Proposed Bulk Reporting for Mixer Transactions

Crypto Industry Leaders Challenge US Treasury’s Proposed Bulk Reporting for Mixer Transactions

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  • Leading crypto firms like Coinbase, Consensys, and Paradigm are pushing back against the US Treasury’s proposed rules that would require bulk reporting of crypto mixer transactions.
  • They argue that the lack of specificity in the proposal and the need for reporting all mixer activities, even legitimate ones, could lead to inefficiency and resource waste.

Challenging the Proposed Rules

Coinbase, a prominent cryptocurrency exchange, expressed its reservations about the US Treasury’s proposed reporting requirements for crypto mixer transactions. In a comment to the Treasury Department’s Financial Crimes Enforcement Network (FinCEN), Coinbase emphasized that regulated platforms already adhere to existing rules for recordkeeping and reporting of suspicious activities related to crypto mixing.

Inefficient Use of Resources

Coinbase particularly criticized the proposal’s insistence on reporting all crypto mixing activities, even those with legitimate purposes. The exchange argued that this broad approach would result in the inefficient allocation of resources and unnecessary bulk reporting of transactions that are not suspicious. Paul Grewal, Chief Legal Officer of Coinbase, stressed the need for more targeted measures to avoid counterproductive data dumping without monetary thresholds.

Seeking a Balanced Approach

Coinbase suggested that instead of imposing mandatory bulk reporting, FinCEN should provide specific guidance to help exchanges fulfill their existing obligations to report suspicious activities involving mixing. This approach aims to strike a balance between regulatory oversight and efficient resource utilization.

Concerns Over Privacy and Security

Other industry players, including Consensys and the Blockchain Association, expressed concerns about the broad definitions and interpretations in the proposal. They emphasized the need for a security solution that preserves user privacy while addressing money laundering concerns.

The Background and Impact

FinCEN’s proposed rulemaking, announced in October, aims to increase transparency regarding crypto mixing activities. While recognizing the legitimate uses of crypto mixing, FinCEN is concerned about its potential for money laundering by illicit actors.

Impact on the Crypto Ecosystem

The proposed rules classify mixing of convertible virtual currencies as a “primary money laundering concern.” This affects not only dedicated tumblers but also service providers using basic privacy protocols. It imposes additional regulatory requirements on operators of these services.

Industry Response

Industry leaders, including Coinbase, Consensys, the Blockchain Association, Paradigm, and Coin Center, have responded critically to the proposed rules. They argue that the rules lack specificity, justification, and could have unintended consequences on the crypto ecosystem.

The pushback from prominent crypto firms underscores the ongoing debate surrounding crypto regulations and their potential impact on the industry’s development and privacy concerns.

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Godfrey Benjamin
Godfrey Benjamin
Godfrey Benjamin is an experienced crypto journalist whose primary goal is to educate everyone about the prospects of Web 3.0. His love for crypto was sparked during his time as a former banker when he recognized the clear advantages of decentralized money over traditional payments. Business Email: info@ethnews.com Phone: +49 160 92211628