Since the U.S. Federal Reserve and Financial Crimes Enforcement Network opened a proposed rule to acquire more information on smaller international transactions, many crypto users have labeled the measure as an invasion of privacy.
On Oct. 23, the regulatory agencies published a notice of a proposal to modify a long-standing rule in which financial institutions in the United States are required to exchange client information for all international transactions greater than $3,000. The proposal — which includes “transactions involving convertible virtual currencies and digital assets with legal tender status” — would lower this monetary threshold to $250. In order to comply with the changes, crypto exchanges would seemingly need to store a great deal of personal information from users.
The Fed opened the proposal for public comment, and many crypto users have been quick to voice their dissent. Some cited concerns that the proposal would prove to be antithetical to the nature of crypto. One anonymous person commented that “the whole point of Bitcoin is to remain decentralized and unregulated — by creating rules, laws, and regulations, you are defeating the purpose of its use.”
At least one advocacy group is encouraging U.S. citizens to speak out against the rule change. Fight for the Future, a digital rights group based in Massachusetts, today claimed to have 3,000 people submit comments to the Fed and FinCEN to “stop attacking crypto and our privacy rights.”
Privacy was at the top of the list for one person in the public comments, seemingly concerned with how crypto exchanges would handle the burden of securing personal data.
“This proposal, if adopted, would prove to be an invasion of privacy,” said Kyle Cribbins from Dallas. “In terms of digital assets, crypto exchanges are not held accountable in the same way that other financial institutions are, and have a track record of bad operational security when it comes to securely storing client information.”
The claim has some merit. A hacker reportedly stole data from thousands of customers at crypto hardware wallet manufacturer Ledger earlier this year. In May, crypto lending provider BlockFi reported it suffered a data breach compromising the physical address of some wealthy clients.
“At a time when many countries and institutions are pushing for the outright end of physical cash, it is not at all appropriate to increase restrictions that make it more difficult for Americans to transact in and transfer [convertible virtual currencies],” said Grant Dever regarding the proposed rule. “America needs to be a leader in these technologies and increasing the burdens on entrepreneurs through this type of restriction is counter-productive and will leave us vulnerable to technological advances by rival nations.”
Public comments for the FinCEN and Fed rule will close this week.