Tag: u.s. treasury department

US Treasury Department Proposes New KYC Requirements for Cryptocurrency Transactions

US crypto users seeking to transfer their assets from a cryptocurrency exchange to their own personal wallets will have to comply with a new KYC requirements under a regulation proposed by the Treasury Department.

In an effort to address anonymous transfers of digital assets by bad actors, the US Treasury Department has launched a plan to require some crypto users to offer information about their identities. The new plan targets private accounts that allow the holder of a unique digital key to store crypto assets and transact with others directly without going through a financial institution. Such accounts are known as unhosted or self-hosted wallets – a form of software (thumb drive) on a user’s cellphone or computer. The wallets are not held on a bank or a registered exchange.

In the new proposed regulation, the Treasury Department requires banks and money service businesses such as popular crypto trading platforms like Gemini, Coinbase to verify the identities of self-hosted or unhosted wallet holders for any digital asset transaction that exceed $3,000.

Banks and crypto trading platforms would have to report any crypto transaction exceeding   $10,000 to the Financial Crime Enforcement Network (FinCEN) within 15 days.

Investors Embracing Digital Gold

This week for the first time, Bitcoin price has climbed to $20,000, before quickly surging to $23,000 yesterday. These are the latest in a series of significant milestones that have seen the price of the cryptocurrency rose by almost 400% since March. The current rally is impressive as investors looking to get higher returns have been moving to embrace the leading cryptocurrency this year in the wake of the COVID-19 pandemic.

Bitcoin’s recent embrace by institutional investors including PayPal has made people more confident about the cryptocurrency. Major institutional investors including billionaire Paul Tudor Jones, Square Inc., MicroStrategy, and others have been adding the crypto into the portfolios. The current rally validates longtime crypto bulls but also raises the question of whether this will end in tears. While the era of $20,000 might be temporary, the crypto asset is, more than ever before, here to stay.   

Coinbase is challenging the U.S. Treasury over the recent tornado cash sanctions

Crypto Coinbase has challenged the decision of the United States Treasury Department to include Tornado Cash, a decentralized software project, on the list of Specially Designated Nationals and Blocked Persons (SDN). This action, which was brought up in the Western District of Texas, marks a serious clash between the rapidly expanding cryptocurrency industry and the federal regulatory authorities.

Tornado Cash is a platform that runs on the Ethereum blockchain that offers immutable smart contracts that permit anonymous cryptocurrency transactions. This protects the users of Tornado Cash from having their privacy compromised. This piece of software has emerged as a central issue in the ongoing discussion on the appropriate level of government oversight of the digital space.

According to the allegations made in the complaint filed by Coinbase, the action taken by the Treasury Department to penalize Tornado Cash goes beyond the scope of the legal power granted to it under the International Emergency Economic Powers Act (IEEPA) and the North Korea Sanctions and Policy Enhancement Act. The plaintiffs contend that the usual definitions of a “national” or “person” do not apply to Tornado Cash since it is a decentralized organization, and these activities are governed by those definitions. In addition, they argue that the smart contracts in issue do not qualify as “property” in the legal sense since they cannot be changed and no one owns them. Furthermore, they claim that Tornado Cash does not have any legal, equitable, or beneficial stake in the smart contracts in question.

The judicial procedures shed light on the difficulty of governing blockchain technology and the ramifications it has for individual privacy and rights. The plaintiffs contend that the inclusion of Tornado Cash on the SDN List by the Treasury unfairly criminalizes the use of a privacy-focused software application, which impacts law-abiding persons. The plaintiffs have filed a lawsuit to challenge this designation.

As the case moves forward, it exemplifies the rising contradictions between the essential need for regulatory control in the bitcoin industry and the basic rights of free speech and privacy. The verdict in this case has the potential to establish an important precedent for the future regulation of cryptocurrencies as well as the wider use of economic penalties in the era of digital technology.

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