The Federal Reserve and Financial Crimes Enforcement Network (FinCEN) has expressed their need to boost scrutiny of small-scale crypto transactions. Previously, businesses were only mandated to provide details and information about transactions that were above the $3,000 mark. However, it appears that there will now be a change in this particular threshold. This time around, companies will be required to disclose all details and information about crypto transactions that are above the $250 mark. This new rule was proposed by the agencies yesterday and it will eventually be passed into law, which would effectively lower the long-standing threshold of $3,000 that had been set back in 1995.
The new threshold for all international crypto transactions will now be $250. This means that every financial institution will be required to provide details about their clients for all their transactions that are higher than $250, whether they are going out or coming in the United States. This means that the new rule will certainly have an impact on retailers and small traders, as long as their dealings are in excess of $250. The purpose of introducing this rule is to further minimize the risk of money laundering and any other financial crimes across every level.
It is also important to note that the proposed rule will also affect those who are holding digital assets because it has specifically mentioned ‘convertible virtual assets’ for all transactions that fall under this specified threshold. Apart from that, the notice also shed some light on the information that will have to be provided to the authorities by these financial institutions and companies. It will include the name and address of the originator or transmitter, along with the identity of the beneficiary’s bank or the recipient’s financial institution. Plus, they will also have to provide the amount of payment or the transmittal order.
Apart from that, any payment instruction provided by the transmitter with the payment order, along with the date the transmittal order is executed will have to be shared with the authorities. To put it simply, the information that has been asked for is what is usually stored in the account of users of a crypto exchange and this might give rise to a lot of threats related to data security. Moreover, under the new rules, it is mandatory for the receiving institution to be familiar with the location of every transmitter in regard to transactions that are above the $250 threshold.
The Financial Action Task Force (FATF) is planning to introduce a similar rule all over the world. However, this arrangement has been faulted by the crypto space because it will defeat the decentralized nature of crypto trading. Those who are against the new rules have stated that collecting personal information about clients defeats the very purpose of the ‘peer-to-peer electronic cash system’, which was promised in Bitcoin’s whitepaper at the time of its launch. However, the rule is still under consideration and stakeholders have been invited to share their opinions about it in the next 30 days.