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US treasury proposes new disclosure rules on cryptos

by Jonathan Adams
digital transactions

The proposed limits for reporting digital transactions are $10,000 for non-wire transactions and $3,000 for wire transactions

The U.S. Treasury Department proposed sweeping new rules late Friday that the government says would make convertible digital currencies like bitcoin less attractive to criminals engaging in crimes such as ransomware attacks.

The new regulations, if adopted after a comment period, would require banks and some other institutions to obtain and report the identities of parties engaging in certain digital transactions, including payments involving what are called “unhosted wallets” – effectively secret bank accounts that hold cryptocurrency. The rules effectively require financial institutions to report such digital transactions in much the same way they have been required to report cash transactions since 1970.

The proposed limits for reporting digital transactions are $10,000 for non-wire transactions and $3,000 for wire transactions – the same as with cash.

The rationale for the new regulations, as the government laid out in the Federal Register, is that “U.S. authorities have found that malign actors are increasingly using CVC to facilitate international terrorist financing, weapons proliferation, sanctions evasion and transnational money laundering, as well as to buy and sell controlled substances, stolen and fraudulent identification documents and access devices, counterfeit goods, malware and other computer hacking tools, firearms, and toxic chemicals. In addition, ransomware attacks and associated demands for payment, which are almost exclusively denominated in CVC, are increasing in severity.”

CVC stands for “convertible virtual currency” – a category of digital products that can serve as currency. Bitcoin is a popular example.

U.S. Treasury Secretary Steven Mnuchin said in a prepared statement that the new proposed rule “addresses substantial national security concerns in the CVC market and aims to close the gaps that malign actors seek to exploit in the record-keeping and reporting regime. The rule, which applies to financial institutions and is consistent with existing requirements, is intended to protect national security, assist law enforcement and increase transparency while minimizing the impact on responsible innovation.”



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