It had been rumored since November that the Trump Administration was planning to tighten the rules for cryptocurrency wallets before the new president takes the reins in January. Those fears were not unfounded.
The US Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) released on Friday a notice of proposed rulemaking that would require money services businesses to submit reports, keep records and verify the identity of customers as they relate to digital currencies “held in unhosted wallets … or held in wallets hosted in a jurisdiction identified by FinCEN,” Bitcoin Magazine reports.
FinCEN defines “unhosted wallets” as a “software program or written record” through which users store the private keys needed to access and exchange cryptocurrencies like bitcoin.
The proposed rule effectively requires bitcoin exchanges to collect, store and share personal information from users who transfer their bitcoin private keys from those exchanges to their own private wallets, as well as transaction information.
The public has until January 4, 2021 to provide written comments to this rule, which can be submitted through the online federal rulemaking portal.
The fact that the market remained buoyant after the proposal was announced was seen by some observers as bullish.
Derivatives trader Cantering Clark tweeted: “So, it seems there has been some clarity on the FinCEN new rule with regard to wallets. The market has not responded negatively. This is very bullish. Consider the capital that likely stepped out of the trend waiting for this now being deployable again. #Bitcoin“
Many observers on Twitter and YouTube characterized the proposed regulation as ill-conceived and futile.
YouTuber Crypto Daily put it in a nutshell: