A large number of U.S. crypto firms are joining hands to oppose FinCEN's proposed regulations in that it forces businesses operating with crypto to gather information on the identities of non-customer counterparties.
According to a letter on Jan. 4, Jack Dorsey - CEO of financial services firm Square -highlights the proposal designed to seek to impose reporting obligations that go "far beyond what is required for cash transactions," and that Sqaure would be expected to collect "unreliable data about people who have not opted into our service or signed up as our customers."
"Counterparty name and address collection/reporting should not be required for [virtual currency] CTRs or recordkeeping, as it's not required for cash today.”
Square speculates that if passed, the law would lead crypto users to seek the unregulated and non-custodial crypto services based outside of the U.S., exerting impacts on the nation's global competitiveness as well as posing further challenges to regulators:
"By adding hurdles that push more transactions away from regulated entities like Square into non-custodial wallets and foreign jurisdictions, FinCEN will actually have less visibility into the universe of cryptocurrency transactions than it has today."
Kraken - a major U.S.-based crypto exchange also - was criticizing the proposed regulations, satirizing that FinCEN was unable to provide estimates for the cost of implementing the rule. Similar to Square, it cautioned that the law will allow users to away from regulated platforms.
"It virtually guarantees that the evidence available to law enforcement today will be placed outside their reach tomorrow," Kraken concluded, adding: "It is quite clearly a politically-motivated piece of midnight rulemaking, the publication of which diminishes the trust we have placed in FinCEN."
In addition, a submission taking exemption to FinCEN's proposal was published by Coinbase, noting that the rule was "impermissibly vague" and failed to allow the public to gain benefits, indicating that it imposed "expansive privacy invasions on the public."