There are rumors that US authorities are all set to curb the anti-money laundering transactions from across the border. The Secretary of Treasury Steven Mnuchin who is outgoing now is likely to make several rules around cryptocurrency before he leaves office in January.
The AML threshold is likely to be reduced from $3000 to $250 compliance for transfers in crypto or fiat sent out of the US. The Financial Crimes Enforcement Network and the Fed are likely to change the rules in this regard.
Short notice period
It is interesting to note that the proposal for changing the rules was given a one month response period, which is very less when compared to the typical duration of 60-90 days. Yet another strong rumor floating in the market is that these proposals come directly from political appointees and not the people who work at FinCEN or the Fed.
Market experts feel that people who work at FinCEN have a broader perspective about the process, and they take a steady approach to such problems. However, Mnuchin has time till the end of January before he leaves office, and he looks determined to implement these changes quickly.
Industry response to the proposals
The industry response to these proposals is shocking as many people believe that regulators are still not ready to make such drastic changes around unhosted wallets, and they should take time to understand the process. Many experts said that they would be surprised if the proposals come true. The knee-jerk reaction to this problem would complicate things further, and it can be resolved if the regulators had a detailed discussion with industry experts. The industry believes that there are different and better methods to handle the situation than to take an old fashioned approach.
Crypto wallets that are self-hosted
The industry experts also say that the regulators do not clearly understand what they call self-hosted or unhosted wallets. The Financial Action Task Force has global recommendations for such wallets, and this involves having a virtual asset service provider and private wallet.
Even Switzerland also implemented such rules, and this made it mandatory for exchanges to have rules in case of transactions which are more than of $1000. Apart from that, the one needs to prove the ownership of before such transactions are approved by the regulators. The industry is shocked to see such regulations coming from the US as it was a good market for cryptocurrency.