US Treasury's Semi-Annual Regulatory Agenda
On Friday, the US Treasury released its semi-annual regulatory agenda, shedding light on significant cryptocurrency-related issues. In late 2020, the Financial Crimes Enforcement Network (FinCEN) proposed a rule requiring additional anti-money laundering (AML) reporting for transactions exceeding $10,000 involving self-hosted wallets. Recently, this proposal was withdrawn, but a replacement may be underway.
Proposed Changes to the Definition of Money
The new agenda highlights a proposal by the Federal Reserve and FinCEN to expand the definition of 'money' under the Bank Secrecy Act (BSA) to include cryptocurrency and other digital assets. This amendment aims to ensure regulations cover domestic and cross-border transactions in convertible virtual currencies like cryptocurrency, which serve as mediums of exchange without legal tender status. Although specifics about self-hosted wallets are omitted, these changes could broadly impact digital transactions.
What's Next for Self-Hosted Wallets?
A public request for comment on this proposal is anticipated in 2025. Meanwhile, a separate bill by Senator Elizabeth Warren seeks to expand AML procedures across the cryptocurrency sector, affecting wallet providers, miners, and validators. While controversial, platforms like Metamask may not struggle to comply, given its infrastructure relies on centralized solutions like Infura.
Comparison with European Regulations
Across the Atlantic, Europe's recent AML legislation excludes self-hosted wallets, though the European Banking Authority deems transactions with such wallets high-risk. This classification equates to rigorous due diligence processes, similar to financial audits.
These evolving regulations reflect ongoing efforts to align cryptocurrency transactions with traditional financial scrutiny, aiming to mitigate risks associated with digital assets while balancing innovation.
