FinCEN offers Cryptocurrency Guidelines for the Battle against Money Laundering and Enforcement of Unhosted Wallets

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The Financial Crimes Enforcement Network (FINCEN), which serves as an anti-money laundering arm under the US Treasury Department, has introduced regulatory legislation for companies operating cryptocurrencies, such as exchanges.

Pursuant to FinCEN’s plan, unhosted wallets or self-hosted wallets should be tracked and cryptocurrency transactions should comply with anti-money laundering (AML) legislation. Reports for transactions of $10,000 or more originating from FinCEN should be provided by crypto trading platforms. This will mean that cryptocurrencies would be subject to the same regulations as cash deposits and withdrawals currently in effect.

FinCEN also recommends that transactions of $3,000 or more originating from unhosted wallets should be checked – in other words, companies dealing with cryptocurrencies should verify the identity of the buyer, such as the name and address of the customer, the sum of the payment, the time of the transaction, the value of the transaction and any information related to the transaction.

In addition, the Financial Crimes Unit indicates that unhosted wallets originating in blacklisted countries such as North Korea and Iran should be identified. However, this can be a heavy duty, as digital geolocations are not always verifiable.

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US to regulate stablecoins, but is it moving fast enough?

FinCEN’s decision to crack down on the role of digital currencies in cyber-crime-related transactions comes at a time when US financial regulators have made progress in developing rules for stablecoins. According to the paper, the Treasury Department, along with the CFTC and the SEC, hopes to “manage risk effectively and maintain the stability of the US domestic and international financial and monetary systems.”

Since crypto innovation was a massive 2020 sound, the US has been struggling to control cryptocurrencies, beginning with XRP. Previously, it was criticised for not getting on the blockchain and crypto train as fast as its peers, including countries in the APAC region such as Japan and China.


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