The Electronic Frontier Foundation views FinCEN’s proposal as a privacy hazard. He questions that only 15 days are given to the public to express opinions.
Following the proposed regulation presented a few days ago by FinCEN, the office of the United States Department of the Treasury that collects and analyzes information on financial crimes, the Electronic Frontier Foundation (EFF) published an article that questions the new rule.
The non-profit organization, which defends freedom of expression and the right to privacy on the Internet, criticizes its writing the new demands on money service companies (MSB), which include exchanges of cryptocurrencies.
The idea is to force these financial institutions to submit reports, keep records, and verify the identity of clients about operations involving cryptocurrencies, above certain thresholds.
The measure includes portfolios not hosted by a financial institution (or self-hosted) and portfolios hosted by a financial institution in certain jurisdictions that FinCEN can identify, says the document.
In this sense, the Foundation considers that this project could obstruct a wider adoption of wallets and self-hosted technologies or even impede the integration of these technologies with intermediaries such as exchanges.
For the EFF, the problem is that the new regulation will make it more difficult for users of these wallets to seamlessly interact with other users who have wallets from a service that could be subject to the regulations.
Another question that the organization exposes in its writing is the fact that the new rule would prevent people who store cryptocurrencies in their wallets from making anonymous transactions with people who store their crypto assets in a money services company.
“Regulation will likely cool the ability to use self-hosted wallets to transact with the privacy of cash,” they note.
It also explains which are the possibilities that some cryptocurrencies have. For example, Bitcoin; in which transaction data is permanently recorded on a public blockchain.
In these cases, if the user name in association with a particular BTC address is known, it is possible to obtain information about all bitcoin transactions that use that address.
For the EFF, this property of the blockchain, along with the requirement to collect identifying information associated with wallet addresses, will grant the government access to a large amount of data beyond what the regulation intends to cover.
Financial surveillance extends to the cryptocurrency sector
In the introduction to the document, FinCEN justifies its proposal by stating that it is intended to address national security concerns:
“This proposal is consistent with existing requirements and aims to help law enforcement and increase transparency while minimizing the impact on responsible innovation,” says an official statement from the Treasury Department.
However, the EFF believes that, under these arguments, the US government intends to extend the financial surveillance of the traditional banking system to cryptocurrencies, putting the right to privacy at risk.
The Foundation is concerned that more and more steps are being taken to undermine the anonymity of cryptocurrency transactions.
For this reason, he is struck by the fact that the proposal only grants 15 days of the deadline to comment on the proposal, precisely at the time of the Christmas holidays. It is an approach that has been supported by exchanges such as Kraken and Coinbase, which have also publicly exposed their criticism.
The EFF is also involved in another controversy present in the United States, due to its criticism of the EARN IT bill that seeks to exercise control over encryption systems.
By: Jenson Nuñez.
