The measure would apply to all transactions that begin or end in the United States. The current rules apply to all operations that exceed USD 3,000.
Currently, the US Federal Reserve and the Financial Crimes Enforcement Network (FinCEN) are further tightening the regulation of Bitcoin and cryptocurrencies. Both agencies are proposing a reform that would force all financial institutions, including exchanges, to report international operations over USD 250.
The US Bank Secrecy Act (BSA) serves as a framework for this amendment to records and the so-called “travel rule”. According to the current norm, users must report to the regulatory authorities all operations to and from the United States that exceed USD 3,000. With the approval of the reform, the new minimum amount would be USD 250.
The Financial Action Task Force (FATF) introduced the “travel rule”, which is a set of provisions to minimize money laundering and terrorist financing. The guidelines apply to all virtual asset service providers (VASP).
The Federal Reserve, which acts as the central bank of the United States, mentioned the data that financial institutions must keep and report. These are the following: name and address of the sender, amount of the payment, date of execution, payment instructions, and information about the recipient financial institution.
“The bill clarifies that these rules apply to transactions related to convertible virtual currencies. They also apply to transactions related to digital assets in legal tender. The rule clarifies the meaning of ‘money’ as used in certain defined terms,” said the US Federal Reserve.
Concerning this last aspect, the agencies are proposing to clarify the meaning of “money”, according to its use in current regulatory standards. The Federal Reserve classifies cryptocurrencies like Bitcoin as “convertible virtual currencies” (CVC). They say that they “have an equivalent value as currencies or act as a substitute for currencies, but are not legal tender.”
Given that the bill is in a period of public consultation, those persons or institutions interested in participating must send their comments within the next 30 days. However, the potential reform once again raises a sensitive issue within the Bitcoin community: that of privacy.
With the approval of their norm, not only exchanges complying with know-your-customer and anti-money-laundering (KYC/AML) regulations would know users’ operations. Records from external entities with governmental connections would also receive them.
In the past, there have been mixed opinions on Bitcoin, and cryptocurrencies, in general among economists at the US Federal Reserve. In June, two finance specialists stressed that Bitcoin is a new exchange mechanism, rather than a new type of money.
In February 2020, the Federal Reserve had begun to study the possibility of issuing its digital currency. This has been an increasingly common trend among central banks worldwide, which are implementing it mainly due to the emergence of Bitcoin.
The importance of Bitcoin worldwide has led some governments to create rules to control its users’ holdings and transactions. Regulators also have their eye on other decentralized cryptocurrencies. They seem to be increasingly aware of the great potential of these assets.
By Alexander Salazar
