Risk & Compliance

Square CEO Opposes FinCEN’s Proposed Crypto Rules

Jack Dorsey says the new rules will drive cryptocurrency users to use unregulated third-party wallets, including ones hosted outside the United Sta...
Lauren MuskettJanuary 5, 2021

Jack Dorsey, CEO of Twiter and financial services company Square, on Monday, raised concerns over proposed regulations for certain digital asset transactions in a comment letter addressed to the policy division of the Financial Crimes Enforcement Network (FinCEN).

What Happened: Under the proposed guidelines, financial intermediaries are tasked with gathering personal data like names and physical addresses of parties involved in large digital asset transactions.

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Dorsey states that the proposed regulations “would require cryptocurrency service providers like Square to keep records of and report certain cryptocurrency transaction information far beyond what is required for cash transactions today.”

The entrepreneur, a long-term backer of bitcoin, also believes that the rule could lead to the collection of unreliable data from non-customers.

Why Does It Matter: The entrepreneur believes that FinCEN’s latest proposal can cause uncertainty, which could drive cryptocurrency enthusiasts to use unregulated third-party wallets, including ones hosted outside the U.S.

The new rules would “drive cryptocurrency activity away from regulated entities and push cryptocurrency transactions to offshore and other unregulated channels that are much more (if not entirely) opaque to FinCEN and law enforcement,” as per Dorsey.

Additionally, the cumbersome data collection process would not only stifle innovation but also place an additional burden on the service provider.

With a surge in bitcoin prices, the cryptocurrency domain is witnessing heightened investor interest. From approximately $7,300 at the start of January 2020, Bitcoin has surged above $31,880 to date to record a 337% surge.

Apart from Square, PayPal and MicroStrategy were some of the other mainstream companies that drove interest in cryptocurrency in 2020.

This story originally appeared on Benzinga.

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