Jack Dorsey, a16z and Coinbase criticise FinCEN’s proposed industry-regulation rules

Jack Dorsey, the chief executive of Twitter and Square, said that FinCEN’s proposed rules are devastating for the cryptocurrency industry. A similar view was voiced by representatives of a16z and Coinbase.

In a letter addressed to the agency from Square, it is stated that the new rules create “unwanted obstacles” for cryptocurrency users and could drive them to foreign, unregulated platforms.

The proposed FinCEN regulatory changes envisage the collection of personal information on the parties to deals and the transactions of customers of cryptocurrency companies. Officials say that tightening KYC/AML procedures will curb illicit activity involving digital assets, including money laundering, drug trafficking and the financing of terrorism.

Dorsey regards these requirements as excessive, capable of depriving companies of incentives to innovate and to continue operating in the cryptocurrency space. Users will increasingly use non-custodial services outside the United States, which simplify interaction with assets.

“If the rules are implemented as written, Square would need to collect inaccurate information about people who did not use our service and are not registered as its users”, the letter states.

On the website of the well-known venture capital firm Andreessen Horowitz (a16z) говорится, that the FinCEN proposals are ‘ill-conceived and fraught with numerous unintended negative consequences’.

“For these reasons we urge FinCEN to withdraw the proposed rules or, at a minimum, extend the period for submitting comments. This would enable constructive consultations with representatives of the crypto industry on topics important to the future US economy.”

a16z Comment Letter Final 1.4.21 by ForkLog on Scribd

Similar remarks appear in Coinbase’s letter to the U.S. Department of the Treasury, of which FinCEN is a part.

Coinbase’s response to … by Coinbase Legal

The largest American cryptocurrency firm lamented that the agency allocated only 15 days for comments on the proposed rules, instead of the standard 60 days.

Update. Fidelity Digital Assets, the digital assets unit of Fidelity Investments, also sent FinCEN a letter with remarks and criticisms of the proposed regulations.

FidelityDigitalAssets FinCEN Comment Letter by ForkLog on Scribd

The head of FinCEN, Kenneth Blanco, urged banks to take seriously the risks associated with cryptocurrencies and review their AML procedures.

Also, in the autumn, Square invested $50m in bitcoin. The current value of the cryptocurrency held by the company is $162.3m.

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