Coinbase Criticizes U.S. Treasury’s Proposed Rule on Cryptocurrency Mixing
Coinbase has expressed its concerns about the U.S. Treasury’s proposed rulemaking on cryptocurrency mixing, stating that it fails to address a regulatory gap and imposes unnecessary data and resource demands on crypto platforms.
Insufficient Addressing of Regulatory Gap
In its comment filed with the Treasury Department’s Financial Crimes Enforcement Network (FinCEN), Coinbase argued that regulated crypto platforms already adhere to recordkeeping and reporting rules for suspicious activities and illicit crypto mixing.
Inefficient Use of Resources
Coinbase disagreed with the proposed requirement for crypto platforms to report all crypto mixing activities, including legitimate ones, as it would be an inefficient use of company resources. Additionally, the absence of a monetary threshold for reporting was criticized by Coinbase.
Bulk Reporting of Non-Suspicious Transactions
Paul Grewal, Chief Legal Officer of Coinbase, expressed concern that the lack of a monetary threshold would lead to bulk reporting of non-suspicious transactions, which Congress has deemed a waste of time and resources.
Transparency Improvement Efforts
Coinbase’s comment was in response to FinCEN’s proposed rulemaking in October aimed at enhancing transparency around crypto mixing activities. FinCEN Director Andrea Gacki emphasized the agency’s focus on identifying and combating illicit use and abuse within the cryptocurrency ecosystem.
Potential Approaches
The use of crypto mixers for money laundering activities by illicit actors has been well-documented. While acknowledging that crypto mixing can have legitimate uses, FinCEN highlighted its potential role in promoting money laundering. Coinbase suggested that instead of imposing mandatory bulk reporting rules, Treasury should help exchanges meet their existing obligations to report suspicious activity involving mixing.
Moreover, Coinbase recommended the inclusion of a threshold to prevent bulk reporting of small transactions and proposed a focus on recordkeeping rather than reporting to mitigate privacy and security risks.
Hot Take: Coinbase Challenges U.S. Treasury’s Proposed Rule on Cryptocurrency Mixing
Coinbase has raised concerns about the U.S. Treasury’s proposed rulemaking on cryptocurrency mixing, arguing that it fails to address regulatory gaps effectively and imposes unnecessary burdens on crypto platforms. The requirement for platforms to report all crypto mixing activities, including legitimate ones, is seen as inefficient by Coinbase, which also criticizes the absence of a monetary threshold for reporting. Instead, Coinbase suggests focusing on helping exchanges meet their existing obligations to report suspicious activity involving mixing. With its comment filed in response to FinCEN’s proposed rulemaking, Coinbase aims to contribute to the ongoing efforts to improve transparency in the crypto industry.
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