Coinbase, Consensys, and Paradigm Call for Reconsideration of Proposed Crypto Mixer Reporting Requirements
Coinbase, Consensys, and Paradigm have submitted comments to the U.S. Treasury Department’s Financial Crimes Enforcement Network (FinCEN), urging a reevaluation of the proposed reporting requirements for crypto mixer transactions. They argue that the requirements lack specificity and raise concerns about resource allocation.
Coinbase asserts that regulated platforms already comply with existing rules for recordkeeping and reporting of suspicious activities, including illicit crypto mixing. The company criticizes the proposal’s requirement for reporting all crypto mixing activities, even those with legitimate purposes, as it would lead to inefficient use of resources.
Paul Grewal, Chief Legal Officer of Coinbase, suggests that FinCEN should provide specific guidance to help exchanges meet their obligations to report suspicious activity involving mixing.
Concerns Over Transparency and Privacy
FinCEN’s proposed rulemaking aims to increase transparency around crypto mixing activities but has raised concerns among industry players. Coinbase recommends introducing a threshold to eliminate reporting minor transactions and focusing on recordkeeping over reporting to reduce privacy and security risks.
In addition to Coinbase, Consensys and Paradigm have also expressed reservations about the reporting requirements. Consensys emphasizes the need for a security solution that balances privacy preservation, while Paradigm believes the proposed rule fails to address FinCEN’s concerns adequately.
Criticism of US Government Accountability Office Report
On another note, Coinbase’s Paul Grewal has criticized a recent crypto report by the US Government Accountability Office (GAO). He accuses the report of lacking depth and being sensationalistic in its approach. Grewal questions the rationale behind the GAO’s criticism of the crypto industry, considering its investments in legal compliance.
The GAO report highlights concerns about digital assets being used to circumvent economic sanctions and adds to the ongoing debate on the role and regulation of cryptocurrencies in the global financial system.
Hot Take: Industry Pushes Back Against Proposed Reporting Requirements
The crypto industry, represented by Coinbase, Consensys, and Paradigm, is pushing back against the U.S. Treasury’s proposed reporting requirements for crypto mixer transactions. They argue that the requirements lack specificity, leading to inefficient resource allocation. Additionally, they raise concerns about privacy and security risks associated with bulk data collection and reporting.
While acknowledging the need for transparency, industry players recommend introducing a threshold to eliminate reporting minor transactions and focusing on recordkeeping instead. They urge FinCEN to provide more targeted guidance to help exchanges fulfill their obligations without unnecessary data dumps.
The criticism extends beyond reporting requirements, with Coinbase’s Paul Grewal questioning the US Government Accountability Office’s report on crypto. He accuses it of lacking depth and sensationalism, highlighting the industry’s investments in legal compliance.
This pushback underscores the ongoing debate surrounding the role and regulation of cryptocurrencies in the global financial system.
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