US Senator Pat Toomey has called on Treasury Secretary Janet Yellen to “significantly revise” the proposed crypto regulation of the Financial Crimes Enforcement Network (FinCEN) and the planned adoption of the guidelines of the Financial Action Task Force (FATF).
Senator asks Janet Yellen to revise proposed U.S. crypto regulation
U.S. Senator Pat Toomey wrote a letter to Treasury Secretary Janet Yellen on Thursday regarding the U.S. approach to regulating cryptocurrencies. “I am writing to raise concerns about two proposals involving the Treasury Department that relate to the regulation and oversight of cryptocurrencies,” he began.
The first concern relates to the rule proposed by FinCEN for cryptocurrency transactions and the second to the FATF guidelines on cryptocurrencies and virtual asset service providers (VASPs). The senator described:
While I recognize that the FinCEN and FATF proposals are aimed at combating the misuse of cryptocurrencies for illegal activity, if adopted they would have a detrimental impact on financial technology (fintech), basic American privacy, and efforts to Fighting illegal activities. I urge you to make significant changes to it.
The Senator spent the first part of his letter stating that “promoting financial innovation is important” for the US. He believes that “cryptocurrencies can dramatically improve consumer privacy, access to financial services and decision-making power.”
Toomey then claimed that FinCEN’s proposed crypto rule would “have a negative impact” on the US, citing two main reasons. First, it would impose “onerous records” and reporting requirements for crypto transactions “that go beyond the existing requirements for US dollar transactions”. Second, he argued:
The rule proposed by FinCEN could also prove counterproductive in combating illegal activity … By restricting individual privacy and the ability to do business with financial institutions, the rule would likely encourage bad actors to use methods that do not have an interface to have financial institutions.
“As a result, such cryptocurrency transactions would be less susceptible to proper government oversight and detection,” he continued.
The Senator indicated that some reporting requirements for USD transactions had not been updated for more than 40 years. “Existing requirements for the US dollar are no longer adequately tailored to detect illegal activities,” he said and called on Treasury Secretary Yellen to check whether they were “suitable for US dollar transactions”. He emphasized that in some cases, cryptocurrencies can be “more easily traceable than transactions with US dollars”.
Referring to the FATF guidelines, Senator Toomey stated:
The FATF’s guidelines will keep cryptocurrency transactions away from financial institutions and undermine the ability of law enforcement and analytics firms to identify and track illegal activity. The FATF should revise its guidelines to focus on transactions and companies in need of regulation.
Concluding his letter to Yellen, the Senator said the US “should support, not inhibit, financial innovation,” adding, “I urge you to take a more careful approach to identifying illegal activity so that financial innovation can flourish and privacy the American is preserved. “respected.”
Do you think Treasury Secretary Yellen will take Senator Toomney’s advice to heart? Let us know in the comment section below.
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