Major cryptocurrency firms Coinbase, Paradigm, and Consensys have called on the US Treasury to review proposed reporting processes for transactions involving crypto mixers, arguing that these steps lack necessary regulations and could lead to an exodus of resources.
In response to the Financial Crimes Enforcement Network’s (FinCEN) proposed rulemaking process, which suggests record-keeping and reporting requirements for local financial institutions dealing with convertible virtual currency mixing transactions, Coinbase sent a letter on January 22nd highlighting the proposal’s overly broad, burdensome, and ineffective nature.
Coinbase contends that there is no regulatory gap regarding crypto mixers, as regulated entities like itself already file Suspicious Activity Reports (SARs) for illegal crypto mixing activities over $2,000. Furthermore, the proposed rules could lead to mass reporting of data that minimally aids law enforcement, violates privacy, and centralizes sensitive information, potentially compromising security.
Supporting Coinbase’s stance, Consensys, in a separate letter to FinCEN dated January 22nd, advocated for a security solution that balances privacy protection. They urged FinCEN to narrow down any requirements to avoid causing real harm to the ecosystem and its users.
FinCEN had identified cryptocurrency mixing as a primary concern for money laundering and proposed recording and reporting rules in October. Before finalizing any new rules, FinCEN suggested the crypto industry present a detailed plan on how it could implement data collection, storage, and reporting without detrimental effects.