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This regulatory shift is intended to cover both domestic and cross-border transactions involving convertible virtual currencies
The US Treasury’s latest regulatory agenda hints at significant changes for cryptocurrency oversight. On Friday, it was announced that the Financial Crimes Enforcement Network (FinCEN) has withdrawn its controversial 2020 proposal requiring enhanced Anti-Money Laundering (AML) reporting for transactions involving self-hosted wallets. However, this move may precede a new, broader regulatory initiative.
The 2020 proposal aimed to amend the Bank Secrecy Act (BSA) by expanding the definition of monetary instruments to include cryptocurrency, a move that faced substantial pushback. The new agenda suggests a similar focus, as FinCEN and the Federal Reserve are jointly working on expanding the BSA’s definition of "money" to encompass digital assets, including cryptocurrencies. This regulatory shift is intended to cover both domestic and cross-border transactions involving convertible virtual currencies, which act as substitutes for traditional currency but lack legal tender status. While the agenda does not explicitly mention self-hosted wallets, the broader definition could imply increased scrutiny for these transactions.
Additionally, Senator Elizabeth Warren’s recently introduced bill proposes extending AML requirements to encompass a wider range of cryptocurrency activities, including those by wallet providers, miners, and validators. While such measures face resistance, larger wallet providers like MetaMask could adapt due to their centralized backend solutions. In comparison, European regulations have notably excluded self-hosted wallets from direct AML requirements but impose heightened scrutiny on transactions deemed high risk. The evolving US stance may bring similar or more stringent measures, potentially impacting the broader crypto landscape.
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