Back to the list

Frozen: Biden Ceases the FinCEN’s Crypto Wallet Limits and Regulations

28 January 2021 11:40, UTC
Denis Goncharenko

The newly elected president Joe Biden has already brought mixed feelings to society. Although most US citizens are very satisfied with their choices and the hope for a better future, some people still remain dubious about the topic. Since the very first moment at the White House, Biden has already implemented quite a lot of changes and amendments to some of the major habits.

Some of the above-mentioned changes include the Act on the Climate Changes. America has again joined the Paris agreement, which aims at creating a better future in a more ecological world. The previous president Donald Trump did not have the same opinion regarding this topic, and thus he was the one to withdraw America from the initial agreement plan.

Biden seems to bring certain patterns back to society. Basically, is it good or bad, after Trump and his extravagant actions in every direction, Biden seems to put everything on the shelves and while there is nothing different from the last hereditary from Obama, some of the changes might be coming very soon?

Not only has Biden taken care of the Paris agreement and ecology, but also human rights and gender equality. The vice president of the country is Kamala Harris, who is the first Asian-Black Woman Vice-President of the country. There definitely is the part of Americans who are extremely proud of the choice and happy for the further possibilities, though there are still people who have certain concerns and do not idealize the current state either.

Not only the current office is in charge of ecology and human rights but also the economy and finances. Economically and financially just like any other country in the world is suffering from the global pandemic and severe economic crisis. The US is not the exception. While it has one of the most rigid economies, it still did not help when it comes to the global pandemic and very limited opportunities. During this time, the main goal for every country is to survive this period and to have as few victims as it is physically possible.

While obviously, the medical sphere is one of the primary interests and priorities, finances and economy are essential for completing any plan. This is the next step Biden and his office have centered their attention on. A big part of the financial situation of the United States of America depends on online transactions and online acquisitions.

The crypto regulations

One of the first actions taken by Joe Biden and his administration was changes in the financial and Federal regulatory process. The decision has been made to freeze the Federal regulatory process, including the controversial self-hosted crypto wallet regulations proposed by the former Treasury Secretary Steven Mnuchin and the administration of Donald Trump.

The previous regulation included controlling any kind of online crypto transaction, payments, and wallet. Those transactions and cryptos have been highly supported by the local businessmen and authorities. Many players would choose Dogecoin gambling as they got to gamble, together with the most popular Bitcoin and other currencies. This imposed serious limits on one of the most beneficial parts of the crypto payments, which is a decentralized currency, which guarantees the privacy and security of the transactions and payments.

Due to the decentralized nature of the cryptos and especially the perks of having Bitcoin, they were mainly used for transactions that are not traced by the banks and authorities. One such activity is online gambling. The players would mostly tackle serious bank issues, while their account was used for online gambling. Such people are having trouble with getting credits or loans.

Usually, in order to avoid similar problems with the bank history, the players would address the online crypto gambling, where the transactions were not tracked by any authorities and financial sector representatives. Because of the regulation and limits imposed by the former US government, the biggest segment of crypto transactions, such as online casinos and online gamblers, were not able to use all of the benefits of the decentralized system of cryptocurrencies.

The most recent announcement was made by the newly elected administration, bringing back the benefits of the decentralization and privacy of the transactions. It came as an announcement in a White House memorandum for the heads of various federal agencies, the Financial Crimes Enforcement Network (FinCEN) included. The edict does not specify the crypto wallet proposal, but places a general freeze on all agency rulemaking pending review, effective for 60 days from the date of the memorandum.

At least better than the predecessor

The initial amendments proposed by Mnuchin also implied the crime prevention and limiting underground and black market interaction and action through the crypto payments. Though, it also limited the benefits of the crypto wallet and payment. The current head of the proposal is Janet Yellen, which holds high hopes by many supporters. Crypto industry insiders have lauded the move with Compound Finance General Counsel Jake Chervinsky stating:

“We fought hard & earned the right to take a breath & reset. Janet Yellen isn't Steve Mnuchin. I'm optimistic.”

The proposal by Steven Munchin was made on the 18th of December. If the bill passed it would require that banks and all money businesses and services submit and keep records of the payments and online crypto transactions, they would also be required to verify the identity of the customers who make the transactions and also the identities of the private cryptocurrency wallets.

The proposal has been widely criticized by industry leaders including the CEO of financial services firm Square, Jack Dorsey, who said that counterparty name and address collection should not be required for cryptocurrency just as it’s not required for cash today. Not only was it criticized due to the violation of the basic right of privacy, but also due to the technical impossibility to comply with the local regulations. This would be because smart contracts do not contain name or address information.

Janet Yellen has been appointed as a Treasury Secretary for a week for now, but she already put a dampener on the crypto scene with critical comments this week that cryptocurrencies are used "mainly for illicit financing." Yellen is not the most beloved person by the administration and secretary, but at least they say that she is better than Munchin.

“First, anyone is better than Secretary Mnuchin, who decided long ago that he hated everything about crypto. Second, although Dr. Yellen may not be a fan now, I expect she'll be open to learning & listening, & will follow regular orders in deciding on new regulations. That's good.”

Yellen is not the only one of the newly chosen candidates, with some major changes on the way. Biden has also appointed Gary Gensler to lead the Securities and Exchange Commission who appears to be more sympathetic to the mission of decentralization than his predecessor.

Image courtesy of Daily Express