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Today, FreedomWorks Foundation submitted a formal comment opposing a proposed rule by the Financial Crimes Enforcement Network (FinCEN) regarding cryptocurrency. The proposed rule would require banks and other organizations to identify, and keep records of, all individuals who use either hosted or unhosted cryptocurrency wallets.
As we pointed out in our comment excerpted below, both the content of this regulation and the process by which it was promulgated are objectionable. For starters, FinCEN attempted to sneak this regulation past the American public by proposing it right before the Christmas holiday and using emergency powers to shorten the public comment period to one quarter of its normal length. Even more concerning, the proposed rule has the potential to create a system by which either federal regulators or savvy hackers could collect an unprecedented amount of bulk financial data on those who use cryptocurrencies. In times such as these, it is crucial that we not hand the federal government yet another tool with which they can collect bulk information on American citizens without due process.
The text of the formal comment can be found here, in the attachment at the bottom of this page, and excerpted directly below:
[Federal] regulators must be wary of missing the forest for the trees. As is too often the case, this proposed rule represents a drastic federal overreaction that threatens the future of cryptocurrencies. In their effort to clamp down on financial crime, it appears that FinCEN has failed to account for all the external costs of their proposed action. This proposal is simply the latest example of financial regulators abusing their authority under the Bank Secrecy Act in a blatant power grab.
There is proof enough of this fact in the procedure by which FinCEN decided to propose this rule change. Citing “significant national security imperatives,” federal regulators used emergency powers to allow only 15 days of public comment, one quarter of the traditional 60 days. These emergency provisions are only supposed to be used for issues that offer a clear and present danger to national security that requires immediate federal action. Yet, in spite of the fact that there is no indication that cryptocurrency transactions are an immediate threat to our national security, FinCEN used these emergency powers to rush through the proposed rule.