United States – Kraken criticizes Treasury regulatory proposal that threatens crypto industry

Januar 8, 2021

Kraken and other major players such as Coinbase and Square are rising to criticize the U.S. Treasury Department’s proposal. The new provisions contemplate the monitoring of cryptographic transactions to private wallets.

Kraken responds to the Treasury

The Kraken platform claims that FinCEN’s new proposal to monitor personal cryptographic wallets will prevent the adoption of the blockchain and hamper law enforcement efforts. Kraken is the latest company to make public its opposition to the proposed regulation by FinCEN, an office of the U.S. Treasury Department.

If adopted, the proposal would require exchanges to retain and report certain information about its customers‘ cryptographic transactions beyond what is required today for cash transactions.

In his letter to Bitcoin Blueprint, published Tuesday, January 5, Kraken said the proposed regulation departs significantly from existing law, adding that it also imposes excessive requirements on industry players.

Kraken also expressed interest in the timing of the 15-day public comment period proposed by FinCEN as opposed to the usual 60-day consultation period.

We can read in the press release :

«It appears that FinCEN has proposed this short time frame to avoid scrutiny and virtually eliminate public input. (…) »

Other major players are moving into the market niche

Coinbase has also been virulent in the face of the US Treasury Department’s proposal. The exchange denounces a process that is itself marked by a certain hostility towards the crypto-blockchain industry: „us against them“. The exchange also highlights the deliberately short timeframe and the lack of justification by the Treasury.

Jack Dorsey’s Square also reacted and argues that FinCEN’s proposal will not help current law enforcement efforts, and may even have the opposite effect by driving customers away from regulated transaction services into opaque, unregulated channels.

Jack Dorsey explained :

«This proposal will impede financial inclusion, is impractical, is arbitrary. It will promote innovation and employment outside the United States and regulated institutions.»

Despite the short consultation period, FinCEN received many criticisms, and nearly 6,000 comments were received.