The New Civil Liberties Alliance has objected to FinCENâ€™s proposed crypto wallet rule, calling it â€œunlawful.â€ In addition, the group says that the U.S. Treasuryâ€™s â€œplanned â€˜crackdownâ€™ on cryptocurrency holdersâ€™ private wallets is an unconstitutional power grab.â€
FinCENâ€™s Proposed Crypto Wallet Rule Is Unlawful, Says NCLA
The New Civil Liberties Alliance (NCLA), a nonpartisan, nonprofit civil rights group, filed its comments on Monday objecting to FinCENâ€™s proposed rule, entitled â€œRequirements for Certain Transactions Involving Convertible Virtual Currency or Digital Assets.â€ The Financial Crimes Enforcement Network (FinCEN) is a bureau of the U.S. Treasury Department.
The NCLA warned:
The group calls FinCENâ€™s proposal a â€œlarge-scale state intrusion into private digital transactions,â€ asserting that its â€œunlawful requirements â€¦ would lead to a massive collection of peopleâ€™s personal informationâ€ and would â€œlikely force privacy-sensitive digital assets out of the U.S. banking system.â€
Under the proposal, â€œdigital assets would fall into the â€˜monetary instrumentsâ€™ category of regulated currencies,â€ the NCLA explained. This means private data of bitcoin and other crypto users would be collected as mandated by the Bank Secrecy Actâ€™s (BSA) record-keeping and currency transaction reporting requirements.
Furthermore, FinCENâ€™s proposed rule â€œsets in motion a chain reaction of personal information mandatory disclosure,â€ the NCLA described. For example, whenever a financial institution makes a transaction involving cryptocurrencies worth more than $3,000 with a person, even if the individual is using an unhosted wallet, it must keep detailed records concerning both the customer and the counterparty. The NCLA pointed out that â€œEven existing BSA requirements for traditional banks do not require this level of disclosure about counterparties.â€ The alliance argues:
The group further explained that â€œthe proposed rule violates the Fourth Amendment by extending the BSAâ€™s reach to require production of sensitive financial information from those who have never voluntarily disclosed it to a financial institution, and who, like cryptocurrency owners, have been excluded from the BSAâ€™s reach.â€ The NCLA emphasized that â€œIt would unconstitutionally require disclosure of private information to law enforcement without any suspicion of wrongdoing,â€ subsequently urging FinCEN to â€œrecognize constitutional limits on its authority and to halt its unlawful rulemaking.â€
Caleb Kruckenberg, NCLAâ€™s litigation counsel, commented:
Do you agree with the NCLA on FinCENâ€™s crypto rule? Let us know in the comments section below.
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