FinCEN Extends Comment Period on Digital Asset Transactions in Small Win for Crypto Industry

FinCEN has submitted for publication in the Federal Register an Extension Notice, which will extend the comment period on its Notice of Proposed Rulemaking (NPRM) regarding certain transactions involving virtual currency or digital assets.

FinCEN, part of the US Department of Treasury, came under criticism when it appeared to rush through the NPRM in the midst of the holidays and during the transition to the Biden administration.

The extension will lengthen the reopened comment period and set one deadline for all comments addressing its NPRM regarding “digital assets with legal tender status” (LTDA) or involving “convertible virtual currency” (CVC).

Under the NPRM, banks and money services businesses (MSBs) would be required to submit reports, keep records, and verify the identity of customers in relation to transactions above certain thresholds involving CVC/LTDA wallets not hosted by a financial institution also called unhosted wallets.

FinCEN recently issued a notice reopening the comment period for the NPRM.  In that notice, FinCEN provided an additional 15 days for comments on the NPRM’s proposed reporting requirements regarding CVC or LTDA transactions greater than $10,000, or aggregating to greater than $10,000, that involve unhosted wallets or wallets hosted in a jurisdiction identified by FinCEN.  FinCEN further provided for an additional 45 days for comments on the NPRM’s proposed requirements that banks and MSBs report certain information regarding counterparties to transactions by their hosted wallet customers and on the NPRM’s proposed recordkeeping requirements.

FinCEN states that today’s extension notice allows additional time to respond to all aspects of the proposed rule, and sets one closing date for the comment period.

All comments to the NPRM will now be due 60 days from the date of publication of this Extension Notice in the Federal Register.  FinCEN looks forward to reviewing any additional information submitted during this time.

Earlier today, Dr. Janet Yellen was sworn in as the first female Secretary of the Treasury. While her policy perspective is not entirely clear regarding crypto, testimony presented during her nomination hearing indicated she desires that the US leads in Fintech innovation as well as digital assets. Simultaneously, she has expressed her concern regarding the usage of digital assets for illicit activity.


FinCEN Requirements for Certain Transactions Involving Convertible Virtual Currency or Digital Assets

 

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