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The narrative

It seems that the controversial plan put forth by the U.S. Treasury Department in 2020, which caused much debate, has officially expired (having been dormant for several years).

Why it matters

In 2020, a proposal that garnered significant attention within the crypto policy sphere was one where it seemed like the entire U.S. cryptocurrency industry united to submit numerous comments. These comments were directed towards the Financial Crimes Enforcement Network (FinCEN) and the Treasury Department, advocating against stringent know-your-customer (KYC) regulations for smart contracts or individuals managing their personal wallets.

Breaking it down

During the final days of President Donald Trump’s term, the U.S. Treasury Department, via its financial crimes monitoring body – the Financial Crimes Enforcement Network – proposed a rule to apply customer identification measures to unhosted digital wallets. However, many experts believed that this requirement was impractical for most wallets as they are not companies or entities and typically do not collect personal data of such nature.

Initially, the plan faced intense criticism from various quarters. Politicians (even from the president’s party), heads of corporations, and lobbyist organizations collectively expressed opposition towards the proposal. The initiative, spearheaded by then-Treasury Secretary Steven Mnuchin, was criticized by legal experts for its ambiguous reporting requirements and definitions, making it difficult to apply in practice. Additionally, there was uncertainty about how exchanges or other entities could feasibly enforce the suggested rules.

As a crypto investor, I’m thrilled to share that our industry managed to secure a significant triumph over the proposed legislation. The initial comment period was extended by a generous 15 days, which fortunately coincided with President Joe Biden taking office and preventing any potential influence from Trump/Mnuchin.

The suggestion made occasional appearances, yet it never received substantial attention afterward. Eventually, on August 19, 2024, the entire plan was formally rescinded.

Michael Mosier, who previously served as acting director at FinCEN, informed CoinDesk that the withdrawal signifies that officials prefer collaborating on assessing potential risks and benefits through innovative technology, such as mobile financial services, rather than immediately imposing restrictions to preserve safety by confining people to traditional methods like landlines, switchboards, mailed checks, and publicly listed home addresses in phone books.

As a cryptocurrency investor, I’m keeping an eye on a proposed regulation from FinCEN dating back to late 2020. This proposal aims to enforce the Travel Rule, which is a framework set by the Financial Action Task Force. The goal of this rule is to combat money laundering in the crypto space by requiring financial institutions to disclose personal details about the senders and recipients of transactions exceeding a certain threshold.

In simpler terms, the initial plan in 2020 established a limit of $250, significantly lower than the $3,000 limit for comparable financial reports at present. However, this week’s announcement did not include any modifications regarding the current limit.

In a tweet, Mosier stated that mentioning this proposal implies that the Treasury Department might act upon it, as communicated to the White House Office of Management and Budget.

“Items can be on there for many years but not move,” he said.

Stories you may have missed

On reporting

there was quite a bit of discussion on X (previously known as the bird site, the hell site, or Twitter) regarding speculation that Vice President Kamala Harris might appoint Gary Gensler, current Chair of the Securities and Exchange Commission, as her Treasury Secretary if she wins the presidential election. This speculation spread rapidly across crypto-focused social media platforms.

I contacted several people who frequently interact with Senate employees or collaborate with legislators, and each one confirmed that the story was untrue.

Sheila Warren and Caitlin Long, representatives from the Crypto Council for Innovation and Custodia Bank respectively, have both stated that this account seems unauthentic.

As a fellow crypto enthusiast, I found myself intrigued by the analysis presented in Tuesday’s The Node newsletter by my colleague Ben Schiller. However, given the significant buzz this story generated among those who share concerns about Harris, I thought it would be beneficial to delve a bit deeper into the matter myself.

In the article, one of the interviewed individuals was Congressman Tom Emmer, who serves as the House Majority Whip at present. However, the article referred to an earlier conversation he had with a journalist. During this conversation, the journalist quoted Emmer as being critical of the current Biden-Harris administration for having left-leaning activists among its staff. He also warned that some of these activists could potentially be part of a future Vice President Harris’ team. Emmer specifically mentioned Gary Gensler, the head of the U.S. Securities and Exchange Commission (SEC), as an example.

Workers from Emmer’s office had not responded to our request for a comment by the deadline as to if they had received any solid information that could support his earlier statements.

A different person cited was Katie Biber, who served as the legal chief at Paradigm. Similarly, it seems that her basis for this statement stemmed from a previous tweet discussing a hypothetical scenario about the SEC’s (consisting of five commissioners) political composition. This discussion didn’t involve or pertain to the Treasury Department in any way.

An outside spokesperson for Paradigm said the company declined to comment.

To put it simply, what I want to discuss stems from the unexpected level of interest it attracted from professionals who profess adherence to the “trust, but verify” principle, yet seem eager to accept claims without any questioning.

According to the principle of whatever, it’s always conceivable that this tale is accurate, however, the required proof or evidence hasn’t been presented as of now.

This week

Wednesday

Elsewhere:

Should you have ideas, queries, or suggestions about the topic for next week, or any feedback in general, don’t hesitate to reach out to me via email at nik@coindesk.com or connect with me on Twitter @nikhileshde. I’m looking forward to hearing from you!

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See ya’ll next week!