The New Civil Liberties Alliance has opposed FinCEN’s proposed rule on cryptocurrency wallets, calling it illegal. In addition, the group says the US Treasury’s planned crackdown on the private portfolios of cryptocurrency holders is an unconstitutional power grab.
FinCEN’s proposed rule on cryptocurrency wallets is illegal, according to NCLA.
The New Civil Liberties Alliance (NCLA), a nonpartisan, nonprofit civil rights group, filed comments Monday opposing FinCEN’s proposed rule, titled Requirements for Certain Convertible Virtual Currency or Digital Asset Transactions. The Financial Crimes Enforcement Network (FinCEN) is an agency of the United States Treasury Department.
The US Treasury’s planned crackdown on the private portfolios of cryptocurrency holders is an unconstitutional power grab….. The proposed rule represents a radical – and illegal – expansion of FinCEN’s financial oversight.
The group calls FinCEN’s proposal large-scale government intrusion into private digital transactions and argues that the illegal requirements would lead to massive collection of people’s personal data and likely drive privacy-sensitive digital assets out of the U.S. banking system.
Under the proposal, digital assets would fall under the monetary instruments category of regulated currencies, Naclavia said. This means that personal information of users of bitcoins and other cryptocurrencies will be collected in accordance with the requirements of the Bank Secrecy Act (BSA) for recording and reporting currency transactions.
Moreover, FinCEN’s proposed rule sets off the chain reaction of mandatory disclosure of personal information described in the NCLA. For example, whenever a financial institution makes a cryptocurrency transaction of more than $3,000 with an individual, even if that individual uses an unsecured wallet, it must keep detailed records of the customer and the counterparty. The NCLA noted that even existing BSA requirements for traditional banks do not require this level of counterparty disclosure. The Alliance argues:
The proposed rule exceeds the relevant constitutional limits by authorizing FINCEN to exercise the exclusive legislative power of Congress.
The panel also said the proposed rule violates the Fourth Amendment by expanding the scope of the BSA to require confidential financial information from people who have never voluntarily provided it to a financial institution and who, like holders of cryptocurrencies, are excluded from the BSA. NULA stressed that it would be unconstitutional to require the disclosure of private information to law enforcement agencies without any suspicion of wrongdoing, and then called on FinCEN to recognize the constitutional limits of its authority and end the illegal regulation.
NCLA trial lawyer Caleb Krukenberg commented:
FinCEN’s proposed rule illegally seeks to convert the agency’s limited authority to regulate banks into an authorization to conduct large-scale financial oversight of innocent people who simply use digital assets. FinCEN should recognize that its proposal is completely unconstitutional and repeal the rule immediately.
Do you agree with the NCLA on FinCEN’s cryptography rule? Let us know your comments in the section below.
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