The Treasury Department in the United States is making progress toward regulating non hosted wallets. This is part of Biden’s strategy to tackle fraudulent activities involving crypto-assets.
In 2020, the Financial Crimes Enforcement Network (FinCEN) proposed two rules. The rules ensure it is notified of non hosted crypto transactions above $10,000.
Also, it compels banks to gather sender and receiver’s information for transactions above $3,000. With this, Wally Adeyemo, Deputy Secretary of U.S. Treasury, believes the department is making progress.
While speaking at the Consensus 2022, Adeyemo noted that:
“The department is working on addressing the risks posed by non hosted wallets. Basically, financial institutions must know who is making transactions whether they are criminals or not. For non hosted wallets, we shall provided them with information to prevent facilitation of financial fraud.”
Treasury Dept: The Travel Rule Will Respect User Privacy
The regulation of non hosted crypto wallets arose after countries imposed sanctions on Russia. However, there is not enough evidence to prove that Russians evaded sanctions using crypto.
In addition, Adeyemo gave a brief description of the Travel Rule. The rule would reveal the identities of those transacting crypto funds to the financial institutions involved. This is to help enforce national security and the Bank Secrecy Act.
However, the issue of privacy infringement remains a major concern. He noted that the regulations would allow for innovation while protecting national security.
“Government authorities are aware that the future financial system will be mainly digital. However, the protection of America’s national security is a top priority,” Adeyemo added.
Crypto Regulation Coming From All Angles
The Treasury Dept’s response to crypto regulation is due to Biden’s executive order. Earlier this year, the Biden administration directed government firms to research digital assets.
Also, the order mandates the Treasury Secretary and six agencies to submit a report to the President. This report will highlight the possible risks of digital assets, CBDCs, and stablecoins.
Besides the President, they will submit another report to the “Congress of the National Strategy for Combating Terrorist and Other Illicit Financing.” After that, all the agencies will submit a plan to mitigate the financial risks.
The Treasury Dept. joins the Lummis/Gillibrand crypto bill, which both senators released last week. Meanwhile, the bill will become effective in 2023 due to the upcoming elections.
Currently, the crypto bill centers on the category of digital currencies. Also, it places different digital assets under the right regulator, such as SEC and the CFTC. It also highlights regulations for stablecoins.