They consider that 15 days, on Christmas holidays, are not enough to analyze the proposal.
FinCEN’s rule would hamper transactions involving smart contracts.
The plans exposed a few days ago by the US agency against financial crimes (FinCEN) with a regulation proposal that mainly affects self-custodial cryptocurrency wallets, continue to generate criticism.
In this case Kraken and Coinbase make public their questions to the project that would force cryptocurrency exchanges to verify customer identity, keep records, and submit reports.
Among other observations, reject the time allowed to submit opinions, stipulated in 15 days, with an expiration date for next January 4. They consider that this period is insufficient to evaluate the new rule, especially since it includes the Christmas holidays and occurs in the middle of the COVID-19 pandemic.
In a statement posted on their blog, the Kraken team said that will fight to stop the approval of this rule and invites the public to send their comments. However, it notes that a sufficient time frame has not been established to give a meaningful answer.
The government almost always gives us at least 30 days to do it, and often 60 days or even more for important matters. Instead, in order to get through this rule with minimal public participation, FinCEN provides only 15 days during the holiday season for the public to consider the consequences of the rule (…) This is unprecedented and clearly inappropriate for a deviation so dramatic of existing law.
Coinbase, for its part, through its legal director, Paul Grewal, sent an open letter to the director of FinCEN, Kenneth Blanco and showed his disagreement with the proposal. He requested that a normal period of 60 days be established to respond, which is usually the common in the traditional financial industry. “There is no emergency here. There is also no justification ”, he added.
He notes that FinCEN’s arguments, warning of dangers to national security, have been under consideration since 2019. Consequently, there is no explanation of how an emergency suddenly arose years later, “just as the current administration is ready to leave office. ”.
In the notice, FinCEN asks for comments on 24 different questions (more than three pages of the notice only). According to our initial review, responding to those issues will require Coinbase and many other companies to carry out detailed technical analysis, comprehensive cost assessments, and a complex balance of privacy interests for clients whose personal information should now be automatically released to an agency. governmental.
The exchange ensures that FinCEN has made no attempt to estimate the cost of the proposed rules, leaving that work entirely to the industry in this 15-day comment period.
“Addressing all the questions would take much longer than that time (…) To do so in a few business days during national holidays and during the latest COVID surge is obviously impossible,” Coinbase notes.
Proposal would prevent the use of smart contracts
Beyond the short period for comments, Kraken also classified as “problematic” the regulation that FinCEN seeks to promote, with its proposal to require identity records. even for self-custodial cryptocurrency wallets.
With the FinCEN rule, exchanges will not be able to make transactions with smart contracts. Source: WorldSpectrum / pixabay.com
His publication focuses on the issue of financial exclusion. He believes that the proposal, in the first place, will exacerbate this problem, by preventing the sending of money to people who do not have a postal address.
“Beyond just prohibiting transactions with homeless humans, would ban financial institutions from sending cryptocurrencies to smart contracts, which, to begin with, have no name or physical location, “says Kraken.
Clarifies that smart contracts are a technology created to eliminate the need for costly and risky intermediaries, which “are what keep the poor out of the current financial system.” Therefore, the proposed rule would stifle the flow of resources to this technology, which would cause the financial system of tomorrow “to be as exclusive as today’s.”
The Coinbase post raises similar ideas. He called the rule “unfortunate and disappointing.” Also see a threat to the progress of the cryptoassets industry from the United States, referring to the negative implications it would have for self-custody cryptocurrencies.
These complaints from the two exchanges, located among the most important in the ecosystem, are in addition to the criticisms of FinCEN’s proposal issued by the Electronic Frontier Foundation, and the Bitcoin developer, Matt Corallo, as reported by CriptoNoticias Recently.