The U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) has released a new proposal that would require users to fill out a KYC form when sending money from a centralized exchange to their private wallet if the amount sent is greater than $10,000 in one day. Furthermore, exchanges would have to collect and provide personal information to FinCEN if a transaction is greater than $3000 or if a group of transactions add up to more than $10,000.

In a press release, the Treasury said the rule would close “loopholes” around virtual currency transaction reporting. However, this would also undermine the privacy and freedom of crypto users. There has been heavy backlash from the crypto community already.

Marta Belcher, a civil liberties and technology attorney, said that “one of the most important things about cryptocurrency is that it imports the civil liberties benefits of cash into the digital sphere by allowing for anonymous transactions.”

Circle CEO Jeremy Allaire, wrote an open letter to the Treasury Department staff saying the proposed rule “would inadequately address the actual risks that are at issue,” and harm the industry overall. 

With this proposal, the U.S. is following other nations like France and Switzerland, that have already implemented stricter identity verification rules regarding crypto. 

What are your thoughts on this proposal? Is the extra regulation good for crypto in the long term or does it hurt the community as a whole?