On Monday February 14th, the Global Digital Asset & Cryptocurrency Association welcomed the opportunity to respond to FinCEN’s request for information to solicit comment on ways to streamline, modernize, and update the anti-money laundering and countering the financing of terrorism (AML/CFT) regime of the United States. The Global DCA applauded FinCEN’s purpose in requesting this feedback from the industry and recommended that FinCEN should use this moment as an opportunity to re-imagine the BSA/AML framework in light of new and emerging technologies.
- Much of the discussion around the regulation of cryptocurrencies, digital assets and blockchain-based technology has focused on their ability to facilitate money laundering and terrorist financing. As with many technologies, bad actors have indeed used digital assets for these purposes. But the proportion of illicit use of these technologies is comparatively smaller than fiat-based abuse. Rather than treating crypto market participants like traditional financial institutions, GDCA urges FinCEN to recognize that blockchain-based technology, including the fact that open ledgers provide a complete and pseudonymous record of every transaction, offers transformative new ways for governments to effectively identify and restrict bad actors.
- New technologies that are designed to identify misconduct and confirm identity in the digital world are experiencing a period of explosive innovation and advancement. FinCEN should support the adoption of these new technologies, and should not pass rules that “lock in” specific solutions to the exclusion of others. Reimagining BSA/AML compliance in light of these new technologies would build trust, help fight crime, and keep activity onshore, all while reducing the cost of compliance.
Furthermore, it is not clear how traditional BSA rules and concepts apply to a wide range of market participants in the digital assets industry. A lack of clarity around how existing rules apply to new entrants, and uncertainty about what rules are coming, can hamper growth and drive businesses offshore or underground. GDCA would welcome the adoption of a framework focused on the activities and practices of financial services providers that would define the operational rules and procedures for those who perform different tasks.
Read the full response HERE.