US authorities want to lower the threshold for obtaining information on transactions
If the new provision is implemented, crypto exchanges would have to manage a lot of sensitive user data, which would mean further risks.
The American Financial Crime Authority (FinCEN) and the US Central Bank (Fed) have drastically lowered the information-gathering threshold for transactions
According to a notice released on Bitcoin Rejoin, the two regulators want to lower the previous threshold of $ 3,000, set in 1995, for international transactions to $ 250. Accordingly, financial institutions would have to transmit the associated customer information to the authorities for every transaction that is larger than US $ 250 and is made abroad. The so-called „Travel Rule“ would apply even to very small amounts.
The proposed change in the law also relates specifically to “convertible virtual currencies”, to which the new regulation is also intended to apply.
The information to be transmitted according to the new Travel Rule is:
„1.) Name and address of the payer; 2.) The exact payment amount or transaction order; 3.) The execution date; 4.) All payment instructions that go along with the payment by the executor; 5.) The recipient’s bank or financial institution “
So a lot of sensitive information has to be transmitted, which crypto exchanges would then have to store in addition to the usual customer data. This would be an enormous security risk for users. The new regulation also implies that financial institutions need to know the exact location of each transaction.
The Working Group on Measures to Combat Money Laundering (FATF) is currently working on a similar provision on a global level. This proposal is also very controversial in the crypto industry. The extensive collection of information that would go hand in hand with this is in strong contradiction to the principles of crypto currencies, as they emerge from the Bitcoin whitepaper, among other things.
The change to the Travel Rule is still just a draft. FinCEN and Fed will be collecting public feedback over the next 30 days before moving on to the next round.