President Biden freezes FinCEN's proposed crypto wallet regulations

Published at: Jan. 21, 2021

One of the first actions President Joe Biden has taken on his first day in office is to freeze Federal regulatory process, including the controversial self-hosted crypto wallet regulations proposed by former Treasury Secretary Steven Mnuchin.

The announcement came in a White House memorandum for the heads of various federal agencies, the Financial Crimes Enforcement Network (FinCEN) included. The edict doesn’t specify the crypto wallet proposal, but places a general freeze on all agency rulemaking pending review, effective for 60 days from the date of the memorandum.

Crypto industry insiders have lauded the move with Compound Finance General Council Jake Chervinsky stating;

“We fought hard & earned the right to take a breath & reset. Janet Yellen isn't Steve Mnuchin. I'm optimistic.”

The self-hosted wallet proposal was made by FinCEN on December 18 under former US Treasury Secretary Mnuchin. If passed it would require that banks and money service businesses submit reports, keep records, and verify the identity of customers who make transactions to and from private cryptocurrency wallets.

The proposal has been widely criticized by industry leaders including CEO of financial services firm Square, Jack Dorsey, who said that counterparty name and address collection should not be required for cryptocurrency just as it’s not required for cash today.

Critics also stated that it would be technically impossible for many projects to comply because smart contracts do not contain name or address information.

Biden has appointed Janet Yellen to take over as Treasury Secretary, but she has already put a dampener on the crypto scene with critical comments this week that cryptocurrencies are used "mainly for illicit financing."  But Chervinsky commented that she may not be all that bad:

“First, anyone is better than Secretary Mnuchin, who decided long ago that he hated everything about crypto. Second, although Dr. Yellen may not be a fan now, I expect she'll be open to learning & listening, & will follow regular order in deciding on new regulations. That's good.”

Biden has also picked Gary Gensler to head the Securities and Exchange Commission who appears to be more sympathetic to the mission of decentralization than his predecessor.

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