According to the Twitter CEO, the move to regulate cryptocurrency could make crypto transactions less transparent. Jack Dorsey, Square, and Twitter CEO, has decried the newly proposed regulation of cryptocurrency. A note shared on his company’s website warned that the regulation would affect Square, his company engaged in financial services if launched.
Late last year, Square invested the sum of $50 million in bitcoin. Besides, the company has spent a huge amount of money on cryptocurrency. Hence, it has a lot of stake in the ecosystem. In his letter, Jack Dorsey said the move was uncalled for and it would create several tension wich would streamline dealing digital assets.
Customers could end up using non-custodial wallets
The major fear amongst several entities of the crypto market is that if this law is finally passed, then financial institutions would have the right to look into several important details regarding someone that is not their client. According to the Financial Crimes Enforcement Network, all customers involved in large crypto transactions must submit their names and physical addresses to the financial institutions concerned.
FinCEN aims to use this proposed regulation to curb cryptocurrencies for illegal activities like money laundering, drug trafficking, and international sponsoring of terrorists. If the regulations are eventually enforced in straightforward terms, Square and other financial institutions would be forced to collect false data from people who have not subscribed to their services or registered as their customers.
The new law will streamline crypto adoption
For example, if a mom sends $5000 worth of bitcoin to her son, the bank will be required to get personal information on his computer, regardless of whether the son is using a private bitcoin wallet or not. Concerned stakeholders are now worried that the FinCEN seems to have overstepped its regulatory boundary, more so considering the transparency of the nature of cryptocurrencies.
In Dorsey’s statement, the regulation would force customers to continue to use their non custodial wallets to make transactions that requires payments outside the United Sates. This will eventually hinder FinCEN from getting sufficient information about crypto transactions as it does have now. In short, if banks are made to obtain information from people, they’ll seek an alternative elsewhere and shun the bank. This explains what Dorsey describes as a pervasive incentive.
Dorsey argues that the regulation hinders creativity. Moreover, the burden of collecting and submitting customers’ information to the regulatory agencies will prevent U.S. companies from competing fairly with their counterparts in the cryptocurrency boom.
Dorsey submitted the letter as a remark on the proposed regulation. The proposal has a limited public comment period of 15 days, rather than the standard 60 days. In a statement by the Treasury Department, the 15-day period was necessary due to national security.