FinCEN Proposes KYC Rules for Crypto Wallets

U.S. crypto users hoping to transfer their holdings from an exchange to their own self-hosted wallets may need to comply with new know-your-customer (KYC) requirements after the U.S. Treasury Department’s Financial Crimes Enforcement Network (FinCEN) proposed a new rule on Friday.

Under the advanced notice of proposed rulemaking (ANPR), users who want to transfer their cryptocurrencies off of centralized exchanges and onto their own private wallets would need to provide personal information to the exchanges. The exchanges would also need to submit and store records involving cryptocurrency transactions.

The general public will have 15 days to provide comments or feedback after the rule is published in the Federal Register, the national logbook.

Rumors that this rule was in the works first came out last month, when Coinbase CEO Brian Armstrong tweeted that the Trump administration, specifically Treasury Secretary Steven Mnuchin, was preparing a rushed rule that would require exchanges to verify know-your-customer information for the recipient of a self-hosted wallet. 

The rule would be in line with guidance from the Financial Action Task Force (FATF) last year that required nations implement KYC rules for virtual asset service providers, a term for crypto exchanges and other startups. 

At the time, FATF’s guidelines suggested that individual crypto wallets could be designated VASPs, saying:

“In cases where the VASP is a natural person, it should be required to be licensed or registered in the jurisdiction where its place of business is located – the determination of which may include several factors for consideration by countries.”

This is a developing story. Check back for updates.