Joe Biden halted many of Trump’s administration’s last-minute regulations, including blockchain rules. The directive was distributed in a letter to all government departments hours after Biden’s inaugural ceremony. Controversial crypto regulations suggested on December 18 by Steve Mnuchin were met with skepticism.
President Joe Biden has frozen all federal regulatory plans, including the proposed regulations on self-hosted crypto wallets by former Treasury Secretary Steve Mnuchin, so they can be reviewed by his current administration.
A Freeze on All New Laws
In a memo Wednesday, Biden directed his head of personnel, Ron Klaine, to communicate the order to all federal departments and agencies. All new laws should be avoided, with the exception of emergency cases, and those submitted to the Office of the Federal Register should be automatically removed, Klaine said.
Under the new regulations, for transfers above $3,000, members of certain crypto exchanges who choose to transfer their holdings into private, or self-hosted wallets, will be forced to include comprehensive personal details. These exchanges will also have to disclose to the Financial Crimes Compliance Network, or FinCEN, trades estimated at more than $10,000.
Initially, a 15-day public consultation period for the rule was proposed, but after criticism from crypto organizations and businesses, this was expanded. Critics pointed out that the new guidelines threaten the freedom of persons and companies working in cryptocurrencies to crypto invent and to privacy.
Concerns relating to the principle of human rights and privacy are at the center of opposition to the rumored law. Cryptocurrency exchanges and other sites for crypto utilities collect KYC (know your customer) information regularly.
This activity helps law enforcement to evaluate the specifics of a transaction dependent on the blockchain address, undermining consumer sovereignty, which has long been considered a core cryptocurrency tenet.
Self-hosted wallets are usually considered a more stable and anonymous variant of other wallets since, on the basis of their blockchain address alone, a user may not be detected. There are also disconnected from the internet in certain cases, such as crypto hardware wallets.
Previous Opposition to the Law
Opponents of the rumored law point to the increased paperwork and regulatory pressure on businesses offering crypto-related services that the law will impose on them. Coinbase’s Brian Armstrong has stated that in certain situations where crypto infrastructure, such as decentralized finance (DeFi), is used to offer resources to the unbanked, providing identity documents may be impossible.
Jai Ramaswamy, former Department of Justice (DoJ) head of anti-money laundering, recently wrote about the risks of legislation against unhosted wallets. A policymaker’s guide to self-hosted wallets was released last month by the Blockchain Alliance, a lobbying organization.
A letter to Treasury Secretary Steven Mnuchin was published by a coalition of Republican lawmakers voicing alarm over his department’s proposal to enforce a new rule on the cryptocurrency industry.
For transactions involving self-hosted crypto wallets or wallets that are not provided by a financial institution or service, the rule, which is reported to be in the works but has not been verified by the department, allows financial institutions to check the identity of receivers and senders. Examples of such wallets provide wallets for hardware or a wallet operating on the machine of a customer.