The Coin Center has raised concerns about a new proposal from the Financial Crimes Enforcement Network (FinCEN) that classifies specific cryptocurrency transactions as primary risks for money laundering. This proposed rule targets virtual currency mixing services, which are used to conceal the origin of funds. However, the Coin Center argues that the definition of mixing services is too broad and could potentially limit legitimate privacy measures and domestic transactions that are not within FinCEN’s jurisdiction.

In a letter, the Coin Center highlights the failure of the rule to distinguish between illegal foreign transactions and legal domestic activities. They believe that this could give FinCEN excessive power under anti-money laundering regulations, such as the PATRIOT Act. Furthermore, there are concerns that the rule could lead to unjustified blocking of transactions, resulting in serious consequences for law-abiding individuals and entities.

The Coin Center urges FinCEN to reconsider the rule and make necessary revisions to better differentiate purely domestic transactions and avoid unintended consequences. They stress the importance of balancing the risks of money laundering with the need to support legitimate use cases for cryptocurrencies.

As discussions continue, the cryptocurrency community eagerly awaits the outcome of this regulatory process. The details of the ruling could have a significant impact on the future landscape of privacy and innovation in the realm of digital currencies.

In addition, the Coin Center has also criticized a separate proposal from the Securities and Exchange Commission (SEC) that seeks to redefine the term ‘exchange’. These developments highlight the ongoing challenges and debates surrounding the regulation of cryptocurrencies.