The United States Financial Crimes Enforcement Network, or FinCEN, recently proposed a series of new regulations applying to financial institutions dealing with digital currencies, such as Bitcoin BTC. To summarize the proposed regulations, exchanges would essentially be required to file a report with FinCEN when a customer makes a purchase in excess of 10,000, and gather Know Your Customer information any time a transaction of 3,000 or greater is conducted using a noncustodial wallet.
This means that if a customer buys 3,000 worth of Bitcoin and withdraws it to a wallet they control, they would have to not only prove ownership of that wallet but also provide their name and physical address, along with additional identifying information.
Personally, my life stands to change very little. Ive been living entirely off of cryptocurrency since 2015, unbanked since 2016, and have never used a centralized exchange, receiving all of my coins as compensation for goods and services. But as few live as I do, we will likely see a significant impact on how most cryptocurrency users conduct their business. I would hazard a guess that most users have interacted with a centralized platform requiring KYC.
For the rest of cryptocurrency users, the newly proposed regulations would put a significant friction point on deposits and withdrawals. At present, a user signs up to an exchange, submits KYC documents for approval, and can buy and withdraw Bitcoin to a wallet they control,…