Biden Is Weighing New Rules for Bitcoin Investors – Here’s What Might Change

bitcoin and US fiat currency

Bitcoin has been on a meteoric rise in the past few months, fueled by many factors, including the increased institutionalization of cryptocurrencies and the backing of big-name investors, such as Tesla’s Elon Musk.

Bitcoin broke the $60,000 ceiling earlier this month, and the crypto was valued twice at $1 trillion in the past few weeks, according to CoinMarketCap.

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In another sign that crypto investing is going mainstream, Morgan Stanley said last week it will be the first U.S. bank to offer bitcoin to its wealthier clients, and last month Goldman Sachs last month said it was set to re-open its cryptocurrency trading desk.

Experts are however waiting to see how the new Biden administration will approach regulatory issues surrounding the asset class.

MarketWatch reports that the most immediate regulatory issue that crypto investors will have to face “is an impending decision by the Financial Crimes Enforcement Network — a Treasury Department unit tasked with fighting money laundering and other financial crimes — on new requirements for banks and other intermediaries to maintain records and verify customer identities for certain crypto transaction.”

“Since the Biden administration has come in, they’ve been more deferential to FinCen, who I don’t think ever really wanted this as much as [former Treasury Secretary] Steve Mnuchin did,” Jerry Brito of the think tank Coin Center told MarketWatch, adding that law enforcement was wary the rules would encourage criminals to refrain from transacting with U.S.-based exchanges that are known to cooperate with criminal investigations. “The Biden administration will take a more rational approach going forward,” Brito told MarketWatch.

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FinCen extended its comment period for the rule after President Biden was inaugurated. The extension, filed on Jan. 26, has a 60 day comment period. The proposed rule is seeking to address the illicit finance threat created by one segment of the convertible virtual currency (CVC) market and the anticipated growth in LTDAs (legal tender digital assets)  based on similar technological principles, according to its website.

To this end, FinCEN proposes to address this threat by establishing a new reporting requirement with respect to certain transactions in CVC or LTDA, that is similar to the existing currency transaction reporting requirement, and by establishing a new record-keeping requirement for certain CVC/ LTDA, it says.

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About the Author

Yaël Bizouati-Kennedy is a full-time financial journalist and has written for several publications, including Dow Jones, The Financial Times Group, Bloomberg and Business Insider. She also worked as a vice president/senior content writer for major NYC-based financial companies, including New York Life and MSCI. Yaël is now freelancing and most recently, she co-authored  the book “Blockchain for Medical Research: Accelerating Trust in Healthcare,” with Dr. Sean Manion. (CRC Press, April 2020) She holds two master’s degrees, including one in Journalism from New York University and one in Russian Studies from Université Toulouse-Jean Jaurès, France.
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