Same title; reopening of comment period, 86 FR 3897, FR Doc 2021-01016
Document text
Research, not advice. Part of the Bitcoin research archive (October 2026). Claims labelled unverified, contested or fringe are reported, not endorsed; statuses of bills and rules are as of the date checked. Government, court and patent records are public domain; the research notes are CC BY 4.0.
Federal Register, Volume 86 Issue 10 (Friday, January 15, 2021)
[Federal Register Volume 86, Number 10 (Friday, January 15, 2021)]
[Proposed Rules]
[Pages 3897-3899]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-01016]
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DEPARTMENT OF THE TREASURY
Financial Crimes Enforcement Network
31 CFR Parts 1010, 1020, and 1022
RIN 1506-AB47
Requirements for Certain Transactions Involving Convertible
Virtual Currency or Digital Assets
AGENCY: Financial Crimes Enforcement Network (``FinCEN''), Treasury.
ACTION: Notice of proposed rulemaking; reopening of comment period.
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SUMMARY: On December 23, 2020, FinCEN published a notice of proposed
rulemaking proposing requirements for banks and money services
businesses (``MSBs'') related to certain transactions involving
convertible virtual currency (``CVC'') or digital assets with legal
tender status (``legal tender digital assets'' or ``LTDA''). As set
forth below, FinCEN is identifying additional statutory authority for
the proposed rule under the Anti-Money Laundering Act of 2020,
providing additional information regarding the reporting form, and
reopening the comment period for the proposal. Specifically, FinCEN is
providing an additional 15 days for comments on the proposed reporting
requirements regarding
[[Page 3898]]
information on CVC or LTDA transactions greater than $10,000, or
aggregating to greater than $10,000, that involve unhosted wallets or
wallets hosted in a jurisdiction identified by FinCEN. FinCEN is
providing an additional 45 days for comments on the proposed
requirements that banks and MSBs report certain information regarding
counterparties to transactions by their hosted wallet customers, and on
the proposed recordkeeping requirements.
DATES: The comment period for the proposed rule published on December
23, 2020 (85 FR 83840) is reopened for 15 days for comments on the
proposed reporting requirements and for 45 days for comments on the
proposed requirement to report counterparty information and the
proposed recordkeeping requirements. Written comments are now therefore
due with respect to the proposed reporting requirements (except with
respect to reporting of counterparty information) on February 1, 2021,
and with respect to all other aspects of the proposed rule on March 1,
2021.
ADDRESSES: Comments may be submitted by any of the following methods:
Federal E-rulemaking Portal: http://www.regulations.gov.
Follow the instructions for submitting comments. Refer to Docket Number
FINCEN-2020-0020 and the specific RIN number 1506-AB47 to which the
comment applies.
Mail: Policy Division, Financial Crimes Enforcement
Network, P.O. Box 39, Vienna, VA 22183. Refer to Docket Number FINCEN-
2020-0020 and the specific RIN number.
FOR FURTHER INFORMATION CONTACT: The FinCEN Regulatory Support Section
at 1-800-767-2825 or electronically at [email protected].
SUPPLEMENTARY INFORMATION:
On December 18, 2020, FinCEN filed with the Federal Register a
notice of proposed rulemaking (the ``December Notice''). The December
Notice was published in the Federal Register on December 23, 2020.\1\
In the December Notice, FinCEN proposed to address the threat of
illicit finance with respect to certain transactions involving CVC or
LTDA by (i) establishing new reporting requirements for certain CVC or
LTDA transactions analogous to existing currency transaction reports,
and (ii) establishing new recordkeeping requirements for certain CVC or
LTDA transactions that is similar to the recordkeeping and travel rule
regulations pertaining to funds transfers and transmittals of funds.
The original comment period formally closed on January 7, 2021,
although FinCEN took steps to ensure comments could still be received
after that date.\2\
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\1\ Requirements for Certain Transactions Involving Convertible
Virtual Currency or Digital Assets, 85 FR 83840 (Dec. 23, 2020).
\2\ Members of the public have continued to be able to, and have
in fact continued to, submit comments since January 7, 2021. FinCEN
will continue to review comments submitted after the filing of the
original notice of proposed rulemaking, including comments received
between January 7, 2021 and January 15, 2021.
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On January 1, 2021, the Anti-Money Laundering Act of 2020 (Division
F of Pub. L. 116-283) (``AML Act of 2020'') became law. The AML Act of
2020 amended 31 U.S.C. 5312(a)(3), the definition of ``monetary
instruments'' in the Bank Secrecy Act (``BSA''), on which Treasury
proposed to rely to determine that CVC and LTDA are monetary
instruments. As amended by the AML Act of 2020, the BSA now defines the
term monetary instruments as United States coins and currency; as the
Secretary may prescribe by regulation, coins and currency of a foreign
country, travelers' checks, bearer negotiable instruments, bearer
investment securities, bearer securities, stock on which title is
passed on delivery, and similar material; as the Secretary of the
Treasury shall provide by regulation for purposes of sections 5316 and
5331, checks, drafts, notes, money orders, and other similar
instruments which are drawn on or by a foreign financial institution
and are not in bearer form; and, as the Secretary shall provide by
regulation, value that substitutes for any monetary instrument
described in the other categories.\3\
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\3\ 31 U.S.C. 5312(a)(3), as amended by section 6102(d) of the
AML Act of 2020, which added paragraph (D).
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In the December Notice, FinCEN proposed prescribing by regulation
that CVC and LTDA are monetary instruments because they constitute
``similar material'' to instruments described in 31 U.S.C.
5312(a)(3)(B) (``coins and currency of a foreign country, travelers'
checks, bearer negotiable instruments, bearer investment securities,
bearer securities, [and] stock on which title is passed on delivery. .
. .''). As the December Notice explained, CVC and LTDA are ``similar
material'' to ``coins and currency of a foreign country, travelers'
checks, bearer negotiable instruments, bearer investment securities,
bearer securities, [and] stock on which title is passed on delivery. .
. .'' FinCEN now intends to prescribe by regulation that CVC and LTDA
are ``monetary instruments'' pursuant to paragraph (D) of 31 U.S.C.
5312(a)(3), as amended. Specifically, pursuant to 31 U.S.C.
5312(a)(3)(D), CVC and LTDA are both value that substitute for currency
and are therefore ``monetary instruments'' under the BSA.
As FinCEN specified in the December Notice, the determination at 31
CFR 1010.316(a) is not intended to affect the regulatory definition of
``monetary instruments'' at 31 CFR 1010.100(dd), or the use of that
regulatory definition elsewhere in FinCEN's regulations, including in
relation to the currency transaction reporting requirements at 31 CFR
1010.311 and the transportation of currency or monetary instruments
reporting requirements at 31 CFR 1010.340.\4\
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\4\ Nor is this regulatory determination intended to have any
impact on the definition of ``currency'' in 31 CFR 1010.100(m).
Furthermore, nothing in the proposal is intended to constitute a
determination that any CVC or LTDA that is within the regulatory
definition of ``monetary instruments'' prescribed pursuant to 31
U.S.C. 5312(a)(3) is currency for the purposes of the federal
securities laws, 15 U.S.C. 78c(47), or the federal derivatives laws,
7 U.S.C. 1-26, and the regulations promulgated thereunder. Finally,
this determination is intended to have no impact on the taxability
of CVC or LTDA.
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The AML Act of 2020 also amended 31 U.S.C. 5318(a)(2), granting the
Secretary additional authority to implement reporting requirements.
Specifically, the Secretary may require a class of domestic financial
institutions to ``maintain appropriate procedures, including the
collection and reporting of certain information as the Secretary of the
Treasury may prescribe by regulation, to ensure compliance with
[subchapter 53 of title 31 of the U.S. Code] and regulations prescribed
under [such] subchapter or to guard against money laundering, the
financing of terrorism, or other forms of illicit finance.'' Thus, in
addition to the authority cited in the December Notice, the proposed
rule relies on authority under 31 U.S.C. 5318(a)(2) to extend
transaction reporting requirements to CVC/LTDA transactions.\5\
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\5\ 31 U.S.C. 5318(a)(2), as amended by section 6101(b) of the
AML Act of 2020.
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Reports required by the proposed rule would be submitted on a Value
Transaction Report form similar to the existing FinCEN Currency
Transaction Report (``CTR'') Form 112. The form would be submitted
through the existing BSA E-filling system and would be able to be batch
reported.\6\ Filers would be able submit information commonly
associated with CVC and LTDA transactions, such as:
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\6\ The user guide for the existing CTR form is available at:
https://bsaefiling.fincen.treas.gov/docs/XMLUserGuide_FinCENCTR.pdf.
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[[Page 3899]]
(a) The CVC or LTDA type used in the transaction;
(b) The transaction amount;
(c) The assessed transaction value (in U.S. dollars);
(d) The date and time of the transaction;
(e) The transaction hash;
(f) CVC or LTDA addresses involved in the transaction, and if they
are hosted or unhosted;
(g) The name and physical address of each counterparty to the
transaction of the financial institution's customer; and
(h) Other information readily available to the bank or MSB, which
aids in identifying the specific reported transaction(s), the means by
which it was conducted, and the parties involved.
A final rule implementing these proposed reporting requirements
would be effective 30 days after its publication, except that the
requirement to report counterparty information (if adopted) would not
take effect for 60 days given the additional complexity it may present.
FinCEN also continues to invite comment on the portion of the
December Notice related to proposed independent recordkeeping
obligations for transactions greater than $3,000. Any final rule
implementing the recordkeeping requirements would be effective 60 days
after its publication.
Comments on the December Notice: FinCEN reviewed and considered
7,506 comments submitted in response to the December Notice prior to
January 8, 2021. Commenters included financial institutions and
companies that provide services related to CVC or LTDA, academics,
trade organizations, cryptocurrency development groups, non-profit
organizations, customers and employees of companies that provide
services related to CVC or LTDA, and cryptocurrency owners and other
individuals (both domestic and foreign), as well as anonymous sources.
Commenters addressed a range of considerations, including implications
for technological development and other forms of innovation, the
economics of the digital asset industry, U.S. economic competitiveness,
compliance matters, data security and privacy, utility to law
enforcement, and procedural aspects of the December Notice (including
the length of the comment period).
Determination to Reopen the Public Comment Period: FinCEN
appreciates the substantial response from commenters during the
original comment period, and FinCEN welcomes further comment in the
reopened comment periods. With respect to the additional 15 days for
comments on the proposed reporting requirements, FinCEN notes that
these proposed requirements are essentially equivalent to the existing
CTR reporting requirements that apply to transactions in currency. The
proposed rule is a vital loophole-closing measure to prevent illicit
transactions using CVC and LTDA, including the financing of terrorism,
in light of the fact that such transactions would otherwise be subject
to familiar and long-established reporting requirements if they were in
cash. The proposal is also consistent with Congress's recent expansion
of the definition of ``monetary instrument'' in the BSA, which reflects
the expectation that FinCEN would bring CVC and LTDA within monetary
instrument reporting requirements. FinCEN notes that a large number of
commenters agreed it is fully appropriate for FinCEN to finalize a rule
providing similar regulatory treatment to similar activity. FinCEN
welcomes comments during this reopened comment period on FinCEN's
application of new statutory authority pursuant to the BSA amendments
made by the AML Act of 2020. In addition, several commenters noted the
need for additional information on the nature of the reports required
by the proposal in order to provide an assessment of potential costs
and benefits of the proposed rule. As indicated in the supplementary
information, FinCEN intends to use a form similar to the existing CTR
form and requests further comment in light of this additional
information.
With respect to the additional 45 days for comments on the proposed
recordkeeping requirements and the proposed requirement to report
counterparty information, FinCEN is providing a longer period in light
of the somewhat greater complexity of those aspects of the proposed
rule and various issues identified in comments received during the
original comment period.
Kenneth A. Blanco,
Director, Financial Crimes Enforcement Network.
[FR Doc. 2021-01016 Filed 1-14-21; 8:45 am]
BILLING CODE 4810-02-P