The Financial Crimes Enforcement Network (FinCEN) has dropped another bomb on the cryptocurrency industry in the last hours of 2020, as it revealed its intentions to make the reporting of crypto holdings over $10,000 mandatory held with foreign digital currency service providers.
In a proposal filed on Thursday, the US Treasury Department unit proposed an amendment to the Bank Secrecy Act’s Foreign Bank and Financial Accounts (FBAR) regulations.
“FinCEN intends to propose to amend the regulations implementing the Bank Secrecy Act (BSA) regarding reports of foreign financial accounts (FBAR) to include virtual currency as a type of reportable account,” the notice read.
Ending Anonymity of Cryptocurrencies
The FBAR rules mandate the reporting of any financial account held by Americans in a foreign country that holds more than $10,000 in currencies.
The Internal Revenue Services (IRS) detailed that the FBAR reports must include the name of the account holder, account number, details of the foreign bank, type of account and the maximum value held in a financial year.
However, it is not clear how FinCEN is intending to impose the same set of rules on cryptocurrencies, that too held with a foreign entity. Neither did it mention any timeline for the amendment.
According to the existing rules, failure to comply with the FBAR attracts various penalties, including monetary fines, and the same might be applicable for virtual currencies as well.
The new proposal came days before the expiration of the public comment period on another draconian plan of FinCEN, which requires the crypto exchanges and wallet providers to store customer information on any transaction above $3,000 and directly report on transactions with a daily value of over $10,000.
The US cryptocurrency community, including major exchanges like Coinbase, reacted critically to the previous proposals, raising questions on the privacy of crypto holders.
With the latest proposal to include virtual currencies in the existing FBAR rules, it is clear that the US treasury wants complete cryptocurrency control.