The Financial Crimes Enforcement Network (FinCEN) has announced that it will propose new regulations soon cryptocurrency holdings on foreign exchanges. This proposal is unrelated to the one recently proposed by FinCEN for cryptocurrency wallets.
FinCEN’s new crypto rules
FinCEN, an agency of the US Treasury Department, issued a notice on Thursday regarding a new cryptocurrency submission requirement. FinCEN detailed:
Currently, the Foreign Bank and Financial Accounts (FBAR) report regulations do not define a foreign virtual currency account as a reportable account type.
The notice adds that the agencies “intend to propose to amend the regulations implementing the Bank Secrecy Act (BSA) regarding foreign financial account reports (FBAR) to include virtual currencies as a sort of reportable account. “
Shehan Chandrasekera, head of tax strategy at Cointracker, explained that “FBAR is a form that you file with your tax return if you have more than 10,000 foreign financial assets at any time of the year.” He clarified, “There are no taxes to be paid with this form, just additional disclosure.”
Marc Boiron, attorney at Manatt, commented, “Goodbye non-US exchanges … FBARs will have to be filed for non-US virtual currency accounts.” He stressed:
Accidental failure to file an FBAR can result in a civil fine of $ 10,000 for each violation.
“Another example of oversized US regulation,” said Duckduckgo strategist Adam Cochran. “Absolutely insane – but this rule will be something FinCEN would use to pursue international exchanges in a broader sense.”
Attorney Jake Chervinsky described that this proposal “appears to be aimed at users of non-US exchanges” and that he believes it “should not apply to self-custody assets.” He suggested that the reason for the proposal could be tax evasion or “bring non-US crypto companies into compliance with the Bank Secrecy Act.” FinCEN is also currently trying to implement rules regarding crypto wallets before the end of the Trump term.
What do you think of this new rule that FinCEN will propose? Let us know in the comments below.
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