Proposed Rules for Transactions with Unhosted Virtual Currency Wallets

January 6, 2021 - Policy Alerts

On 18 December, the Financial Crimes Enforcement Network (FinCEN) at the U.S. Department of the Treasury announced highly anticipated and controversial new proposed requirements designed to mitigate illicit finance risks associated with “unhosted” virtual currency wallets and wallets hosted in certain foreign jurisdictions with weak anti-money laundering regimes.

Unlike customers who rely on the custody services of financial institutions subject to anti-money laundering and combating the financing of terrorism (AML/CFT) requirements to send and receive virtual currency, users of unhosted or “self-hosted” wallets can transact directly with one another and with hosted wallets using their own private keys, creating potential illicit finance risks. This policy alert will examine the new obligations that, if enacted, will impact banks and money services business, as well virtual asset services providers (VASPs).

Read the Full Policy Alert

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