US Law Mandates Personal Data Collection For Crypto Purchase
The clock is ticking for the crypto industry as it races to fight against a new US law set to take effect on January 1, 2024. The legislation will require American businesses to collect personal information on individuals using digital assets worth more than $10,000 for purchases. This move has triggered a legal battle, with crypto think-tank Coin Center suing the Treasury Department and Treasury Secretary Janet Yellen, arguing that the regulation constitutes “unconstitutional financial surveillance.”
US businesses will have to collect the name, address, and government ID of anyone who uses more than $10,000 crypto to buy stuff. The new rules will snap into action on January 1, 2024.
In court, the Department of Justice argued the regulation was a simple extension of the…
— Wu Blockchain (@WuBlockchain) August 6, 2023
US Crypto Reporting Law
Despite Coin Center’s efforts, a judge dismissed the case in July, stating that the regulation had not yet been implemented, and any harm claimed was speculative. However, Coin Center remains resolute and announced its plan to appeal the decision to the Sixth Circuit without delay.
The contentious regulation, added during the haggling over the trillion-dollar Infrastructure Investment and Jobs Act in 2021, aims to subject crypto users to the same reporting standard as cash transactions. It mandates businesses to collect personal details, including name, address, and social security number, of anyone making crypto payments exceeding $10,000. The US government justifies the new law as a means to combat tax evasion and enhance transparency, citing the success of similar requirements for cash transactions. However, concerns have been raised about the potential privacy risks arising from the transparent nature of blockchain technology, allowing entities to track transactions and potentially compromise anonymity.
Privacy Concerns Over DeFi
The impact of this regulation extends to businesses working with anonymous developers behind decentralized finance (DeFi) protocols. Legal professionals have expressed concerns about maintaining confidentiality and the need to disclose transaction details to the government.
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Despite the ruling’s dismissal, the appeal process offers a chance for Coin Center to reassert its arguments and potentially shape the law’s enforcement. However, the uncertain outcome and lack of clarity on the final version of the regulation pose challenges for businesses preparing to comply. While the crypto industry remains vigilant about the law’s implications, limited discussion has taken place within relevant circles. With the January 2024 deadline approaching, stakeholders are left grappling with how to navigate the impending changes and safeguard user privacy amidst an evolving regulatory landscape.
