The Twitter and Square CEO published an open letter against a proposal from the U.S. Financial Crimes Enforcement Network that would require financial institutions like Square to collect the personal data of customers who transfer at least US$3,000 a day in crypto to self-hosted wallets, among other measures. Dorsey said the rule would create “unnecessary friction and perverse incentives” for cryptocurrency customers to avoid regulated entities for transactions. (CoinDesk, The Logic)

Talking point: The proposed regulation, announced December 18, would compel any institution involved in a cryptocurrency transaction to keep records and verify the identity of anyone performing transactions above the threshold, if their wallets are not hosted by a financial institution. For example, as Dorsey noted in his letter, if a parent used Square to transfer US$4,000 in Bitcoin to their daughter’s private Bitcoin wallet, Square would be obligated to collect her personal information, like her physical address. “The burdensome information collection and reporting requirements deprive U.S. companies like Square of the chance to compete on a level playing field,” Dorsey argued. Regulators, who have long believed the crypto market to be a haven for money laundering, say that tracking crypto transactions in this way is part of an overall effort to close anti-money-laundering gaps. In Canada, companies dealing in digital currencies are required to register with FINTRAC, and retain records on customer transactions. In October 2020, Square bought US$50 million worth of Bitcoin, approximately one per cent of its total assets as of the second quarter of 2020.