As with cash transactions, businesses that receive cryptoassets with a fair market value of more than $10,000 would also be reported on,” it explained.

The cryptomarket is tumultuous, especially right now. Prices for Bitcoin, Ethereum, and others, frequently fluctuate, and have fallen sharply lately for various reasons. Even something as simple as a tweet from Elon Musk can cause the market to skyrocket or slump. Netizens who back currencies like Dogecoin hope the digital dosh will one day be used as an efficient, fast, low-power cash equivalent for buying stuff like cars, homes, clothes, computers, food, and so forth.

Early signs of support for cryptocurrency and blockchain technologies appeared good for the Biden Administration with the announcement that Gary Gensler would be the nominee for chairperson of the U.S. Securities and Exchange Commission.

Gensler is the former chairman of the Commodities Futures Trading Commission before joining the Massachusetts Institution of Technology in 2018 where he lectured on blockchain technology and also became and an adviser for the Media Lab’s Digital Currency Initiative.

As for Yellen, speaking at a Senate Finance Committee hearing Tuesday, she said that cryptocurrencies are “a particular concern” when it comes to criminal activity and terrorist financing. “I think many (cryptocurrencies) are used, at least in a transaction sense, mainly for illicit financing,” she said.

Right now in the United States, cryptoassets are taxed more or less as if they were property, meaning you have to report gains or losses if you exchange cryptocurrency for cash, trade one type of coin for another, use crypto for payment at a merchant, buy an NFT using cryptocurrency, and so on, according to Coindesk.

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The Treasury is worried that businesses and traders can use cryptocurrencies to under-report this income.

“Although cryptocurrency is a small share of current business transactions, such comprehensive reporting is necessary to minimize the incentives and opportunity to shift income out of the new information reporting regime …

According to Treasury secretary nominee and the former Federal Reserve chair, Janet Yellen, cryptocurrencies are a “particular concern” when it comes to terrorist financing and money laundering. The incoming head believes that most digital assets are used for illicit financing.

Yellen voiced her opinion during her Senate confirmation hearing today. Responding to a question from Senator Maggie Hassan on how to tackle threats relating to terrorist financing and the Treasury’s role in keeping a check on illegal financial activities, Yellen said:


We need to make sure that our methods for dealing with these matters — with terrorist financing — change along with changing technology […] Cryptocurrencies are a particular concern.

And I think we really need to examine ways in which we can curtail their use and make sure that [money laundering] doesn’t occur through those channels.”

As Business Insider noted, Yellen’s comments suggest that the incoming Biden administration could be hostile to cryptocurrencies and ramp up regulation.

Bitcoin itself continues its roller coast ride of price swings but has not managed to return to record-breaking levels above $40,000 in the last week. Bitcoin was trading at $34.962.72 as of 8:42 EST.

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Senate Finance Committee website today indicates that the incoming Secretary of the Treasure may have a more positive view on the potential for crypto to reshape the United States financial system.

In her statement, Yellen did again state the need for the US to confront the use of illicit activities leveraging crypto, this time she added that she also plans to encourage legitimate leveraging of digital assets.

The former Fed Chair wrote:

“I think it important we consider the benefits of cryptocurrencies and other digital assets, and the potential they have to improve the efficiency of the financial system.”

Yellen added:

“I think we need to look closely at how to encourage their use for legitimate activities while curtailing their use for malign and illegal activities.

This would mirror existing rules requiring conventional banks to report when customers make cash withdrawals or deposits worth more than $10,000.

Even more controversial in the cryptocurrency world, FinCEN wants to impose new record-keeping requirements for transactions involving users who manage their own private keys—dubbed “unhosted wallets” by FinCEN. Under FinCEN’s proposal, if a cryptocurrency exchange’s customer sends more than $3,000 to an unhosted wallet, the exchange would be required to keep a record of the transaction, including the identity of the customer who initiated the payment.

These new rules didn’t take effect before Trump left office, so the incoming Biden team will need to decide what to do with them. The Biden administration could sign off on the existing rules, rewrite them, or scrap them altogether.

So instead of trying to force the networks themselves to comply, regulators in the US—and many other jurisdictions—have focused on regulating bitcoin exchanges that help users trade between dollars and cryptocurrencies. Once a bitcoin exchange identifies who initially received a particular bitcoin payment, law enforcement can often trace subsequent payments through a blockchain network’s open payment ledger.

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FinCEN

In December, Trump’s outgoing team at the Financial Crimes Enforcement Network—a unit of the Treasury Department focused on money laundering—proposed a new set of rules to tighten the screws on cryptocurrency-based money laundering.

Under the new rules, cryptocurrency-based exchanges would need to file transaction reports with FinCEN any time a customer made a cryptocurrency transaction worth more than $10,000.

One of the reasons the percentage dropped far more than the total transacted is said to be because of overall economic activity in cryptocurrency tripling in 2020.

“The good news is two-fold: cryptocurrency-related crime is falling and it still remains a small part of the overall cryptocurrency economy,” the report authors note.

The figures received were down across the board. Total funds received by “illicit entities” in 2020 dropped to below $5 billion are were dominated by two types of entities: scammers and darknet marketplaces. The latter was at its highest on record, while the percentage of money going to scammers dropped significantly in the year.

In a not-unexpected trend given the countless stories through 2020, ransomware saw the biggest increase in 2020, up 311% while darknet markets rose 29%.
General scams dropped 72% over the same period.

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I think many are used at least in a transaction sense mainly for illicit financing and I think we really need to examine ways in which we can curtail their use and make sure that anti-money laundering doesn’t occur through those channels. Yellen is yet to be confirmed as the new Secretary of the Treasury. However, Bloomberg reports that confirmation could come as early as Thursday.
If confirmed, Yellen would become the first woman to serve in such a capacity and will be replacing Steve Mnuchin.

Meanwhile, crypto-savvy Gary Gensler has been nominated to replace Elad Roisman as the new chairman of SEC.

Overall, Yellen’s rather myopic views on digital assets could pave the way for more stringent regulations in the U.S.

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