Oct 25, 2020
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US Government Agencies Propose Changes to Funds Transfer Rules-Seek to Broaden Definition of Money to Include Cryptocurrencies

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US Government Agencies Propose Changes to Funds Transfer Rules-Seek to Broaden Definition of Money to Include Cryptocurrencies

The U.S. Federal Reserve Board and Fincen are seeking feedback on their proposal to lower the threshold at which financial institutions must collect and retain information on funds transfers. In their joint notice on the rule change proposal, the two U.S. agencies want a new threshold for international transactions to be set at $250 down from the current $3,000. The rule for domestic transactions remains unchanged.

Agencies Want Cryptocurrencies Defined as Money

In a press statement, the two agencies are also seeking comments on the proposition to broaden the definition of money to include cryptocurrency-related transactions. Current rules only apply to funds transfer involving banks. The document explains:

The agencies are also proposing to clarify the meaning of money as used in these same rules to ensure that the rules apply to domestic and cross-border transactions involving convertible virtual currency (CVC).

While the agencies are acknowledging that cryptocurrencies lack legal tender status, in the rule change proposal they want these digital currencies treated as money since the so-called CVCs already act as “a medium of exchange that either has an equivalent value as currency or acts as a substitute for currency.”

According to the agencies, the proposed rule “make(s) it explicitly clear that both payment orders and transmittal orders include any instruction by the sender to transmit CVC or any digital asset having the legal tender status to a recipient.”

This means, if passed, the proposed rule would “supersede the present definition of money for purposes of the Recordkeeping and Travel Rules.”

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