Regulation

Did Mnuchin Break DeFi?

Exploring FinCEN Proposed Rule on Non-Custodial Wallets
Ryan Sean Adams Ryan Sean Adams Dec 21, 20201 min read
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Did Mnuchin Break DeFi?

Dear Bankless Nation,

Did Steve Mnuchin just break DeFi?

Nah. He can’t break DeFi. But he can propose FinCEN enforced rules that make it harder for U.S. regulated institutions to build on bankless protocols.

And it seems he made his attempt last week as FinCEN released a proposed rule adding requirements for how exchanges and custodians must identify the owners of unhosted or self-hosted wallets before any crypto can be withdrawn.

This proposed regulation isn’t as bad as it could have been…but it’s not good either.

That’s why we hopped on with our favorite crypto lawyer Jake Chernvisky to help us understand the dynamics at play. Watch the full video here.

📺 Learn how the new FinCEN rule effects crypto in this new video with Jacke Chervinsky

This rule means more reporting requirements for U.S. exchanges or custodians. It means they’d need to collect the name and physical address of the owner of any ETH or BTC address for a withdrawals greater than $3,000.

A few more takeaways:

  • The rule is vague—we don’t know how it impacts withdrawals to DeFi protocols
  • The rule is yet another erosion of digital freedoms we enjoy in the analog world
  • The rule is more arduous on crypto than comparable rules for banks and ATMs
  • This rule comes directly from Steve Mnuchin and is being hastily pushed though
  • There’s a chance this rule is withdrawn if there’s backlash in public comment

(Seriously. Watch the video.)

The last point is important. The Bankless Nation can play a role in defeating this rule. Jake thinks we have a 51% chance. We’ll be publishing a tactic on how to publicly comment on this rule and attempt to reverse its course—stay tuned.

This is one battle of many in the months to come. Gear up.

Didn’t you know? You come to crypto for the money…but you stay for the revolution.

Happy holidays Bankless Nation. 🏴

- RSA & David

Ryan Sean Adams

Written by Ryan Sean Adams

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