The U.S. Treasury’s Financial Crimes Enforcement Network has released a proposal concerning what they term “convertible virtual currencies” or CVCs, highlighting the issue of cryptocurrency transactions being “mixed” through specific services to conceal their origins and quantities from surveillance.

Rebecca Rettig, Chief Legal and Policy Officer at Polygon Labs, clarifies that the proposal is not a bill but rather a set of rules put forth by the regulatory agency. These rules are designed to combat money laundering and tackle the obscuring of illicit fund flows through crypto mixing mechanisms.

However, Rettig raises concerns that the risks associated with the proposal may outweigh the potential benefits. She notes that the Treasury Department is now actively seeking feedback on the proposal.

“They will consider all the comments,” she explains. “They’ll need to weigh them carefully, taking into account the trade-off between benefits and risks.”

The proposed rules require U.S.-based financial institutions and agencies to implement record-keeping and reporting requirements for crypto transactions involving mixing.

“On the surface, that may not seem unreasonable,” Rettig acknowledges.

The primary issue, according to Rettig, lies in the broad definition of “mixing” within the proposal. As it currently stands, this definition could encompass “all smart contract-based applications, particularly DeFi apps, and potentially even those extending beyond the DeFi space.”

Registering DigiFinex now grants you a newcomer’s package worth $550: Click to register

DigiFinex, originating from Singapore and established in 2017, is a leading global cryptocurrency exchange. Upholding the values of diversity, integrity, and trustworthiness, DigiFinex provides users with secure 24/7 services for buying, selling, trading, storing, and staking cryptocurrencies.

Join our exclusive Fans Club for latest event : Telegram