The New Civil Liberties Alliance (NCLA), a US nonprofit civil rights group, has officially accused the US Treasury Department of infringing the rights of crypto holders who use private wallets to store their digital assets.
NCLA claims that the department is engaging in an “unconstitutional power grab” that may potentially lead to a “massive collection” of personal information of many people.
In late 2020, a bureau that operates inside the treasury, the Financial Crimes Enforcement Network (FinCEN) proposed a rule that would ask crypto exchanges to collect counterparty information from the transactions that are sent to “unhosted wallets” dubbed “Requirements for Certain Transactions Involving Convertible Virtual Currency or Digital Assets.”
Under this new rule, crypto exchanges would have to keep personal data on any transaction worth more than $3,000. For transactions that go over $10,000, the exchange would have to gather, store, and report it to FinCEN.
NCLA officially objected to the rule yesterday, claiming it “represents a radical extension of FinCEN’s financial surveillance of innocent Americans.” Yesterday, March 29th, was the last day on which the regulator could take public comments on its proposed rule.
The nonprofit also claims that this rule would widen the scope of the Bank Secrecy Act since it means that digital assets would now be part of the monetary instruments category of regulated currencies. NCLA also claims that the rule actually goes far beyond what is considered appropriate constitutional limits.
“FinCEN’s proposed rule unlawfully attempts to transform the agency’s limited authority to regulate banks into permission to engage in the mass financial surveillance of innocent individuals who merely use digital assets,” declared NCLA’s Litigation Counsel Caleb Kruckenberg.
“FinCEN ought to recognize that its proposal would be grossly unconstitutional and promptly scrap this rule,” added Kruckenberg. In case this doesn’t happen, the group will “file suit to protect Americans’ civil liberties.”