26+ Bitcoin Companies Sign a Letter to FinCEN Against Proposed Surveillance Rules

26 bitcoin companies signed a legal response to the U.S. Department of the Treasury and FinCEN’s proposed rules that would seriously harm privacy by effectively prohibiting basic bitcoin best practices such as not reusing addresses and collaborative bitcoin transactions.

26+ Bitcoin Companies Sign a Letter to FinCEN Against Proposed Surveillance Rules
  • "The Proposed Special Measures would unreasonably infringe upon the legitimate financial privacy interests of cryptocurrency users, and would apply to a variety of digital techniques that are not mixing transactions at all, but rather simply represent good cybersecurity practices," was stated in the letter.
  • "Moreover, the Proposed Special Measures are unnecessary to achieve FinCEN's aim, and we encourage FinCEN to either withdraw the Mixing Transaction NPRM altogether or to pursue a less invasive, less restrictive, and more effective approach—the same approach it has used since its first enforcement activities in the cryptocurrency space in 2013—to enforcement against specific bad actors."

The letter then proceeds to outline 6 key points:

  1. FinCEN should exercise caution and either withdraw entirely or narrowly tailor the Mixing Transaction NPRM because if adopted, the Mixing Transaction NPRM would not only represent the first time FinCEN used its Section 311 powers against a class of transactions, but also the first time FinCEN has ever imposed Special Measure 1.
  2. The Mixing Transaction NPRM proposes a rule that is an improper and overbroad application of Section 311 measures to achieve transaction surveillance and suppression that FinCEN does not otherwise have a lawful basis to undertake.
  3. The Mixing Transaction NPRM should be withdrawn because the proposed definition of "CVC mixing" is overbroad and targets lawful activity in a way that makes the agency's proposed action arbitrary and capricious.
  4. The Mixing Transaction NPRM should be withdrawn because its inaccurate depiction of standard security practices as "mixing" impermissibly restricts the capacity of users to protect their property so that FinCEN can conduct a fishing expedition.
  5. The Mixing Transaction NPRM should be withdrawn or significantly narrowed in scope because FinCEN's required statutory analysis fails to adequately value the legitimate uses of CVC mixing services and unduly burdens legitimate users and financial institutions.
  6. The Mixing Transaction NPRM should be withdrawn because it requires covered financial institutions to perform law enforcement's function to accomplish FinCEN's AML goals, which FinCEN, DOJ, and law enforcement can achieve using existing tools when they have a proper legal basis to employ those tools.

Other bitcoin advocacy groups and companies have also shared their comments recently:

  • Coin Center said that the proposal is 'unprecedented and exceedingly broad,' as well as 'beyond the statutory authority' of FinCEN. Per Coin Center, it constitutes 'an unconstitutional deprivation without due process.'
  • Bitcoin Policy Institute called for a 'sensible balance that promotes economic competitiveness and protects individual freedoms, ensuring that the U.S. remains a leader in digital asset innovation."
  • Coinbase said that 'CVC Mixing is an important privacy and security tool with many legitimate purposes, while illicit uses are the exception and would not even be captured by the NPRM.'

Full Letter / Archive
CoinCenter's Letter / Archive
BPI Post / Archive
Coinbase's Letter / Archive