Biden presses pause on FinCEN’s disastrous cryptocurrency regulation, but new threats loom

Digital rights group Fight for the Future warns that President Joe Biden’s hand-picked Secretary of the Treasury has baselessly tied cryptocurrency use to money laundering and terrorism

FOR IMMEDIATE RELEASE: January 20th, 2021

As one of his first acts as President of the United States, Joe Biden issued a freeze on all Federal regulatory processes for up to 60 days in order to allow members of his administration to review and approve all proposals from the previous administration. Unless the Director of the Office of Management and budget makes an exception, FinCEN’s recent proposal to allow warrantless surveillance on cryptocurrency transactions will be included in this freeze. 

While this seems like a big win for cryptocurrency users and privacy advocates everywhere, the Biden administration may yet prove to be just as hostile to cryptocurrencies as the Trump administration. In fact, Biden’s nominee for Secretary of the Treasury Janet Yellen just this week urged lawmakers to “curtail” the use of Bitcoin due to completely false claims that cryptocurrencies are “mainly” used for money laundering and terrorism.

“In his first speech as President, Joe Biden promised to defend the truth and defeat the lies,” said Dayton Young, Product Director at Fight for the Future, (pronouns he/him). “So why is his hand-picked Treasury Secretary spreading dangerous lies about cryptocurrency? Studies have shown that illegal activity accounts for just one third of one percent of all cryptocurrency transactions … far below the amount of fiat currency used for criminal purposes. When Janet Yellen decides to get serious about stopping money laundering, she should focus her attention on JP Morgan, HSBC, and every other big bank implicated in the FinCEN files that were leaked last year instead of unfairly targeting cryptocurrencies.”

The UN estimates that somewhere between 2% and 5% of global GDP is connected to money laundering and other illegal activities each year. And FinCEN’s own files show that much of this criminal behavior is facilitated by big banks using fiat currency. In contrast, data from Chainalysis shows that 0.34% of cryptocurrency transactions are associated with criminal activity, and that only a small fraction of all the Bitcoin ever mined is even used for transactions at all.

“Decentralized technology has the potential to create a more equitable future by taking power away from powerful gatekeepers and putting it in the hands of ordinary people,” continued Young. “Systems built on blockchains can help bring financial independence to those who are struggling to compete in corrupt economies, and provide freedom of expression to marginalized people everywhere. As Secretary of the Treasury, Janet Yellen will have enormous control over the future of this revolutionary technology. It would be irresponsible for her to implement any new regulation until she understands the facts of the matter. We urge her to reject any efforts to increase financial surveillance and instead pursue policies that protect our privacy, promote equality, and encourage innovation.”

While no decision will be made on the Trump Administration’s proposal for invasive cryptocurrency regulation until after Janet Yellen is confirmed as Secretary of the Treasury, FinCEN is still actively accepting comments. Fight for the Future is urging everyone to visit StopFinancialSurveillance.org to learn more about this dangerous proposal and file an official comment with FinCEN.