SUPPLEMENTARY INFORMATION:

On December 23, 2020, FinCEN published an NPRM that proposed adopting recordkeeping, verification, and reporting requirements for certain deposits, withdrawals, exchanges, or other payments or transfers of CVC or LTDA by, through, or to a bank or MSB that involve an unhosted or otherwise covered wallet.^[1] Under the proposal, the term “unhosted wallet” described “when a financial institution is not required to conduct transactions from the wallet.” ^[2] FinCEN proposed defining otherwise covered wallets as those wallets that are held at a financial institution that is not subject to the Bank Secrecy Act and is located in a foreign jurisdiction identified by FinCEN.^[3] The NPRM proposed requiring banks and MSBs to file a report with FinCEN containing certain information related to a customer's CVC or LTDA transaction and counterparty, and to verify the identity of their customer, if a counterparty to the transaction is using an unhosted or ( printed page 63515) otherwise covered wallet and the transaction is greater than $10,000, or multiple transactions that aggregate to greater than $10,000 in 24 hours. The NPRM also proposed requiring banks and MSBs to keep records of a customer's CVC or LTDA transaction and counterparty, including verifying the identity of their customer, if a counterparty is using an unhosted or otherwise covered wallet and the transaction is greater than $3,000.

As stated in the report issued by the President's Working Group on Digital Asset Markets established by Executive Order 14178, “Strengthening American Leadership in Digital Financial Technology,” FinCEN is withdrawing the NPRM as part of the Trump Administration's ongoing efforts to ensure digital asset regulations are fit-for-purpose.^[4] FinCEN will take no further action on this NPRM.

91 FR 63514