Coinbase urges the U.S. Treasury to reconsider the reporting requirement for "bulk data" in the proposed cryptocurrency mixing rules

ChainCatcher news, according to The Block, Coinbase stated in comments submitted to the Financial Crimes Enforcement Network (FinCEN) on Monday that the U.S. Treasury's proposed rulemaking on cryptocurrency mixing fails to adequately address regulatory gaps while requiring crypto platforms to provide unnecessary data and resources. Coinbase stated that regulated crypto platforms are already obligated to record and report suspicious activities and illegal crypto mixing rules, but requiring crypto platforms to report all cryptocurrency mixing activities, including those with legitimate purposes, is not an effective use of company resources. The document also questioned the lack of a monetary threshold for record-keeping and reporting. Coinbase's Chief Legal Officer Paul Grewal wrote in an X post that the absence of a monetary threshold "will only lead to a large number of reports of non-suspicious transactions." Grewal stated, "Congress has indicated that this data dump is a waste of time and resources."

Grewal stated in an X post, "If the Treasury wants to focus on this issue, they should help exchanges fulfill their existing obligations to report suspicious activities involving mixing. This is what the Treasury has done elsewhere, and specific guidance is more effective than mandatory bulk reporting rules." In light of these issues, Coinbase suggested that FinCEN should introduce a threshold to eliminate bulk reporting of small transactions. Coinbase also recommended that only record-keeping should be required, rather than reporting, to mitigate privacy and security risks.

Coinbase's comments are a response to FinCEN's proposed rulemaking aimed at increasing the transparency of cryptocurrency mixing activities, which was introduced last October. Many illicit actors, such as North Korean hackers and Russian ransomware attackers, use crypto mixers for money laundering activities. While FinCEN stated in its proposal that such mixers may facilitate money laundering, it acknowledged that cryptocurrency mixing can be used for "legitimate and innovative purposes."