U.S. crypto-asset users hoping to transfer their holdings from an exchange to their own personal (“unhosted”) wallets may need to comply with new know-your-customer (KYC) requirements under a rule proposed by the U.S. Treasury. Under it, when such transactions exceed $3,000 the exchange would be required to collect and keep records of the customer’s detailed personal information. Also, exchanges would be required to report either individual or groups of transactions that add up to more than $10,000 during a day to the Financial Crimes Enforcement Network (FinCEN). The Treasury has given stakeholders 15 days to respond with comments.
According to the accompanying FAQ the proposed rules are similar to existing FinCEN Currency Transaction Report (CTR) rules that require the establishment of recordkeeping requirements for wire transfers over $3,000 and reporting of cash withdraws over $10,000.
As Bitcoin rocketed above $23,000 for the first time this week, the mania pushed the price of the Bitwise 10 Crypto Index Fund as much as 650% above the value of its holdings and is currently trading near 350%, according to data compiled by Bloomberg. Meanwhile, the premium on the Grayscale Bitcoin Trust swelled to 34% amid the rally. For those investors looking for access to Bitcoin but who are reluctant or unsure how to get direct exposure, the ease of buying products like BITW or GBTC through a brokerage platform trumps the extra cost.
Bitfinex now allows its customers to borrow Bitcoin (BTC) collateralized by three major fiat currencies (USD, EUR and JPY) and Tether (USDT). They will also be able to borrow Ethereum (ETH) against USD the borrower holds on the platform. Customers will be able to obtain BTC loans of up to 80% of the value of their USD, USDT or EUR holdings, or up to 70% of the value of their JPY holdings. Customers using the platform to borrow ETH will be able to get up to 80% of the value of their USD holdings. At launch, the annual percentage rate on BTC loans was 4.16%, and 1.14% on ETH loans. And speaking of Bitfinex…
Tether follows the I.O.U. model, where virtual coins are supposed to represent actual money and be redeemable at any time. It all sounds well and good, but for one thing: There is no evidence to suggest Tether is fully backed. More troubling, the issuance of tethers correlates with the rapid run up in price of bitcoin from April to December 2017 when bitcoin peaked at nearly $20,000. If authorities were to step in and freeze the bank accounts underlying tether, it is hard to guess what impact that could have on crypto markets at large. See Amy Castor’s timeline of events that reveals a full picture of the controversy surrounding Tether and Bitfinex.