By Michael Scott
The US Treasury revealed plans to expand the financial surveillance to cash transactions of $200 beginning April 14. The surveillance targets money services businesses within the thirty zip codes in Texas and California, prompting concerns about whether it could apply to crypto.
The Treasury Department ramps up surveillance of transactions with a $200 limit processed by businesses within the US Southwest border. The tighter grip has attracted the attention of the crypto industry’s privacy advocates.
The question arises over whether this directive will apply beyond cash to allow the surveillance of crypto transactions. While Americans express concerns over financial privacy rights, it is uncertain if this applies to digital assets transactions on crypto exchanges, including Coinbase, Kraken, and Crypto.com.
Are Crypto Firms Excluded From $200 Threshold?
Coin Center Communications head Neeraj Agrawal indicates that crypto firms operate as licensed money services businesses. He considers the order to exclude crypto firms as it targets businesses with Western Union-type operations.
FinCEN issued the temporary order on Friday urging all money service entities within the 30 zip codes in Texas and California to report transactions that exceed $200.
The order lowers the reporting threshold from $10,000, though it still requires the report to conform with the same approach involving name, address, and social security number. Besides the amount, the type of money exchange, recipient, and transaction purpose should be revealed.
Treasury Secretary Scott Bessent indicated the new directive is set to affect over 1 million individuals as the regulator targets the risks posed by cartels, drug traffickers, and criminal actors operating along the Southwest border.
Fight Against Money Laundering
Bessent added that criminal actors who are laundering money utilize wire transfers and money orders. The Western Union-style businesses offer a crucial financial lifeline for the criminal actors.
The order seeks to terminate the conduit, allowing criminals to profit from the illegal activities. The actors orchestrate violence and corruption within the US-Mexico border communities. However, he considers that immigrants and the unbanked population utilize the services during remittances, settling debts, and household bills.
Nick Anthony from the Cato Institute submits that monitoring the transactions executed within the money services platforms will help thwart criminal activities within the border towns. The political analyst at the Libertarian think tank indicates potential to cause severe intrusions into everyday lives.
Casualty of $200 Threshold
Anthony argues that the directive will claim casualty, particularly folks within the lower end of the income levels. The analyst notes that they frequently utilize alternative financial services. Individuals who perceive a sense of financial privacy will discover the government can execute sweeping surveillance at a notice.
Anthony disclosed that though the crypto firms are excluded from the present order, the surveillance rules should warn them of potential scrutiny of the transactions. The digital asset holders and advocates for financial autonomy should worry that executing business from the watchful eye is impossible.
Anthony considers this to be a pretty harsh indication that the Fourth Amendment hardly works as individuals think. The temporary order could extend the scope to effectively encourage the reporting of transactions below the $200 threshold.
The order changes typical arrangements obligating the money services businesses to flag transactions structured into smaller units to avoid the reporting requirements. Anthony indicated that businesses suspecting $185 is sent to avoid the $200 threshold should flag and file such to the Treasury.
Anthony considers the order as opening up separate challenges where the $200 could turn the $0 threshold. The stringent surveillance rules could push the clients previously utilizing MoneyGram and Western Union to digital assets.
The announcement could push the affected individuals to several alternatives, such as cryptocurrency. The new threshold could prompt people to make decisions solely on what suits them and their needs since other options are not crushed.