Twitter and Square CEO Jack Dorsey has come out in opposition to regulation on Bitcoin, noting that the proposed legislation could hurt Square as well as crypto customers.
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The regulation, put forth by the Financial Crimes Enforcement Network (FinCEN), would require financial institutions, such as Square, to “collect names and physical addresses from non-customers” for cryptocurrency transactions over $3,000, which Dorsey wrote in a letter would create “unnecessary friction and perverse incentives for cryptocurrency customers to avoid regulated entities for cryptocurrency transactions.”
“By adding hurdles that push more transactions away from regulated entities like Square into non-custodial wallets and foreign jurisdictions, FinCEN will actually have less visibility into the universe of cryptocurrency transactions than it has today,” Dorsey added in his letter to regulators.
In October, Square, which has seen its market cap soar during the coronavirus pandemic, purchased 4,709 bitcoins, worth $50 million at the time. At current prices, the bitcoins would be worth almost $150 million.
Square also benefits from the rise of bitcoin due to customers buying and selling the cryptocurrency via its Cash App, consistently ranked as one of the top 20 apps on the Apple App Store.
The regulation is designed to prevent the illegal use of cryptocurrency transactions, including drug deals and terrorism, but Dorsey provides an example of a mother sending a daughter $4,000 worth of bitcoin that could also be hindered.
“For example, under this Proposal — if a Square customer’s mother gifts her daughter $4,000 in physical cash and the daughter deposits those funds in a bank, the bank would have no obligation to collect information on the customer’s mother,” Dorsey explained. “Under the proposal, if this same transaction were completed in cryptocurrency, the bank would have to reach beyond its customer relationship and intrude upon the mother’s private information in order for the daughter to successfully deposit and freely access her gift.”
Dorsey, whose net worth is above $12 billion, added that the regulations would also hurt law enforcement capabilities, as well as innovation.
“This proposal, especially given the lack of proper time for meaningful review, falls short,” Dorsey wrote. “Ultimately this will not only harm the economic empowerment of individuals and payments innovation more broadly but also diminish FinCEN’s fundamental responsibility to protect the financial system — a goal which we strongly share.”