1/ After a long wait, FinCEN has finally issued its new proposed rule extending AML regulation to non-custodial wallets.

It could've been worse (really), but it's still a terrible rule in both process & substance.

Here's what it says, what's wrong with it, & what we do next 👇

2/ The rule would impose new obligations on virtual asset service providers (VASPs) like exchanges & custodians.

For deposits & withdrawals > $3k involving a non-custodial wallet, VASPs would have to record the name & physical address of the wallet

3/ VASPs would also have to report any deposit or withdrawal > $10k to FinCEN in the form of a currency transaction report (CTR).

FinCEN says these requirements are necessary to "combat the financing of global terrorism," "address transnational money laundering...." You get it.

4/ Before now, the Travel Rule only imposed these record-keeping & reporting requirements on transactions from VASP-to-VASP.

Today's proposal follows a global trend of extending AML regulation to transactions from VASP-to-wallet, as we've seen from Switzerland, France, & others.

5/ Let's look on the bright side for a minute.

This doesn't require KYC for every transaction with a non-custodial wallet. It isn't an outright ban on self-custody. It doesn't prohibit the act of using a permissionless network.

It really -- REALLY -- could have been much worse.