If Cash Was Regulated the Way Crypto is Proposed to Be

3 min readDec 22, 2020


Author’s note: The U.S. Treasury Dept. has proposed new rules that would force law abiding citizens to disclose where they store their own digital currency. Surveillance would be enforced at the point of withdrawal from exchanges. These rules would hurt jobs, hurt progress and make everyone less secure. If the same requirements were applied to cash, it would look something like this:

FinCEN Proposes New KYC Rules for Wallets in People’s Pockets

(Reuters) The U.S. Financial Crimes Enforcement Network (FinCEN) has released a proposed rule that would require banks and payment providers to ask for and store detailed records of what people plan to do with their own money once they withdraw it from a bank.

The rule calls for enhanced know-your-customer (KYC) requirements for withdrawals to so-called “unhosted wallets” — defined as “any place anyone can store physical bills and coins.”

FinCEN does not explicitly define “unhosted wallet”, but experts interviewed by Reuters stated that the proposed rules would apply to leather wallets, purses, money clips, duffle bags, metal safes and children’s piggy banks. It was unclear whether brassieres, which can be used by women to store cash in a pinch, would also have to be reported.

Typical example of an unhosted wallet

The rules require financial companies to ask customers intrusive questions about where they plan to store the cash being withdrawn from a branch or ATM machine. A sample compliance form obtained by Reuters included options such as “in my left sock” and “in a bundle kept together by a rubber band.” The form has an entire section dedicated to different pockets of traditional trousers, but makes no reference to cargo pockets, leading some to wonder whether middle-aged white men would be exempt.

Consumer advocates pointed out how despite the overwhelming evidence that 99% of cash usage was innocuous, the government would treat every trip to an ATM machine as suspicious behavior. When asked about this bias, a FinCEN spokesperson replied that an Arab national was recently observed handing a twenty dollar bill to his cousin, so they had to be vigilant in the interest of national security. The government knows most people aren’t criminals, but considers it reasonable to treat them as if they were. “We’ve all seen Breaking Bad”, the spokesperson added.

The proposed rule also requires banks to transmit all of the accumulated information on where people keep their cash to a central database. When asked if this was a good idea in light of the fact that the US Treasury has just been hacked, a source within the department disclosed that staffers had been ordered to no longer use ‘password123’ as their password.

Civil Liberties experts complained about the disproportionate impact this rule would have on ordinary Americans, the poor, minority groups, migrants, the elderly, and anyone else who still relies on cash. Banks and traditional financial services firms on the other hand could benefit, as there would be a new barrier to people withdrawing money.

Asked about the potential long term impact of the law, outgoing Treasury Secretary Mnuchin replied that it was purely coincidental that his once and future employers on Wall Street may be the ultimate beneficiaries.