Circle EU Policy Leader: An obvious regulatory principle should be a standard non-negotiable practice

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An obvious regulatory principle that should be standard non-negotiable practice, but unfortunately is not, is that regulatory thresholds and limits, whether for AML, taxes, or other purposes, are inflation-adjusted.

Otherwise, simply through inflation, these regulatory thresholds are effectively lowered every year, without any democratic decision-making process or legislation passed.

As one example, the 1970 Bank Secrecy Act requires banks to file reports with the government if a customer’s daily transactions exceed $10k. In 1970, when the law passed, the median American annual income was less than $10k.

If that threshold were adjusted for inflation, it would cover transactions worth well over $80,000 today. Instead, it is still $10,000. Through the back door of inflation, these thresholds are lowered virtually every year.

The same goes for the FATF travel rule or currently discussed limits for crypto merchant payments in the EU. Whatever you think of these measures in the first place, it should be absolutely common sense and consensus among all that introducing them without inflation-adjustment is wrong.