U.S. regulators are discussing the “why” of a new proposal that has crypto fans concerned.

Speaking Monday at the V20 Virtual Asset Service Providers Summit, Carole House, cyber and emerging tech policy specialist at the Financial Crimes Enforcement Network (FinCEN), said criminals are conducting cross-border payments using smaller amounts of cryptocurrency – hence FinCEN’s proposed lowering of the “Travel Rule” threshold.

According to the rule change proposal submitted last month, FinCEN and the Federal Reserve would modify the thresholds at which banks must collect and store fund transfer information, reducing it from $3,000 to $250 for any transfers – in crypto or fiat – that go outside the U.S.

It’s part of a general broadening of terms, said House, adding that lowering reporting thresholds for international transactions will help law enforcement and other national security authorities.

Read more: US Moves to Cast a Wider Net for Catching Money Launderers, Crypto or Otherwise

“Criminals are using smaller value transfers and virtual currencies to facilitate terrorism financing, narcotics trafficking and other illicit activities, like cybercrime,” House told V20 delegates. “So we strongly urge you to provide FinCEN with your comments on the NPRM [Notice of Proposed Rulemaking] by Nov. 27.”

The Travel Rule aims to prevent money laundering by identifying the originator and beneficiary of a transaction when funds of over a certain amount are transferred. Applying this rule to the pseudonymous architecture of crypto is a challenge being worked through by the Financial Action Task Force (FATF) in collaboration with local regulators and the digital asset industry.

According to FinCEN’s analysis of 2,000 suspicious transaction reports (SARs) filed between 2016 and 2019, the mean and median dollar value was $509 and $255, respectively. Almost all the transactions began or ended outside the U.S.

In response to the NPRM, Washington, D.C.-based digital asset think tank Coin Center questioned the changes to the threshold for Travel Rule obligations in terms of a proper cost-benefit analysis being absent. Such analysis should take into consideration not just the direct cost to regulated entities but the cost to individuals and society, it said. 

There’s been considerable concern from small and mid-sized firms about the cost of compliance generally, and particularly when it comes to things like Travel Rule, which came up during the V20 Q&A.

Addressing the cost-of-compliance question, FATF Executive Secretary David Lewis told V20 delegates the cost of not complying was far greater. 

“If you want this industry to have a good reputation and to continue to operate out in the open, then it’s the central prerequisite ultimately,” Lewis said. “The cost of non-compliance will only ever have short-term benefits, you might say, and would be very short-sighted for companies that want to continue to operate in this space and don’t want to give their industry a bad name.”

Lewis pointed out that in about 20 countries there are some 1,130 VASPs (the FATF shorthand for businesses dealing in cryptocurrencies) already registered in compliance with FATF recommendations.

Aside from the rule change consultation, FinCEN’s House urged industry players to get in touch, even mentioning that the regulator’s door is open to innovators from the recent wave of decentralized finance (DeFi).

“We want to hear from the industry as we are examining all the different technologies and business models operating in this space, whether it’s decentralized exchanges or related applications,” said House, adding:

Read more: FinCEN Fines Bitcoin-Mixing CEO $60M in Landmark Crackdown on Helix, Coin Ninja

Given that much of DeFi involves interacting with a smart contract (rather than an identifiable entity, or at least at a remove from its creator), FATF was asked about its specific position on the $13.6 billion sector. To which, Sandra Garcia, co-chair of FATF’s virtual asset contact group, sounded a cautionary note.

“What we’re looking at when we sort of dissect a lot of these new innovations is that somewhere you do actually have some sort of central administrator or someone who holds the private keys that we think falls within the definitions of the FATF,” Garcia said.