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Key points to remember
- The CEO of Coinbase has expressed concerns over an upcoming US law planned by Treasury Secretary Steven Mnuchin.
- The new law would impose KYC checks for self-hosted wallets and smart contracts.
- The apprehension around regulation is putting negative pressure on Bitcoin and other cryptocurrencies.
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The CEO of Coinbase, Brian Armstrong, shared details of an alleged proposal by the US Department of the Treasury, whose experts thought “Could be an existential threat to Bitcoin.”
No more monitoring of Bitcoin users
The outgoing Trump administration plans to implement a mandatory KYC rule for self-hosted Bitcoin wallets.
Self-hosted wallets include open source crypto wallets such as Bitcoin Core and Metamask and extend to DeFi, hardware peripherals and paper wallets. Armstrong explained in the Twitter thread:
“This proposed settlement would, in our view, require financial institutions such as Coinbase to verify the recipient / owner of the self-hosted wallet, collecting credentials on that party before a withdrawal can be sent to that self-hosted wallet. -hosted. “
In June 2019, the Financial Action Task Force (FATF) released new guidelines for Virtual Asset Service Providers (VASPs), which require crypto companies to obtain users’ personal information before they can send and receive digital assets.
Compliance with KYC and AML rules on access ramps and Bitcoin exchanges is widely implemented in the industry. Governments have forced many crypto exchanges to do KYC mandatory for registration. Thus, have access to the transaction details of the exchange users.
However, self-hosted Bitcoin wallets that have remained anonymous make it difficult to enforce the latest travel rule. More, more 500,000 Bitcoins dropped out of trading this year, making it difficult for authorities to keep up.
Regulators are clearly demanding greater adherence to the FATF guidelines by requiring information on all crypto wallets, not just on platforms like Coinbase.
The Netherlands already have implemented a similar rule citing the previous one with their 1970 Sanctions Act.
Regulatory concerns suspend Bull Rull
Twitter crypto voiced strong concerns on the seriousness of the situation. If implemented, it would harm the privacy and prevent any degree of anonymity of a person’s Bitcoin wealth.
Angel investor, Balaji Srinivasan, called for resistance to the proposal. he said:
“The new anti-crypto regulation proposed by [Steven Mnuchin] is a form of deprivation of the right to vote financially. This harms people who have no identity, further expands the surveillance regime, and sets up more honeypots for hackers. It must be resisted vigorously. “
The movement is also considered the primary cause of the Bitcoin price drop this morning. However, Jeremy allaire, the co-founder of Circle, wrote:
“The market reaction to regulatory engagement around open access to blockchain is overblown – there are smart, cash-committed people who want to work with industry to address risk while preserving networks. open and innovation.
Bitcoin led the industry losses dropping 13.09% to a low of $ 16,320. He is currently changing hands to $ 16,884.21.
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