The central theses
- The Coinbase CEO expressed concern about an upcoming U.S. law envisaged by Treasury Secretary Steven Mnuchin.
- The new law would mandate KYC checks for self-hosted wallets and smart contracts.
- Concerns about the regulations are putting negative pressure on Bitcoin and other cryptocurrencies.
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The CEO of Coinbase, Brian Armstrong, shared details an alleged proposal by the US Treasury Department, the experts think “Could be an existential threat to Bitcoin.”
More monitoring of Bitcoin users
The outbound Trump administration plans to implement a mandatory KYC rule for self-hosted Bitcoin wallets.
Self-hosted wallets include open source crypto wallets like Bitcoin Core and Metamask and extend to DeFi, Hardware devices and paper wallets. Armstrong explained on the Twitter thread:
“This proposed regulation would, in our opinion, require financial institutions like Coinbase to verify the recipient / owner of the self-hosted wallet and collect identifying information about that party before sending a withdrawal to that self-hosted wallet.”
In June 2019 the Financial Action Task Force (FATF) have issued new guidelines for Virtual Asset Service Providers (VASPs) that require crypto companies to obtain users’ personal information before they can send and receive digital assets.
Adherence to the KYC and AML rules for Bitcoin ramps and exchanges is widespread across the industry. Governments have forced many crypto exchanges KYC mandatory for the registration. This gives you access to the transaction details of Exchange users.
However, self-hosted Bitcoin wallets that have remained anonymous make enforcing the latest travel rule difficult. In addition, over 500,000 bitcoin stopped the exchange this year, which makes it difficult for the authorities to keep track of things.
Regulators are clearly calling for greater compliance with FATF guidelines by requiring information on all crypto wallets, not just platforms like Coinbase.
The Netherlands already have implemented a similar rule citing the primacy of their 1970 Sanctions Act.
Regulatory concerns are pausing Bull Rull
Expressed in crypto Twitter strong concerns about the seriousness of the situation. Implementation would compromise privacy and prevent some level of anonymity from a person’s Bitcoin assets.
Angel investor, Balaji Srinivasancalled for opposition to the proposal. He said::
“The proposed new anti-crypto regulation by [Steven Mnuchin] is a form of financial disenfranchisement. It harms people who don’t have ID, further expands the surveillance regime, and sets up more honeypots for hackers. It must be vigorously resisted. “
The move is also seen as that Main cause Bitcoin price drop this morning. Yet, Jeremy Allaire, the co-founder of circle, wrote:
“The market’s reaction to regulatory engagement in the area of open blockchain access is exaggerated. There are bright, dedicated people in the Treasury who want to work with the industry to mitigate risk while maintaining open networks and innovation.”
Bitcoin led the industry’s losses, falling 13.09% to lows of $ 16,320. It is currently changing hands $ 16,884.21.
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