[ad_1]
Brian Armstrong is concerned that the Trump administration is about to send a farewell gift to the cryptocurrency industry.
Coinbase CEO brought to Twitter Wednesday night to blow up US Treasury Department plans to attempt to track down owners of self-hosted cryptocurrency wallets with an onerous set of data collection requirements.
If the whispers are to be believed, outgoing Treasury Secretary Steven Mnuchin is preparing to crack down on one of the core tenets of the cryptocurrency ethos: the individual’s ability to keep their cryptocurrency (undisturbed).
“This proposed regulation, we think, would require financial institutions such as Coinbase to verify the recipient / owner of the self-hosted wallet, by collecting identifying information about that part, before a withdrawal can be sent to that self-hosted wallet,” he tweeted. Armstrong.
If true, the regulation would represent an advantage against the US cryptocurrency industry like few ever imposed by the federal government. It would force companies to know each counterparty to their users’ cryptographic transactions, keep records, track movements, and verify identities even before a transfer can take place.
It would also bring to an end the worst-case scenario envisioned by industry players when the Financial Action Task Force (FATF), an intergovernmental body, told its member countries to apply the so-called travel rule to cryptocurrencies last year. This long-standing rule requires financial institutions to collect information about the sender and recipient of a money transfer. But it was ambiguous what it would mean when someone sent bitcoin, for example, from their Coinbase account to an address controlled by a private key on a sheet of paper kept in a sock drawer.
The Treasury Department did not immediately respond to a request for comment.
And it wouldn’t just interest those who store their coins on a hardware device like Trezor or Ledger. Many cryptographic services use unsecured wallets. Smart decentralized finance contracts (DeFi). Software wallets, paper storage. Everyone would need to prove their provenance to transact with regulated entities under the rule.
Such a broad interpretation of the FATF guide has already been applied in Switzerland and the Netherlands. There, virtual asset service providers (VASPs) must prove ownership of the unsecured crypto wallets prior to the transfer.
Armstrong said Wednesday that such a settlement “would be a terrible legacy and would have long-standing negative impacts for the United States.”
“This additional friction would kill many of the emerging use cases for cryptography. Crypto isn’t just money – it’s digitizing all kinds of assets,” he said.
Armstrong’s tweets seemed to break the industry’s long-boiling fears of this type of regulation in full public view.
In recent days, more lobbyists and cryptocurrency advocacy groups have staged what in hindsight appears to have been a soft influence campaign to shape public opinion of unsecured wallets.
On November 18, Coin Center published an article on the “unintended consequences” of restrictions on unhosted wallets.
“The Blockchain Association has long been aware that some regulators in the US and abroad have concerns about self-hosted wallets,” executive director Kristin Smith told CoinDesk. “We are actively educating officials on both the executive and legislative branches to address misconceptions about self-hosted portfolios.”
[ad_2]Source link
