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Coinbase CEO fears rumored crypto wallet rule can affect US crypto-economy

Coinbase CEO fears rumored crypto wallet rule can affect US crypto-economy
TL:DR Breakdown

The Trump administration is allegedly planning to introduce a new regulation for self-custody wallets. If true, Coinbase CEO said it would affect innovations in the US crypto-economy.

Earlier today, Coinbase CEO Brian Armstrong informed about rumors which surfaced last week, saying the outgoing Trump administration is planning to enforce a new regulation that will require some kind of know-your-customer (KYC) for self-hosted crypto wallets . Armstrong spelled out his thoughts about this, noting that such regulation can have a side effect on the United States crypto-economy if actually, the rumored information was true. 

Coinbase CEO blasts concerns over crypto wallet rule

As Armstrong explained, the US Treasury Department, together with Secretary Mnuchin, is planning to introduce a new regulation over self-hosted crypto wallets, according to a rumor. The wallet in question is basically any self-custody or non-custodial wallets. Using such wallets grants digital currency users the freedom of handling and storing their crypto-assets, rather than relying on third-party companies to manage them.

Self-hosted crypto wallets are important, because they allow anyone to use this new technology to access basic financial services – just like anyone can use a computer or smartphone to access the open internet. — Brian Armstrong (@brian_armstrong) November 25, 2020

The rumored regulation would require these wallet users to verify their information even before a transaction can be executed, according to Coinbase CEO. 

“This proposed regulation would, we think, require financial institutions like Coinbase to verify the recipient/owner of the self-hosted wallet, collecting identifying information on that party before a withdrawal could be sent to that self-hosted wallet,” he explained.

How this affects the crypto-economy

“Openness,” according to Armstrong, is one of the factors driving innovations and growth of the cryptocurrency industry. On its own, the rumored regulation sounds like a reasonable thing to do. However, it isn’t worth practicing, as collecting KYC-like information from the wallet users in the crypto-economy is often impractical, says Coinbase CEO. Such a regulation would possibly hamper the ability of crypto users to freely hold, store, and transact their crypto-assets.

Consequently, many Americans might shift to dealing with unregulated companies in other countries due to privacy concerns. More so, such regulation can cause great friction to the volume of transactions in the US crypto-economy, Armstrong said, adding that:

“This additional friction would kill many of the emerging use cases for crypto. Crypto is not just money – it is digitizing every type of asset.” shares this Contents always with License.

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