The U.S. Treasury Department plans to track owners of self-hosted cryptocurrency wallets, Bitcoin price is affected by this?
Every time a market fluctuates, people ask why and find the cause. At press time, Bitcoin price is trading around $ 17,793, down more than 5% in the past 24 hours. The reason for this flash crash is information that the US Treasury Department is trying to track the owners of crypto wallets.
For those who don’t know – self-hosted crypto wallets (also known as non-custodial wallets or self-custody wallets) are a type of software that lets individuals store and use their own cryptocurrency, instead of needing to rely on a third party financial institution.
— Brian Armstrong (@brian_armstrong) November 25, 2020
Treasury Department’s rumored plans to track owner’s cryptocurrency wallets, Bitcoin price are affected?
According to Coinbase CEO Brian Armstrong, the outgoing Treasury Secretary Steven Mnuchin is preparing to modify one of the fundamental tenets of the crypto ethos: The individual’s ability to hold their crypto (unmolested) themselves.
If this rumor is true, the regulation will represent a broader facet against the US crypto industry as the federal government ever taxed a handful. It will force companies to know every counterpart to users’ crypto transactions, keep logs, track movements, and verify identities even before a transfer can be made.
And it would not just affect those who store their coins on a hardware device like Trezor or Ledger. Many crypto services use non-custodial wallets. Decentralized finance (DeFi) smart contracts. Software wallets, paper storage. All would need to prove their provenance to transact with Companies Registry under the rumored rule.
According to Armstrong, such a regulation would have a devastating and long-term negative impact on the United States:
“A regulation would be a terrible legacy and have long-standing negative impacts for the U.S. 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.”
So far, the regulation of decentralized cryptocurrency networks has been mostly limited. This situation leaves the industry virtually unregulated and private, providing a real alternative to traditional finance.
Armstrong’s tweets appear to have broken the industry’s longstanding fears of this kind of regulation for the full public view. In recent days, many crypto lobbyists and lobbying groups have held what appears to be a mildly influencing campaign to shape opinion about custodial wallets.
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