Coinbase CEO: Trump Administration May Rush Out Burdensome Crypto Wallet Rules

Thursday 26 November 2020, 12:23 PM AEST - 1 month ago

mnuchin_armstrong3U.S. Treasury Secretary Steven Mnuchin, left, could be "planning to rush out some new regulation regarding self-hosted crypto wallets before the end of his term," tweeted Coinbase CEO Brian Armstrong.

Brian Armstrong is worried the Trump Administration is about to send the cryptocurrency industry a parting gift.

The Coinbase CEO took to Twitter Wednesday night to blast the U.S. Treasury Departments rumored plans to attempt to track 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 tamp down on one of the fundamental tenets of the cryptocurrency ethos: the ability of the individual to hold their crypto (unmolested) themselves.

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, Armstrong tweeted.

If true, the regulation would represent a broadside against the U.S. cryptocurrency industry like few ever levied by the federal government. It would force corporations to know every counterparty to their users crypto transactions, keeping logs, tracking movements, and verifying identities even before a transfer could take place.

It would also bring to pass 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 crypto businesses last year. This long-standing rule requires financial institutions to collect information about the sender and receiver of a money transfer. But it was ambiguous what that would mean when someone sends bitcoin (BTC, -1.98%) from, say, 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 would not just affect those who store their coins on a hardware device ...

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