Coinbase CEO: The Outgoing Trump Administration Likely to Take Regulatory Measures on Self-Hosted Crypto Wallet
On Wednesday, November 25, Coinbase CEO Brian Armstrong expressed concerns that the outgoing Trump administration could possibly push a rushed out regulation on self-hosted cryptocurrency wallets before ending the term in January 2021.
In a message to his followers on Twitter, Armstrong wrote: “Last week we heard rumors that the U.S. Treasury and Secretary Mnuchin were planning to rush out some new regulation regarding self-hosted crypto wallets before the end of his term. I'm concerned that this would have unintended side effects, and wanted to share those concerns”.
Self-hosted cryptocurrency wallets or the non-custodial wallets are software allowing individuals to stop their own cryptocurrency without relying on any third party financial institutions.
Armstrong explains the importance of self-hosted crypto wallets as they allow users to access the basic financial services. The cryptocurrencies are powerful tools of technology and innovation that comes with a promise of offering financial freedom to users.
Armstrong notes that proposed regulations could possibly require crypto financial institutions and exchanges to verify the owner of the self-hosted wallet thereby “collecting identifying information on that party, before a withdrawal could be sent to that self-hosted wallet”.
If the regulation comes into practice, it will be a broadside action against the U.S. cryptocurrency industry. It will force businesses and corporations to know every counterpart to the users’ crypto transactions while keeping a tab on their transactions, logs, tracking movements, and verified identities even before the transactions can take place.
Such regulations could have a widespread impact on all services using non-custodial wallets, DeFi smart contracts, paper storage wallet, hot wallets and cold storage wallets. All such wallets will have to disclose their origin and transaction history as per the new rule.
“Given these barriers, we're likely to see fewer transactions from crypto financial institutions to self-hosted wallets. This would effectively create a walled garden for crypto financial services in the U.S., cutting us off from innovation happening in the rest of the world,” Armstrong noted.
He further added: “This would be bad for America because it would force U.S. consumers to use foreign unregulated crypto companies to get access to these services. And long term, I believe this would put America's status as a financial hub at risk. If this crypto regulation comes out, it would be a terrible legacy and have long standing negative impacts for the U.S”.
Here’s the link to the complete thread.