Brian Armstrong, founder of one of the most successful crypto companies, has expressed serious concerns about how the US government wants to regulate the cryptocurrency industry.
America and its regulatory environment for cryptocurrencies is a long-term enemy. We have only recently written to you about the executive chairman of Ripple, who said that regulation by the SEC is forcing them to consider abandoning the United States. We also wrote to you about Binance, which began with the definitive blocking of U.S. users and today we have another response from the founder of the crypto exchange, Coinbase.
Brian Armstrong responded on his Twitter to rumors that the U.S. The Treasury and Secretary Steven Mnuchin plans to introduce several new regulations on self-hosted crypto wallets before the end of their term.
Brian wrote:
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
This sounds like a reasonable idea on the surface, but it is a bad idea in practice because it is often impractical to collect identifying information on a recipient in the cryptoeconomy. Let me explain why.
Brian thinks that many users send cryptocurrencies to smart contracts so that they can use DeFi applications. The smart contract is characterized by the fact that it does not have to be owned by any natural or legal person and therefore it cannot be identified.
CEO at Coinbase also add:
Many crypto users are sending crypto to various merchants online, paying for goods and services. Does it make sense to require customers to help verify the identity of a business before they can buy a product there?
Many crypto users are also sending crypto to people in emerging markets, where it is difficult or impossible to collect meaningful “know your customer” information. Some of these individuals are living in poverty, and may not have any permanent address or form of government ID.
B. Armstrong also thinks that a group of users who value their financial privacy is likely to refuse to upload multiple identification documents for various companies that may be compromised and stolen.
Brian added that it would be bad for America, as it would force many users to use foreign unregulated crypto companies and this could jeopardize America’s position as a financial hub at risk.
In conclusion, the CEO at Coinbase did not forgive a clear message:
If this crypto regulation comes out, it would be a terrible legacy and have long standing negative impacts for the U.S. In the early days of the internet there were people who called for it to be regulated like the phone companies. Thank goodness they didn’t.
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