One of the biggest stories in crypto and in decentralized finance (DeFi) of the past few weeks is the potential regulation that may affect this space. A number of confirmed stories and rumors indicate that there is going to be an increase in the measures placed on cryptocurrency exchanges and stablecoin providers.
Brian Armstrong, CEO of Coinbase, for instance, recently said that he has heard the U.S. Treasury is looking to crack down on self-hosted crypto asset wallets.
“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.”
This regulation would 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 would basically disallow those without access to ID to operate in the crypto space, at least in many capacities.
There is also a push from U.S. representatives to ensure that stablecoin providers will need to abide by banking law. This would basically disallow stablecoin transactions from taking place between addresses that aren’t tied to an identity.
Some fear that this may be going too far, meaning that it will stifle innovation. In fact, an SEC Commissioner recently said in a speech on DeFi and crypto more broadly that this space and its users may be harmed by such regulation.
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SEC Commissioner On Crypto Regulation
In a speech earlier today, SEC Commissioner Hester Peirce said that the U.S. should learn to “embrace the personal liberty principles undergirding [crypto]” to foster innovation and to provide opportunities to the disenfranchised:
“As this technology gains adoption outside and now inside the legacy financial system, we should figure out a way to embrace the personal liberty principles undergirding it. If we were instead to steamroll the technology’s liberty-enhancing features under the weight of regulation, we would lose a lot of the power of the new technology to afford opportunities to people whose autonomy has previously been curbed by, for example, limited access to the traditional financial system, geographic location, social standing, or subjection to a repressive government.”
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Not Going to Ban This Thing: Comptroller of the Currency
This comes shortly after the Comptroller of the Currency, a U.S. Treasury official, said that he has no plans on banning Bitcoin, crypto, or any related technologies.
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Featured Image from Shutterstock Price tags: xbtusd, btcusd, btcusdt Charts from TradingView.com SEC's Hester Pierce on DeFi & Crypto: Regulation Will Harm Disenfranchised