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Coinbase CEO Brian Armstrong also explained the reverse effects of the rumored regulation.
The CEO of digital currency exchange platform Coinbase Brian Armstrong expressed his opinion on the rumors that the US Treasury may implement unfavorable regulation on the crypto industry. Armstrong highlighted the details of the rumored regulation in a Twitter thread.
Already, the CEO said Coinbase, along with other crypto companies and investors, have contacted the US Treasury regarding the matter.
On the 25th of November, Armstrong shared his concerns on the proposed regulation.
Self-hosted crypto wallets are important, because they allow anyone to use this new technology to access basic financial services – just like anyone can use a computer or smartphone to access the open internet.
— Brian Armstrong (@brian_armstrong) November 25, 2020
He noted that the new regulation may affect non-custodial wallets which allow crypto holders to store and use their digital assets without relying on a third party. If the rumors are true, the CEO said financial institutions will begin to verify the owner of a self custodial wallet. After then, the institution would need to gather information on the individual. The institution will only approve and send withdrawals after verifying identity of the owner of the self-custodial wallet.
Although the new process appears proper and secured, Armstrong said it is a bad idea practically. He said it is mostly “impractical” for financial institutions, like Coinbase, to garner information on recipient identity in the crypto economy. Stating that several crypto users pay for good and services online using digital currencies, he asked:
“Does it make sense to require customers to help verify the identity of a business before they can buy a product there?”
The CEO highlighted other reasons that make the rumors regulation impractical. He said that some crypto users may not even own any government-issued identification cards or permanent addresses. Hence, it would be difficult to verify their identities.
In addition, he said the new regulation may be intruding on people’s financial privacy. He said the rule may be unfavorable to crypto holders who are limiting the information they disclose on their companies.
Coinbase CEO Explained Possible Effects of US Treasury Rumored Regulation
In his Twitter thread, Brian Armstrong also explained the reverse effects of the rumored regulation, if true. He said if the US Treasury passes the rule, it may result in a reduced number of transactions from crypto financial institutions to self-custodial wallets. Armstrong warned:
“This would be bad for America because it would force U.S. customers 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.”
He added that the rumored crypto regulation would be a terrible legacy with long-lasting adverse effects on the US.