news A US gift for Xmas 2020 - another cryptocurrency regulation

[kyoukage01 3181]

Spoiler

Congratulations, the US got you cryptocurrency regulation for Christmas

A proposed rule change targets private wallets

Elizabeth Lopatto

 

Under new proposed regulations from the Financial Crimes Enforcement Network, it may become much easier for the government to track bitcoin transactions. And while there’s currently a 15-day comment period open, cryptocurrency exchange Coinbase and the Electronic Frontier Foundation are calling foul because that period includes Christmas Eve, Christmas Day, New Year’s Eve, and New Year’s Day.

 

The proposed regulations in question, which were filed at 4:20PM ET on December 18th, are about private wallets. Let’s say I am a famous and fancy cryptocurrency investor, and I do some trading on Coinbase. If I have my own private wallet that I want to transfer my money to, I will have to identify myself as the wallet’s owner if I’m sending more than $3,000 in a transaction. And if I want to do business with someone else who has a private wallet, I need to tell the exchange some pretty detailed personal information. The exchanges are then required to store records of all this and turn them over on request.

 

Also under the proposed regulation, an exchange would be required to report my personal information if I make a total of more than $10,000 in transactions in one day. You can see why Coinbase — or any other exchange — would see this new know-your-customer requirement, at minimum, as a complete pain in the ass.

 

It’s also the most ironic development in cryptocurrency’s ironic history; born from a weird group of the libertarians, anarchists, and utopians, cryptocurrency promised to be a way to transact absolutely privately, in a trustless system. Bitcoin, the world’s biggest cryptocurrency, arose just after the 2008 financial crisis as an alternative to banks — but these new regulations will make cryptocurrency exchanges act a lot more like banks. Taken in concert with another rule change about international transactions, it may signal that cryptocurrency’s wild years are over — and anonymity will be harder to find.

 

Cryptocurrency exchanges make it easy to move from dollars (or whatever) into a cryptocurrency and vice versa. That also means that they make cryptocurrency accessible to more people. The current FinCEN proposal makes more work for these exchanges and for the people operating within them as well as undermining the anonymity for which cryptocurrency is famous. Taken in combination with another recent proposed rule change about how to report cryptocurrency that crosses borders, you can see why some cryptocurrency enthusiasts are nervous.

 

There are some concrete consequences to this, the EFF points out. First, it makes anonymity more difficult in a transaction between a private wallet and one hosted by an exchange service. Second, the proposed legislation also makes it less appealing to have a private wallet.

 

But the third problem is the real kick in the ass: some cryptocurrencies, including bitcoin, record all transactions publicly. That means if I am trading bitcoin into my private wallet from an exchange, I have to send a bunch of identifying information about that wallet, which is then potentially available to the US government. Because as soon as you know a specific wallet address is mine, you know every bitcoin transaction I have ever made with that wallet. This means “that the government may have access to a massive amount of data beyond just what the regulation purports to cover,” the EFF writes.

 

So bitcoin, a cryptocurrency created to ensure anonymity, would ensure exactly the opposite under these rules. Though, I suppose, with a little creativity, it’s possible to get around them; you simply create a wallet for the know-your-customer rules, then transfer your money from there into a second private wallet.

 

Yesterday, Coinbase’s chief legal counsel, Paul Grewal, issued a response to FinCEN, complaining about the 15 day period for comments on this rule change: “FinCEN asked the public to provide comments in just 15 days, spanning Christmas Eve, Christmas Day, New Year’s Eve, and New Year’s Day, in the middle of a global pandemic — leaving just a handful of actual working days for comments.”

 

Coinbase is asking for a 60 day review period — which is the norm. The shorter review period of just 15 days is because the Treasury Department says “significant national security imperatives” mean this has to move faster. It’s true that some cryptocurrency transactions are criminal — The Silk Road was a significant part of bitcoin’s history, after all. The proposed rule says that cryptocurrencies “facilitate international terrorist financing, weapons proliferation, sanctions evasion, and transnational money laundering,” among its laundry list of potential criminality.

 

But it’s hard to know how serious that is, since 60 days from now, cryptocurrency exchanges would be dealing with the Biden administration rather than the outgoing Trump administration. “There is no emergency here; there is only an outgoing administration attempting to bypass the required consultation with the public to finalize a rushed rule before their time in office is done,” Grewal wrote.

 

Regardless of the 15-day or 60-day period, it does seem like the Treasury Department is attempting to send a message to any would-be cypherpunks: you can’t beat the existing financial world — you can only join it.

source: https://www.theverge.com/2020/12/22/22195834/cryptocurrency-fincen-regulations-private-wallets

 

The cryptocurrency world has survived quite a lot over the years despite major setbacks: natural, man-made, or othewise. But it looks like the US government isn't finished yet. They have introduced yet another proposed regulation against crypto, and they picked the perfect timing for it: the Yuletide season.

 

The regulation in question has something to do about your cryptocurrency wallets. Basically, it means that if you happen to send a large amount of money via crypto exchanges, you will be asked for KYC requirements, and here's the kicker: the US government can ask those exchanges to hand over your information.

 

US-based exchanges naturally filed a complaint on this, especially given that counterarguments to the proposal may be limited due to the long holidays. I don't know about the other exchanges outside of US jurisdiction, but if the other countries follow the US' lead, then this might spell trouble for the whole crypto community.

 

If this regulation becomes the norm for existing cryptocurrency exchanges everywhere, then what the article said, "... make cryptocurrency exchanges act a lot more like banks" will become true. For regular traders dealing with large amounts of crypto coins, they should ask: "Where's the convenience in that?"

 

Despite the news (the article was written in Dec. 22, 3 days ago BTW), its effect on the Bitcoin bullrun is neglible, with BTC still going strong at the ~$23,000 range. But things might change if this US proposal goes through uncontested, thanks in part by announcing it during Xmas.

 

Edited December 25, 2020 by kyoukage01

[Whited35 15285]

2 hours ago, kyoukage01 said:

The regulation in question has something to do about your cryptocurrency wallets. Basically, it means that if you happen to send a large amount of money via crypto exchanges, you will be asked for KYC requirements, and here's the kicker: the US government can ask those exchanges to hand over your information.

It is a clear indication how US government is treating against cryptocurrency. They are afraid of tax evading cases and crypto crimes. The crux of matter behind their regulation is not that hard to guess i.e. they even wish to trace the credit history of a person even if the transactions have been made by using cryptocurrencies.

As blockchain is itself capable of preventing the frauds, I really do not like the exchanges demanding the KYC verification. 

[Beryymark 126]

Well cryptocurrency has encountered some set backs over the past few years but right now in this year cryptocurrency is more appreciating especially bitcoin but for Us government they're trying to introduce KYC which is very good and will reduce fraudulent schemes 

[Cryptpanda 153]

As the time is passing the price of bitcoin is increasing. Every Christmas eve brings a lot of joys for cryptocurrency holders and traders. As we saw the price of bitcoin reached to ATH at the end of 2017 we see another ATH in the year of 2020

[Syedbesharat 5423]

The exchange are becoming more like banks and countries are now holding them if they don't comply like China they kick them out. Because now the government don't need to look for people for collecting tax they just get all the information freely and authentic from exchange and knock the door of people for tax or either send direct notice. The anonymity is nearly disappeared and now we have just new form of digital banks who have more accurate data of users. I hope this policy wouldn't be implemented and exchanges fight back for users right. But can share how far they can go and which point they compromise. This will lead all other countries to follow their cou try base exchanges as well. 

[kyoukage01 3181]

7 hours ago, Syedbesharat said:

The anonymity is nearly disappeared and now we have just new form of digital banks who have more accurate data of users. I hope this policy wouldn't be implemented and exchanges fight back for users right.

Cryptocurrency exchanges themselves - Coinbase in this particular article - are opposed to this new move by the US government. But as was said by the news, while there's a 15-day period for feedback, the fact that that period encompasses a very long holiday will make most dissidents to this proposed law slow to act. Lots of folks are going to get pissed off for this proposal ruining their holiday.

 

20 hours ago, Shani Choudhry.... said:

Of course you have shared this one useful news and I am feeling very excited seeing this because now we do not have to be so much trouble and upset to blonde our special hands. And we know that whatever the crying scene  is, it is only for our benefit. 

What benefit? KYC has already ruined what cryptocurrencies originally stood for, and you're okay with your personal information this time being handed over to other entities, as is proposed by the news? Maybe this is okay with you if you don't live under US jurisdiction, but if your country also adopts this policy... well let's just see how you will react if this news affects you personally as well.

 

20 hours ago, Whited35 said:

It is a clear indication how US government is treating against cryptocurrency. They are afraid of tax evading cases and crypto crimes. The crux of matter behind their regulation is not that hard to guess i.e. they even wish to trace the credit history of a person even if the transactions have been made by using cryptocurrencies.

I can hear the US' excuse as well while writing this topic. But their excuse means nothing. They've already used personal information for political things (whoops, let's not talk about political matters further 🤐 ) and there is no guarantee that they won't do the same for the information they will get from crypto exchanges.

 

If anything, this will gravely affect the US-based exchanges, as other exchanges outside the US will not have the same policy and the crypto users might decide to move to those exchanges once they get pissed off and fed up.

 

Edited December 26, 2020 by kyoukage01

[Ridam 7455]

They have mentioned they are positive towards the development and innovation of the financial services and considering the facts , increase of crypto in illicit activites at some extent its ok in my view. 

But the main thing to notice here is that will this decision after implementation, able to control those illicit or not? As its still receving views from the conerned parties, you should check that too.

[kyoukage01 3181]

On 12/26/2020 at 5:17 PM, Ridam said:

But the main thing to notice here is that will this decision after implementation, able to control those illicit or not? As its still receving views from the conerned parties, you should check that too.

The thing with criminals is that they can always find a workaround on restrictions. I'm not going to point out what exactly those are, but most likely there is already a way. (Actually there is one simple method given in the article.) You know how the dark web is.

 

What the exchanges are frustrated about though is the procedures the US government is asking for. This entails extra work on their part, and like I mentioned in a previous post, some customers won't like it and will look for other exchanges outside of US jurisdiction.

 

We should be expecting an update once the 15-day review period is up. If I can't update this topic with it on time, then anyone else is free to do so.

 

[Khan 1414]

If US make the crypto legal and allow the usage of it then many other countries will also allow it and it will also help in the organization to pay large bill within seconds.

[Serbberq 724]

US is a grate nation and developed and supporting crypto from US will bring progress to cryptoworld and other country will also learn and adopt using cryptocurrency and legalise it. 

[cryptovlek 2597]

On 12/25/2020 at 5:51 AM, kyoukage01 said:

Despite the news (the article was written in Dec. 22, 3 days ago BTW), its effect on the Bitcoin bullrun is neglible, with BTC still going strong at the ~$23,000 range.

I was thinking that in another time Bitcoin would be crashing to these news, but this time it was different. Those that are buying Bitcoin today don't own the Bitcoin. They don't have wallets but an IOU given by Grayscale or Paypal. They invest in Bitcoin without even touching it, so they don't care about decentralization of the network, privacy or the freedom Bitcoin gives to the owner. They only invest because they had trillions of fresh dollars handed over to them and they found Bitcoin to be a great investment. Perhaps they even favor this regulations as institutions never liked anonymity on the internet.

[kyoukage01 3181]

On 1/7/2021 at 5:52 PM, cryptovlek said:

I was thinking that in another time Bitcoin would be crashing to these news, but this time it was different. Those that are buying Bitcoin today don't own the Bitcoin. They don't have wallets but an IOU given by Grayscale or Paypal. They invest in Bitcoin without even touching it, so they don't care about decentralization of the network, privacy or the freedom Bitcoin gives to the owner. They only invest because they had trillions of fresh dollars handed over to them and they found Bitcoin to be a great investment. Perhaps they even favor this regulations as institutions never liked anonymity on the internet.

True, the news did had negligible effect. But maybe that is because the regulation is still under proposal and not yet being fully implemented. We'll see once this proposed law gets passed through and US-based exchanges start obliging to the new rules.

 

What about this trillions of dollars you're talking about? Is this about the Biden administration's proposed stimulus package? So this is the part where people who previously know nothing about Bitcoins suddenly want to invest thanks to the stimulus package but chooses to buy them at Paypal and leave it there? If this is the case then I think I am getting what you're pointing at in your statement.

 

But still, those small investors have only little voices in the crypto world. A good part of those who like anonymity are whales, and if you are a whale, would you like your crypto wallets being tracked? What if hackers somehow gets hold of your KYC, and now they know your identity? The hackers can then pass your info to some more hardened criminals and the next thing you know, something bad happens to you in real life. Anonymity does not necessarily mean that criminals have exclusive advantage to it, originally it is supposed to be of great use for normal people who wants to protect themselves and their accounts from those who want to steal.

 

... ... ...

 

Still no news on the internet about the latest developments. You folks can read this other article in the meantime.

https://www.coindesk.com/fincen-rule-crypto-wallets-could-be-ineffective-says-elliptic

 

Edited January 15, 2021 by kyoukage01

[cryptovlek 2597]

9 hours ago, kyoukage01 said:

What about this trillions of dollars you're talking about? Is this about the Biden administration's proposed stimulus package? So this is the part where people who previously know nothing about Bitcoins suddenly want to invest thanks to the stimulus package but chooses to buy them at Paypal and leave it there? If this is the case then I think I am getting what you're pointing at in your statement.

It is this that you thought yes, 

I had both Grayscale and Paypal together for reasons that I think are the same. Investors that are buying when using a third party that doesn't give them access to Bitcoin, they have the same knowledge and interest for Bitcoin. Both the institutions that bought and the Paypal users used the extra money they had, probably from QE and stimulus packages and bought Bitcoin. For Paypal I am not sure because the stimulus was deposited in bank accounts, but generally in america wealth is higher in the middle class than the rest of the world and there was extra money for most of paypal users to invest in Bitcoin. The institutions found money from the QE and they had to invest somewhere and another big indicator was the negative interests from Central banks, which is a big reason for funds not to save in banks anything but invest.

10 hours ago, kyoukage01 said:

if you are a whale, would you like your crypto wallets being tracked?

No, not at all, I am sure that most whales have tried some mixers to hide the wallets that were connected in any way with them. I have strong privacy concerns when using the internet and I never had facebook account. 

[kyoukage01 3181]

@cryptovlek Points taken.

 

The ignorance of new Bitcoin buyers/investors who only use services like Paypal will hurt them if something bad happens; the bad thing about most people is that they do not take the time to read instructions and warnings. I wonder how many percentage of people who bought Bitcoins via Paypal have actually read the company's FAQ at some point.

 

https://www.paypal.com/us/smarthelp/article/FAQ4398

Excerpts from the webpage are the following:

Quote

Will PayPal cover losses from fraud on its Cryptocurrency service?
As part of PayPal's commitment to protecting its users, PayPal will not hold customers liable for Crypto purchases or sales made as a result of unauthorized activity in their PayPal account.

PayPal will not cover losses from Cryptocurrency price fluctuations and we recommend that customers make sure purchasing Crypto is right for their individual financial situations. Since Crypto purchases and sales aren't reversible, PayPal urges customers to do their research and make decisions carefully.

 

I lost money on my Cryptocurrency purchase. What can I do?
We recommend speaking to a financial advisor as we are unable to offer financial advice.

 

Someone purchased Cryptocurrency on my account without my authorization. What can I do?
I am sorry to hear that, rest assured that you are not liable for any unauthorized transactions. I will transfer you to a specialist who will be able to help you secure your account.

What can we infer from the quote above? If a person somehow lost his Bitcoins on Paypal, the company does not give a s*** about his losses. People are thus better off using online wallets or exchanges at the moment. Still not as safe as hard wallets, but safer than Paypal.

 

And I wouldn't be surprised if Paypal demands KYC in the future for cryptocurrencies as well, just like any other typical mainstream companies. If US-based exchanges like Coinbase gives in to the demands as mentioned in this topic, there is no reason why Paypal will not do so too.

 

Edited January 17, 2021 by kyoukage01