One tacky aspect that regulators across the globe have not yet come to terms with regarding the crypto sector is how to effectively regulate it and provide a level playing field for all participants. With this in mind, the government of the United States of America has taken it upon itself to ensure the sector is safe and free from illegal actors with certain crypto regulations in the country.
Even though the main motive behind Bitcoin’s creation was to bring the common man up to speed regarding financials due to its decentralized nature, the system is getting centralized as the day progresses.
The United States government wants new KYC law enforced
With the system getting centralized, the real motive behind creating a blockchain and digital assets is being defied. While numerous countries across the globe have been able to define some rules regarding crypto, other countries have not yet enjoyed that privilege.
According to records, the first set of crypto regulations established in the United States of America made crypto adoption and trading easy for exchanges, investors, and traders. While the first law favored anonymity, much cannot be said of the new law.
With the new law in place, the United States of America has told the crypto exchange that they must enforce a strict KYC on their user base. With this new development, the anonymity that comes with trading digital assets will be gradually wearing off. Rumors have been making the rounds that the Trump-led administration is trying to eliminate self-hosted wallets before leaving the office at the end of their term.
Self-hosted wallets are very private wallets where users can store their digital assets. This kind of wallet’s importance is the total control a user has over all his assets rather than being controlled by a third party.
Coinbase CEO faults rumored crypto regulations
Most of these self-hosted wallets are used mainly by people in the decentralized finance sector as they can be used in pools, yield farming, and a host of other things in the sector. If the new regulation eventually goes live, crypto exchanges across the United States will need to verify every crypto address using its owners’ details before funds can be sent into them.
Even though the makers of the regulation had good intentions, analysts have argued that the negative implications of the regulations outweigh the positive aspect. In his review, CEO of Coinbase, Brian Armstrong, noted that this new regulation could hinder the progress of smart contracts as it is not always controlled by a person.
Going further, the CEO said that most businesses accept payments using digital assets, and it would not be nice for customers to verify the identity of businesses before making payments. Even though he concedes that most people are using the anonymous feature to commit a crime, it is not enough to expose the privacy of most people that wish to remain anonymous.
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