Crypto Lobbyists Rally for Noncustodial Wallets
In a surprising twist in the realm of cryptocurrency regulation, major players like the Blockchain Association and Coin Center are stepping up their game in defense of noncustodial wallets. It’s like watching a superhero squad assemble just when you thought all hope was lost for decentralized finance!
Blockchain Association Shines a Light
The Blockchain Association, the friendly neighborhood trade organization for crypto, put forth a comprehensive report that offers a buffet of policy recommendations for regulators focusing on self-hosted wallets. They are particularly concerned about the Bank Secrecy Act and the rising tide of regulatory concerns surrounding decentralized finance and peer-to-peer transactions.
Expert Opinions from Coin Center
On the heels of this report, Coin Center released a potent piece by Jai Ramaswamy, currently flexing his compliance muscles at C Labs, and a former anti-money laundering bigwig at the Department of Justice. Ramaswamy’s take? He’s waving his flag for noncustodial wallets, arguing that trying to limit their use in the name of anti-money laundering (AML) is a fruitless endeavor. Talk about a buzzkill!
The Real Problem: Non-Compliant VASPs
Both the Blockchain Association and Ramaswamy are on the same page when it comes to identifying the real sources of risk—non-compliant virtual asset service providers (VASPs). In their grand quest to combat illicit financial activity, they argue that regulators need to focus on these non-compliant entities rather than throwing a blanket over self-hosted wallets. As they say, “don’t blame the wallet; blame the person using it!”
Potential Policies Proposed
In regards to peer-to-peer transactions, the Blockchain Association has laid out three potential policies for regulators to chew on:
- Banning or restricting licensing for platforms facilitating unhosted wallet transfers,
- Imposing transactional or volume limits on these transactions, and
- Mandating that all transactions go through a VASP or financial institution.
However, skepticism looms large. As policy manager Miller Whitehouse-Levine points out, limiting peer-to-peer transactions would require major changes to core protocols. The tech world has its own language; are regulators fluent?
The Reality Check
Adding fuel to the fire, Executive Director Kristin Smith warned that implementing such policies might lead to the drastic measure of cutting off transactions between self-hosted and hosted wallets. Now that’s a scenario no one wants to play out—like a soap opera plot twist gone wrong!
In summary, while concerns about AML are entirely valid, the current wave of proposals targeting noncustodial wallets might just be aiming at the wrong target. As the proverbial cat-and-mouse game between regulators and crypto advocates continues, let’s keep the popcorn close and follow this unfolding saga!
