Analysis of the reasons for Bitcoin's sharp drop: Trump administration wants to "start" at the last moment?

Source: Wall Street Insights

Original title: "The reason for the sharp drop in Bitcoin: Trump administration wants to "strike" at the last moment?

On Wednesday night, Coinbase CEO Brian Armstrong slammed a rumored U.S. Treasury Department program that seeks to track cryptocurrency wallet owners and Everyone involved in the transaction.

The plan is rumored to be carried out by outgoing Treasury Secretary Mnuchin and, if implemented, would suppress a core tenet of the ethos of cryptocurrencies - private encryption Currency is free from harassment and tracking.

Specifically, the proposed regulations would require financial institutions like Coinbase to verify the owners of cryptocurrency wallets and collect their identity information before they can Send digital currency to this cryptocurrency wallet. In addition, these data will also log all the above information.

Affected by the rumor, the price of Bitcoin fell sharply from a high level, and once fell below $17,000 to $16,580, a 24-hour drop of 12.96%, and the turnover exceeded 375 One hundred million U.S. dollars.  

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Far-reaching impact

If this policy is implemented, it will have an impact on the entire currency circle profound. The policy doesn’t just affect people who store digital currencies on hardware devices like Trezor or Ledger. For other encryption services that use non-custodial wallets, decentralized finance (DeFi) smart contract software wallets, etc., they need to prove their identity under the rules and can only conduct transactions under supervision.

Such a policy is not without precedent globally, with FATF guidelines such as the Financial Action Task Force on Money Laundering already implemented in Switzerland and the Netherlands. In these countries, virtual asset service providers (VASPs) must prove ownership of non-custodial crypto wallets prior to transactions.

Armstrong said that such a policy would be a very terrible political legacy of the Trump administration and would have a long-term negative impact on the United States. And the additional transactional friction will kill many emerging crypto applications, including every digital asset.

Jacob Farber, a partner at the blockchain law and consulting firm Ouroboros LLP, said that imposing KYC requirements on transactions between each wallet expands access to The regulatory scope of cryptocurrency will change the meaning of cryptocurrency to a certain extent, making it no longer a substitute for traditional finance. Farber also argued that Armstrong’s concerns are valid, saying that these potential regulations should be developed and followed by the cryptocurrency community.

Worries in the currency circle

Armstrong’s attack has a strong response on the Internet, and many of his ideas are also become a public consensus.

In recent days, several cryptocurrency organizations have launched lobbying campaigns to shape public opinion on deregulation.

Among them, Coin Center published an article on the serious consequences of cryptocurrency wallet restrictions on November 18; A 50-page guide for policymakers.

Coinbase executive director Kristin Smith told CoinDesk that the blockchain association has long been aware of the regulatory trends of some regulators in the United States and overseas on cryptocurrency wallets, while They are actively making calls to executive and legislative branch officials to dispel misconceptions about cryptocurrency wallets.   

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