23 Dec The severe implication of the proposed FinCEN rules: bifurcated bitcoin world
Jake Chervinsky discussed in great length on Stephan Livera’s podcast here (highly recommended!). The worst-case scenario is that this will lead to a bifurcated world where there are bitcoins that are hosted by exchanges, banks, and financial institutes in the walled garden and bitcoins that are self-hosted by the people and there are no bridges between the two worlds.
A similar rule was implemented in Switzerland and I understand that this is exactly what is happening (can someone confirm?) while exchanges in the Netherland seem to verify wallets by asking users to take a photo of the screenshot while trying to withdraw (which is not really a good way to verify). If the rule is implemented, it will depend on the exchanges and they will have to decide how exactly they will be able to comply. Technically, there is really no good way to verify that a wallet belongs to someone.
Kristin Smith of the Blockchain Association believe that the rule will likely be implemented and this will have to be fought in the court as she discussed here
I would encourage everyone to provide feedback and express your opinions here (deadline on 01/04/21 — please be respectful to the regulators). Jake Chervinsky mentioned that he would offer guidance about how to write meaningful feedback, follow him here
It’s the “they fight you” phrase and it’s time for all of us to get in the fight! If you care about “not your keys, not your coins”, this is something you should be paying very close attention to!