- Coinbase CEO Brian Armstrong has warned that the type of regulatory measures suggested by U.S. Treasury Secretary Steve Mnuchin could “kill” the crypto industry
- Armstrong said in a Twitter thread that verifying every single crypto transaction would be harmful and borderline impossible to enforce
- Mnuchin warned earlier this year that strict new measures were imminent
Coinbase CEO Brian Armstrong has warned of the damage that could be done to the cryptocurrency industry by the regulations being suggested by outgoing U.S. Treasury Secretary Steve Mnuchin. Armstrong warned against the “unintended side effects” that Mnuchin’s regulations could spark, in particular the impracticalities of gathering identification on every crypto transaction conducted within or originating from the U.S.
Last week we heard rumors that the U.S. Treasury and Secretary Mnuchin were planning to rush out some new regulation regarding self-hosted crypto wallets before the end of his term. I’m concerned that this would have unintended side effects, and wanted to share those concerns.
— Brian Armstrong (@brian_armstrong) November 25, 2020
Mnuchin’s Plans Could Strangle Innovation – Armstrong
Armstrong’s criticism of the potential move came via an 18-long Twitter thread which warned of the threat posed by Mnuchin’s desire to “rush out some new regulation regarding self-hosted crypto wallets before the end of his term.”
Armstrong said that cryptocurrency’s open source nature “levels the playing field globally” and has the potential, through innovations such as DeFi, to lower the cost and raise the inclusivity levels of financial accessibility.
The kind of regulations being suggested would, Armstrong said, require crypto-handling institutions like Coinbase to “verify the recipient/owner of the self-hosted wallet, collecting identifying information on that party, before a withdrawal could be sent to that self-hosted wallet.”
The impact of this could be disastrous for the space, Armstrong said, with everything from DeFi transactions, to the purchase of goods and services, and even using cryptocurrency to pay for an upvote on a social media platform requiring the identification of the recipient.
This is, of course, completely impractical, with the resultant friction having the potential to “kill many of the emerging use cases for crypto”, which, as Armstrong reminded his readers, is not just about money.
Mnuchin Threatened Heavy Regulation in February
Armstrong finished by saying that any such regulations would be “a terrible legacy” and would have “long standing negative impacts for the U.S.”, comparing the desire to regulate crypto with the desire to regulate the internet in the early 1990s.
Mnuchin’s comments aren’t the first time he has warned about imminent crypto regulation – in July 2019 he called cryptocurrencies a “national security issue”, and in February this year he warned of “significant” changes to the ways they would be regulated.