U.S. agencies and national governments around the world are looking at how to more effectively regulate cryptocurrency assets.
KYC and AML requirements are largely helping to ensure that governments can track capital in the form of crypto on centralized exchanges.
The problem, according to many experts, is what happens when people take the crypto out of the exchanges and put them in their own private wallets.
Helen Partz at Cointelegraph reports today on opinions on noncustodial wallet evolution by somebody who knows – CFO of SatoshiLabs Stepan Uherik.
“It’s very improbable that all the countries would ban noncustodial wallets, or any other aspect of Bitcoin’s peer-to-peer network for that matter,” Uherik said, as quoted. “Such a ban would be easy to enact, but it would cover only a portion of noncustodial wallets and would likely motivate users to look beyond the popular app stores. Hardware and desktop wallets would be unaffected.”
In the coverage, Uherik points out that there are precedents for having technically illegal technology continue to operate widely throughout a populace.
Namely, musical and multimedia digital torrents break all kinds of intellectual property laws, but are commonly used worldwide to share content.
There are some similarities to the noncustodial hardware wallet – when crypto assets are loaded onto these isolated wallets, they become largely untraceable and ungovernable.
There’s a difference between arguing that freely transferred crypto could be used for fraud and criminal activity, and the much more far-reaching step of trying to regulate how people keep their own assets off the grid. In effect, hiding crypto in a noncustodial wallet is a lot like burying money in a jar in your backyard – there is not really an easy way to make it illegal.
Uherik said governments can try, but their efforts will probably fall flat to some extent.
Think about how asset custody affects your crypto plans – and tell us about it!
