Bitcoin threatened by regulation?

Bitcoin threatened by regulation? Fund manager says: „it doesn’t matter

Yesterday, the head of the major Bitcoin exchange Coinbase, Brian Armstrong, revealed that the US Treasury Department is likely to target Bitcoin.
According to Armstrong, this could have a very negative impact on the space.
However, Kyle Samani, Managing Partner at Multicoin Capital, does not see this as a threat to Bitcoin’s rally.

Coinbase CEO on rumours regarding Bitcoin regulation

Yesterday, Coinbase boss Brian Armstrong published a thread claiming an imminent regulation of space. He writes that his company has received „credible rumours“ that the US Treasury Department is in the process of pushing a regulation that requires all Bitcoin Code crypto exchanges to require users to prove that they have the address to which they want to transfer crypto currencies.

„Last week we heard rumours that the US Treasury Department and Secretary of the Treasury Mnukhin are planning to introduce a new regulation on self-hosted crypto-wallets before the end of his term. I am concerned that this could have unintended side effects and wanted to share these concerns“.

According to Armstrong, this could have an extremely negative impact on space. In particular, he highlighted how it could lead to the creation of a so-called „walled garden“ between „Bitcoin in the US“ and „Bitcoin abroad“:

„Given these barriers, we are likely to see fewer transactions from crypto-financial institutions to self-hosted wallets. This would effectively create a walled garden for crypto-financial services in the US and cut us off from innovation in the rest of the world“.

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

Coinbase and a number of other companies and prominent local investors joined forces in a letter to the Ministry of Finance to express their concerns about this potential regulatory measure.

Will it affect BTC?

Bitcoin started to decline seriously after the publication of Armstrong’s tweet. While it is not clear whether the rumour led to a sale, the price of the leading crypto-currency fell from around $18,600 at the time of the Tweet to $16,100 early the next morning.

However, analysts believe that any planned regulation will not have a significant impact on the market in the longer term.

Kyle Samani, a managing partner at Multicoin Capital, does not believe that this will have a significant impact on Bitcoin in the current bull market:

„on the Mnuchin rumours It does not matter for the current BTC bull market (next 12-36 months) Why? Next wave of macro-buyers Macro-buyers want regulation For them the 21M limit is a feature, and resistance to censorship is (some kind of) mistake They do not want self-custody. Only inflation protection.“

Others in the industry have expressed similar views, commenting that Bitcoin is much more of an inflation hedge than a form of money that can bypass all government barriers.

Ethereum 2.0: a first client ready for the mainnet

Ehereum 2.0 Welcomes First Comer – As Ethereum 2.0 launches in a few days, Prysmatic Labs has released the first version of its client Prysm, compatible with the Ethereum 2.0 mainnet. Questions relating to decentralization, however, remain unresolved.

The Prysm customer ready for take off

A few weeks after its launch, the Bitcoin Profit deposit contract finally reached the 524,000 ETH needed to launch the beacon chain .

As a result, the launch of the beacon chain, which is also equivalent to the creation of the first block, will take place on December 1 .

With the famous date fast approaching, the company Prysmatic Labs has just deployed version 1.0.0 of its Ethereum 2.0 client, Prysm .

“We are pleased to announce Prysm version 1.0.0 with full Ethereum 2.0 mainnet support. “

Preston Van Loon, Ethereum developer on Github

This makes Prysm the first Ethereum 2.0 client to be ready for mainnet launch. Despite this, Prysmatic Labs does not rule out the possibility of one or more patch versions being deployed before the launch of the beacon chain.

What about centralization?

While this news is good for the launch of Ethereum 2.0, it will not be without impact on centralization.

Indeed, during the Medalla testnet , initiated last August, an overwhelming majority of nodes – 96% – used the Prysm client.

This centralization around a single client poses many problems. Indeed, one of the objectives of Ethereum 2.0 and more particularly of its compatibility with several clients, was to resolve the problem of dependence on the client Geth encountered on Ethereum 2.0.

Hopefully other customers will get ready for the launch of the beacon chain and that decentralization will be more marked than during the Medalla testnet. It is also up to validators not to all rush to Prysm and explore the use of other clients.