Bitcoin threatened by regulation?28. November 2020
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.