The US treasury, under threat from popularity of Bitcoin has released new proposals to clamp down on such blockchain-based monetary networks. The government department’s new rule would basically consider all self-hosted wallets illegal and the US-based exchanges and wallet services would be forced to not accept transactions from these wallets.
The US Treasury Going Against Bitcoin’s Fundamentals
This move is simply not possible without a fundamental destruction of Bitcoin’s power; P2P transactions. P2P transactions allow trust-less, universally verifiable transactions between two wallet addresses on Bitcoin. These digital monetary transfers do not require an intermediary for example a conventional bank and a physical currency, therefore, they are considered an existential threat by some of the more close-minded groups within these outdated professions. Currently, the proposed law is asking for blacklisting of self-hosted wallets and only if the transaction is greater than $3,000 according to FinCEN (Financial Crimes Enforcement Network) section. However, it may even want to eventually get a blanket ban on these accounts in the future regardless of amount stored or transaction numbers.
Now many of these wallets are tied to actual identities of real-world people and companies like cryptocurrency exchanges, wallet providers, etc. But, many of them aren’t tied to any identity and they are still millions and millions of these accounts. For conventional banking/treasury channels, this money is illegal because they cannot verify the money trail behind money transfers to and from these wallets and thus, they are contend to stop it through extreme measures. While this law hasn’t been written into place yet, it still shows that as Bitcoin gets stronger with time, it will definitely have a legal dispute with these massive state institutions around the world.
What Should the Treasuries do?
What many of these legacy institutions need to realize is that Bitcoin is here to stay one way or another. Rather than forcing Bitcoin to change itself which will make it even more popular, they should embrace the cryptocurrency sector. It is a great opportunity for the system to embrace a technology that makes it better and more transparent rather than hiding behind red tape and protection of the central banks and treasuries.
However, that seems less likely at least in the near future as Bitcoin is expected to be under much greater scrutiny by treasuries and central banks. This backlash will have an effect on the price index of the cryptocurrency but it is expected that it will win in the long-run because of its superior working and transparent nature.
Image source: Kurtis Garbutt