Analysts are debating whether the U.S. Treasury Secretary’s new law on self-custody wallets could jeopardize the current bull run.
This week, several media outlets reported that U.S. Treasury Secretary Steven Mnuchin was considering whether or not to implement the legislation governing self-covered wallets.
This led some analysts and crypto-currency experts to speculate whether or not this would affect Bitcoin, and the current bullish momentum that has been driving up crypto-currency prices.
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The threat of the new regulations focused on the cryptosystem is a credible event that has negatively affected cryptosystem prices in the past, but this time there are some reasons why the proposed law will probably not lead to a drop in the price of Bitcoin.
The possibility of regulation has a price in the cryptomarket
Initially, industry executives expressed great concern when Coinbase CEO Brian Armstrong shared what he had heard about the planned law.
Last week, we heard rumors that the U.S. Treasury and Secretary Mnuchin planned to rush through new regulation regarding self-sustaining crypto wallets before the end of his term. I am concerned that this will have unwanted side effects and wanted to share those concerns.
These concerns were amplified when Circle CEO Jeremy Allaire told Ryan Selkis that the potential regulation could be detrimental to the entire crypt coin industry. Comments from the two industry heavyweights led the entire industry to be cautious about the bill.
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However, recent reports suggest that such a law may require financial institutions to report multiple transactions equivalent to USD 10,000 per day. Compared to initial rumors about this law, it is arguably less stringent than it seemed. In fact, some experts say the proposed rule is similar to the existing FATF travel rule.
Considering that this new law may be less restrictive than the initially planned regulation, and the fact that the market has had enough time to act on it, it is possible that the market has discounted it at this time.
Which way can Mnuchin go?
There are two main paths that Mnuchin could take to introduce the self-custody wallet regulation. First, it could take the conventional regulatory route, which requires a hearing and a 30-day period.
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If Mnuchin adopts the conventional approach, the proposal should be published this week before the end of the current presidential term.
Alternatively, Mnuchin could point to a form of „good cause“ to pass the regulation. This would allow Mnuchin to accelerate the process. Jason Civalleri, an attorney, said:
„In addition, there is an exception if an agency articulates ‚good cause‘ that the public notice/procedure requirements are ‚impractical, unnecessary or contrary to the public interest. For example, one possible use of this exception is if it is necessary to stop a pandemic. Therefore, Treasury would need to articulate why it wants to waive this requirement for ‚good cause‘. For example, it may be able to demonstrate that an extraordinary amount of criminal activity will be impeded by early implementation of the new rule. It seems unlikely, but maybe?
At this point, it is more likely that Mnuchin will adopt the conventional approach. To adopt the „good cause“ approach, he would need to find sufficient evidence to show that the cryptosystems see significant criminal activity.
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Therefore, the probability that the proposed rule will be introduced in the next few days is still the highest, which would be optimistic for Bitcoin. Matt Odell, an advocate of Bitcoin and privacy, said:
„The Block speculates that the U.S. government will simply require exchanges to report on withdrawals of bitcoins in excess of $10,000. The concerns expressed by Armstrong and Davidson seemed to expect much worse. Perhaps the public concern helped. Very bullish if true.