This week various media reported that US Treasury Secretary Steven Mnuchin is considering whether or not to implement legislation governing self-contained wallets.
This led some crypto analysts and pundits to speculate on whether or not this would affect Bitcoin, and the current bullish momentum that has been driving crypto prices higher.
The threat of new regulations focusing on the crypto sector is a credible event that has had a negative impact on crypto prices in the past, but this time there are a few reasons why the proposed rule probably won’t lead to a crash Bitcoin prices.
The possibility of regulation is priced into the crypto market
Industry executives initially expressed grave concerns when Coinbase CEO Brian Armstrong shared what he heard about the planned rule.
Last week we heard rumors that the U.S. Treasury and Secretary Mnuchin are planning to rush out some new regulation regarding self-sufficient crypto wallets before the end of his term. I am concerned that this would have unintended side effects, and I wanted to share those concerns.
– Brian Armstrong (@brian_armstrong) November 25, 2020
These concerns were amplified when Circle CEO Jeremy Allaire told Ryan Selkis that potential regulation could be detrimental to the entire cryptocurrency sector. The comments from two industry heavyweights led the industry as a whole to be wary of the planned rule proposal.
However, recent reports suggest that the rule could require financial institutions to report multiple transactions amounting to $ 10,000 per day. Compared to the initial rumors of the rule, it is arguably less rigorous than it appeared. In fact, some experts say the proposed rule is similar to the current FATF travel rule.
Given that the rule may be less restrictive than the regulation initially planned, and the fact that the market has had sufficient time to act on it, it is possible that the market has been priced at present .
What path can Mnuchin take?
There are two main routes Mnuchin could take to introduce the self-custody wallet regulation. First, it could follow the conventional rule-making route, which requires a hearing and a 30-day period.
If Mnuchin takes the conventional approach, the proposal would have to be released this week before the current Presidential term ends.
Alternatively, Mnuchin could aim for a “good cause” way of passing the regulation. This would allow Mnuchin to speed up the process. Jason Civalleri, attorney, He said:
“Furthermore, there is an exception if an agency communicates ‘good cause’ that the public notice / procedure requirements are ‘impractical, unnecessary or contrary to the public interest.’ For example, one possible use of this exemption is if necessary to prevent a pandemic. The Treasury would therefore have to articulate why it wanted to waive this requirement for ‘good cause.’ For example, it may be able to demonstrate that an extraordinary amount of criminal activity will be hampered by the early implementation of the new rule. Seems unlikely, but maybe? ”
At this point, it is more likely that Mnuchin used the conventional method. To take the “good cause” approach, it would need to find sufficient evidence to prove that crypto saw significant criminal activity.
Therefore, the probability that the proposed rule would be introduced in the coming days remains the highest, which would be optimistic for Bitcoin. Matt Odell, Bitcoin and privacy advocate, He said:
“The Block speculates that the US gov will require exchanges to report bitcoin withdrawal in excess of $ 10k. I had already assumed they did this tbh. The concerns voiced by Armstrong and Davidson seemed to be much worse. Perhaps public anxiety helped. Very bullish if true. ”