Leading cryptocurrency exchange Coinbase has asked its customers in Canada, Japan, and Singapore to send crypto to another digital wallet or exchange to provide the name and address of the recipient.
It was Friday (March 25).
On the same day, it was revealed that the European Union plans to block anonymous cryptocurrency payments of any size to any wallet and will ban any transfers to destinations considered tax havens, such as the British Virgin Islands. , Hong Kong or Turkey, along with a number of other dirty money hotspots were also banned, CoinDesk reported, citing internal parliament documents.
The plan matches a rule now shelved by the US Treasury Department’s Financial Crimes Enforcement Network (FinCEN) proposed in the final days of President Donald Trump’s administration to require exchanges to collect data from know your customer (KYC) for all transactions over $3,000 – even those to private wallets without an exchange.
See also: Warren resurrects calls for KYC data from private crypto wallets
While the United States lags behind many of these countries in establishing a formal regulatory framework for cryptocurrencies – it only started in a coordinated fashion on March 10, when President Joe Biden issued an executive order on the subject – there will likely be a version of this needed, either at a $3,000 limit like FinCEN has proposed or perhaps even for any transaction of any amount, like the EU foresees it.
Read more: Biden Executive Order Set To Accelerate Crypto Policy
It looks like the anonymity party is over for crypto, at least for people who lack the reasonable degree of sophistication needed to bypass major exchanges and trade on decentralized finance (DeFi) exchanges, use mixing services and privacy coins, and more generally risk breaking laws with potentially serious consequences.
See also: When privacy matters, crypto users turn to mixing services
It won’t go without a fight. Coinbase has made it clear that it only enforces these rules where necessary, and more broadly, exchanges like Kraken and Binance have been quick to cut off average Russian customers.
Kraken CEO Jesse Powell justified his position by saying that “people’s money is an exit strategy for humans, a weapon for peace, not war.”
Read more: Citing libertarian values, crypto exchange CEOs won’t cut off Russian customers
But it is becoming increasingly clear that crypto anonymity will go, at least on the exchanges used by the growing crypto mainstream.
Who will win?
There are more than a few examples of crypto exchanges and digital asset service providers making their way into the bailiwick of finance – the goal of crypto, expressed in the very first line of the Bitcoin white paper that started it all, is to eliminate the financial intermediaries.
Even though this goal is a little removed from the exchanges main service, which is to invest, it is worth noting that more and more are issuing debit cards that allow holders to spend their crypto at retail – powered by Mastercard, Visa and PayPal, to be of course, but still without a bank account.
And just last week, crypto-exchange-owned Kraken Bank became the second digital asset bank to win a routing number from the American Bankers Association (ABA) — a major step towards an account. Federal Reserve principal and access to the accompanying global payment rails.
See more : With Routing Number, Crypto Exchange Kraken Bank Gets Closer to Global Payments Rails
This means that now is a good time for financial services firms to examine the growing interest and use of crypto – particularly among millennials and new generations, but also by other demographic groups like women and minorities, according to the 2021 Cryptocurrency Payments Report from PYMNTS. The report found that 46 million Americans plan to use crypto “to make payments for everything from financial services to groceries.”
Get the report: Cryptocurrency Payments Report
After all, they have these payment rails, see clear regulation on the near horizon in 2022, see their customers big and small asking for crypto, and have the money to invest in making the on-ramps and exit crypto still often daunting. user-friendly – and available at financial services firms they already have relationships with.
“I think in 2022 you’ll see a lot more people – that next wave of people – taking an interest in crypto both from an investment perspective and from a ‘Let’s try it for a payout’. [perspective]BitPay CEO Stephen Pair told Karen Webster of PYMNTS in January. “There will be many more places with this service – where you can spend crypto and do it in person.”
Read more: BitPay CEO Says Bitcoin Payments Will Explode in 2022 as Crypto Hits Inflection Point
Then there is the reality that dollar-pegged stablecoins are booming and expected to grow rapidly over the next few years. Instagram’s adoption of the Pax Dollar (USDP) is a big sign. The US and EU are pretty clear that four to five years is the bare minimum – but, frankly, unlikely – for a central bank digital dollar (CBDC) digital currency that can compete with the stable parts on ease of use.
See also: Why Stablecoins Are Rising
But crypto firms have the strength of all FinTechs – speed and agility – as well as comfort with crypto technology and finance. The question is: will financial companies give them time?