Coinbase CEO Worries New Regulations Could Harm Crypto Industry! Fund Manager Says: Will Not Have Long-Term Impact on Coin Prices

Coinbase CEO Brian Armstrong released a series of tweets yesterday, outlining the regulatory challenges that the industry is about to face. While he believes this will be detrimental to the cryptocurrency industry, many market participants see it as a necessary step for cryptocurrencies to go mainstream.

Latest Regulatory Rumors on Bitcoin

According to recent reports, Brian Armstrong, the CEO of the U.S.-based cryptocurrency exchange Coinbase, tweeted a series of messages outlining the regulatory issues facing the industry. He mentioned that the Federal Reserve and the Financial Crimes Enforcement Network (FinCEN) proposed that cryptocurrencies should comply with the Travel Rule, requiring Virtual Asset Service Providers (VASPs) to collect and share information about the sender and receiver of virtual assets.

"Last week we heard rumors that Treasury Secretary Mnuchin is planning to push new regulations on self-hosted cryptocurrency wallets before his term ends. I'm concerned that this could have unintended side effects, so wanted to share early."

Armstrong speculated that the proposal would require institutions like Coinbase to verify the recipients and owners of self-hosted wallets, collecting and identifying the wallet information of the other party before users withdraw and send funds to that wallet. Armstrong believes that this approach could stifle many emerging cryptocurrency use cases and have long-term negative implications for the U.S.

Will It Affect Bitcoin Prices?

Following the publication of this post, Bitcoin started to decline significantly. While it is not clear whether the regulatory news is the main reason for the price drop. Although Armstrong sees this news as bearish for the cryptocurrency industry, not all participants believe it will have a long-term impact on prices.

Kyle Samani, Managing Director of Multicoin Capital, stated that he doesn't think it will have a significant impact on Bitcoin in the current bull market:

"Why wouldn't rumors about Mnuchin, the U.S. Treasury Secretary, affect the current BTC bull market (the next 12-36 months)? Because the buyers of the next bull market want regulation. The cap of 21 million is attractive to them, and the anti-censorship nature is a flaw. What they want is not asset sovereignty but inflation hedging."

on the Mnuchin rumors

For the current BTC bull market (next 12-36 months), it doesn’t matter

Why?

Next wave of buyers macro buyers want regulation

For them, 21M cap is a feature, and censorship resistance is (kind of) a bug

They don’t want self custody. Just inflation hedge

— Composability Kyle (@KyleSamani) November 26, 2020

Furthermore, Raoul Pal, CEO and Founder of the global market analysis company Real Vision, also stated that market participants want cryptocurrencies to be widely adopted, and regulation is a necessary step for cryptocurrencies to go mainstream, which is inevitable.

If you think that secrecy from governments and no KYC is bitcoins future then you don't understand what adoption looks like. They will regulate it. You will declare it. You will have to do KYC and that is fine. It doesn't take away its store of value but just integrates it.

— Raoul Pal (@RaoulGMI) November 26, 2020

Perhaps, from a market perspective, the new regulatory measures will not have a significant impact on Bitcoin, but due to the large number of libertarian investors in the field, it may still spark community backlash to some extent.