Possible New Regulation around Self Hosted Wallets for US

I am very intersted in everyones thought on this article and the possibility of how a new regulation like this would effect coins stored/moved through Incognito. It would break the ability to provide the providence of coins. I am not sure if this is what is causing the crash of value across the cryptosphere today, or if it is just a market correction. I also understand that there are many outside the US in the community, and I would like to also know there perspective and how a new US regulation like this would effect them in their area (if anything at all).



Interested in what solutions might exist to help us with this if it ever came to fruition. Would hate to have to exit the project because of the goverments restrictions.

Meh – Brian Armstrong is grandstanding … mostly.

Were this new regulation to be issued by Treasury, the proposed regulation couldn’t become effective until after a period of public comment and review. In most cases, the comment period alone is 60 days. Current administration has less than 55 days left in office. I suppose Treasury could propose the regulation with a shorter public comment period citing something-something-deep state-something-money laundering, or whatever. However that’s a fairly tall hill for adept politicians to climb. And “adept” is hardly the apropos adjective for the current administration.

The reality is that any new regulation proposed by Steve-not John Oliver-Mnuchin between now and January 20th would be left to the next administration to enact, at best. Janet Yellen is hardly a bitcoin stalwart, though she is on the record as being fairly hands off in both authority and regulatory roles with respect to crypto. So while no crystal ball can tell us what the next Treasury will do, I wouldn’t expect any regulatory leftovers to see a rubber stamp.

The article – however – does point out this type of regulation is in effect in the Netherlands and Switzerland. So it is possible it could become policy on this side of the pond someday. Might be worth some of our Dutch and Swiss members chiming in with their thoughts and experiences.


Also … Steven Mnuchin can suck my hairy, left &^%#.


Correct me if i’m wrong, but this regulation seems to just prevent you from using US based exchanges -> to fiat if the origins of the coin are unknown. I don’t personally use fiat anyways. Let’s say worse case scenario this happens, you could still go from crypto to fiat via other countries. That would give so much economic advantage to other nations over the US. I doubt that the US would put this into regulation it’s like shooting yourself in the foot, economically speaking. Everybody will just cash out in a different currency, and then probably exchange for USD. Seems stupid if you ask me.

How would something like XMR be affected by this. I feel like it would be more valuable cause it doesn’t really care about the regulations. XMR has already been getting delisted by a bunch of exchanges and the value keeps increasing.


A video that @andrey posted a while back from a pod cast had two people talking about this type of regulation, and I think the issue related to what you are saying is that it would be requirement for any bank sending funds to a US bank to show the full history. So if I cashed out in a foreign bank and then tried to transfer to US, this “travel rule” that would be added would require that bank to show where it got the funds, which would invalidate the ability for me to send them back to US.

So even though this is just a US regulation, it would effect other countries and how they would deal with US citizens and their banking institutions, as well as fiat on/off ramps for crypto.

Hopefully @Mike_Wagner perspective on Yellen coming into office and no regulation being passed, if proposed would happen until new administration takes office is how this would play out.

If it does happen, which again I hope it doesn’t and the new administration would not take the stance, I do think it could effect how US citizens look at Incognito, depending on how strong the regulation is about showing full history of coins sources.

My hope is that this is just FUD from US, and by this time tomorrow things are looking up.


I wonder how purchases with crypto would work in this situation. Like if your a business and you accept crypto. Do you get a free pass, or do you just lose money?

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I think this only applies to banks, so indvidual business doing P2P selling or trading are not effected, only regulated bank industries… so credit card companies would be effected, for instance Crypto.com would have to do some work on verifying coins entering their system to be able to use them to top up their MCO Visa cards, because that is done via Metropolitan Bank… but the vendors using Visa cards would not.


Well, when a user receives crypto for a product or service, I would assume they would want to exchange that for fiat at some point. If they are allowed to exchange the crypto they earned to fiat, which they should be able to, then the regulation means nothing. Incognito coins wouldn’t be tainted for normal transactions. However, if they start seeing a large majority of your incoming coins are from Incognito and they start flagging you. What are you supposed to do? Prevent users from sending you coins from Incognito… I don’t think that would work.

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This is just one of the issues… and why the regulation would be very difficult and tie the hands of alot of exchanges and fiat on/off ramps. Users doing P2P trades wouldn’t be able to do this verification, and would only find out when they went to convert to fiat… this regulation would be very hard on DeFi products in general.

I say burn all the FIAT! Make it a crypto only world lmao.
I believe this will be the natural progression over time anyways. Provided we don’t get hit with massive solar flairs that bring us back to a pre-electronic tech era.


Good mo! Count how many people in USA and how many in the world? And how many rich us citizens are not transnational? I don’t think this could affect anything. There’s just fear (a little, no more, that makes it fluctuates). Then ask who owns all theses big news websites and papers? They are in war with word citizens to keep the power. But remember this power to people give greats responsabilities. Without taking care of the weakest of us, there’s no more dream. And the dream makes the price.

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I think even if this were true tomorrow, regulation will relax. Real money is finding its way into the crypto world. Especially with btc. As more people with real money start adopting this “fake money, but we still want a take for the government anyway”, you’ll see regulations relax again. It just needs to benefit the rich before they start sending in lobbyists. True American capitalism. #HODL


My two Satoshis,
Onchain batering systems could still get around this. There is a service where you have others buy things for you on amazon and you pay them back in btc. I wish we could get Craigslist fully decentralized and interfaced somehow with incognito, an incognito peacecoin would be rad.

Its a pain but all it would do is grow a black market for a decade. Like liquor, or gold coins, and then at some point it would be legit again.

I do think that this would not be an overnight change if it did happen, and I also agree with some of the remarks made by @Thriftinkid, just looking at Coinbase alone, their institutional investors are increasing dramatically, increasing their total assets under management by $14B in 6 months to a total right around $20B… thats a massive influx of investor money coming from US institutions, this alone is probably enough to slow down regulation to where it will not hurt the large money centers that are dropping cash into BTC.

This article by the form DOJ AML chief shows their are opposing views to this type of regulation (https://www.coincenter.org/how-i-learned-to-stop-worrying-and-love-unhosted-wallets/), but I also know this piece was written specifically to counter this report and help lobbyist have a counter narrative to use.

Andrey also pointed me to this video a while back which shows some of the information from the report and its effects and the timeline to implement something like this (and the difficulty to do so)… it is worth the watch if you have time and are interested in regulation in US.

Finally, I talked with some people from the Netherlands last night about how this regulation was implemented and what hoops they had to jump through to work with it, and it essentially boiled down that exchanges would white list 1 address per coin for an individual, and that individual would have to prove that address belonged to them. They did not track where the coins had come from prior to that wallet address, so the coins could have come from any source. XMR specifically was not allowed to leave or enter exchanges, because of its not tracking capability… but they could trade XMR on the exchange. A user could hold XMR, trade it on a DEX to a different coin, then bring into a centralized exchange though.

To me, if this was implemented similarly in the US, it would just be a burden for the exchanges, and you would just need at least 2 self custodial wallets… one would be an extension of where you took coins on/off central exchanges the other would be your “real” wallet. The KYC wallet would essentially become just an extension of the central exchanges, but under your individual control.

I don’t think that would be a killer and would be easiest enough to work around (and in the end, pretty pointless of a regulation as it only adds overhead but doesn’t really change anything). I also agree with the Unchained Podcast episode that this would take some time to implement and would not be happening anytime soon… although, if it was passed, I imagine there would be somewhat of a dip on prices, but they would eventually bounce right back… too much money is already involved, with institutions already making too much money for the government to destroy it (IMHO)… its one thing to cripple the average person, but usually large financial institutions and companies are able to ensure their revenues are not completely tanked by new regulations like this.


My Satoshi comment on this matter is this…for one all the comments were excellent…Thriftinkind, Doc, Revolve. and MW…interesting points were made by each author…their might be some form of regulation at some point but the likelihood of anything happening in very near future is doubtful. Though Janet Yellin if confirmed as Treasury Secretary is not a big fan of Crypto the new administration has bigger fish to fry once they take over from the current administration…bottom line it’s something to keep an eye on from time to time but nothing to lose sleep over at present… :sunglasses:


Agreed. @Tempestblack. I’ve always proposed my approach in any crypto as questionable. Im a conservative investor. That was just an in my face big no lol. Im a #hodl


This topic is about anyone owning a private key when they describe “self hosted wallet” so its important to understand this is such a broad range and basically is not enforceable. Yes incognito app is called incognito wallet but we really aren’t a wallet service , its a dex. So important to understand services like incognito are not the ones in regulators cross eyes when it comes to this topic although it would be a good idea to not send directly from an exchange without a few hops in between.


Just another one of the reasons I’m leaving the “land of the free.” Americans in 2020 have begged for more government control of their lives. Alternative currencies that pose a better option than Monopoly money of course won’t be supported.
Even if it doesn’t happen soon, it will eventually. Americans want to give more power to the oligarchs.


@Matt6412 I agree that it will be impossible to stop, but I don’t think the issue is really wether or not it is possible, but wether or not it is legal. While it would be impossible to enforce a regulation that prevents someone from holding an unknown private key (“wallet”), the real issue is wether or not businesses can operate with with customers who have them.

This is also something that Brian brought up in his tweets (https://twitter.com/brian_armstrong/status/1331744884856741888?s=20). The real issue is the stifling of innovation that would come from something like this, if it reached beyond just exchanges that were fiat on/off ramps. If every day businesses that used crypto for tips (Brave browser, publishing platforms) or the general tokenizaiton of real world objects starts to really become a problem. IMHO, the real issue is if something like this would take hold that prevented anyone from doing legal business activities without first KYC’ing a wallet, that would be incredible over burdensome and would essentially stop the crypto innovation that is happening in US… it wouldn’t stop crypto, and it wouldn’t stop innovation, but it would greatly hamper the ability for US businesses to participate. This was one of the final thoughts from the former DOJ AML chief as well.

I don’t think it’s an issue of “stopping crypto” or “its not enforceable”, but if the US makes it where legitimate businesses can’t operate with this in place, then that is the real problem. But again, as I stated above… I don’t think this is on the immediate horizon, and if the government only locks this to exchanges and if it had a similar implementation as Netherlands, I think the total impact will be minimal and pretty much pointless.


Thank you Doc for conveying what Basically is the issue with this proposed regulation and I agree with you that implementation of such a regulation will be harder to enforce… :sunglasses:

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