Possible New Regulation around Self Hosted Wallets for US

Also good to note if such regulation ever came about. incognito app would have to pull itself off the Google play and iTunes store and rely on github repository to distribute downloads…also would be advisable to have tor integration so there is plausible deniability built in, along with multiple hops on incoming and exiting shields (I suppose 4 hops would be considered safe?). Pulling app off play store and iTunes makes it so you aren’t marketing to usa users as this is what would have to be done primarily to avoid fincen violations

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I don’t know if you guys have seen this,
but: https://cointelegraph.com/news/us-lawmakers-seek-to-make-stablecoins-illegal-without-federal-approval
US bill was was introduced to congress to regulate stablecoins, making it illegal to use without government approval.

Dubbed “The Stable Act,” the bill is intended to “protect consumers from the risks posed by emerging digital payment instruments, such as Facebook’s Libra and other Stablecoins.”

That’s some next level FUD right there. Well … maybe it’s warranted for Libra Diem because Zuck 'n FB, but … lolwut … regulated stablecoins. Get bent.

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This seems really odd now that Visa is coming on board to support stablecoin transactions…

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To me, it makes complete sense. The government want’s to have it’s own stablecoin that the they can regulate all they want. I don’t think they want any competition when it comes to USD on the blockchain. If they need government approval for stablecoins, I think Visa will 100% get government approval for processing government issued stablecoins. It seems like they are trying to give the big banks and big processing companies the reigns when it comes to crypto. They want to delegate the potential power directly to the big companies that already have it, cause as you know, money controls the government and these companies have large amounts of money.

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They will try to protect there precious USD aka tool of power with a lot of dirty moves. But in the end we will win no matter what. This is nice short article which shows, that it always happens this way :slight_smile:

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Hi Sato…an excellent article you shared in your post…I especially liked how the author of the article displayed various technologies in their strong and weak forms…and indeed a very strong argument he makes about how in the long run those who are visionaries and intrepid about the strong form of whatever technology they be proponents for…are the ones that wind up being the pioneers and trendsetters in the long run…so yea…I say to them so called gov’t regulators…“Regulate this buddy…hehehehe”… :smiling_imp: :wink: :sunglasses:

Thanks you @Tempestblack. Yes I also like this article. Short but wise. As more they regulate as more we will push the technology and decentralize more and more. The next 10-20 years will be huge, I really believe that we will have a much better world thanks to the blockchain / decentralization. So many ideas will come up for much better governance and the small minority who tries to control everyone around, will loose all of their power. It’s is going to be a wonderful world, where everyone is really free and can be creative, come up with cool ideas which benefit to everyone instead only being a extreme profitable money business. Instead most of us will wake up and our thoughts during the day are not going to be, how can i make money out of this and that.

Instead we would be able to question our self what will bring the most value for me, my family, friends our the whole mankind, earth etc. Once you have a cool idea, you make a proposal on some cool defi platform and will hopefully find funding within hours. Many people around the world who like your project idea, will fund raise you. Each just with a few bucks maybe and get so a small share on your project. No more wall street gangsters, who only look for short term profits, which only leads to wars, data collection, extreme expensive medical sector etc.

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So where are you moving too? What places don’t have China, Russia, Nations of Islam, the EU, or some other big brother looming? Where has greater freedom and isn’t benefiting from US military protection and subsidies?

I am very much against regulation
Their are rights and freedoms the US is definitely infringing on, but most are in direct opposition to our founding framework so their is at least legal avenues to resist. I dont want to just trade one big brother for a worse big brother.

As far as I am aware the US is the only country that has free speech/press as part of its core constitution.

If I knew of a state both stronger and freer I would consider moving. But it had to be both stronger and freer. Because a weak freedom is a temporary freedom.

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That George Bernard quote was fantastic in the article you linked…

It reminds me of a book on decentralization called the spider and the starfish.

With the internet many believed it would be a boon For human freedom and it is… until its not. 2016 I believe was a turning point with the internet for two reasons.

  1. President Obama gave away ICANN internet dns to the UN as an apology for spying on the world with the NSA. This is long term Incrediblely bad for the internet as it made it more censorable for every nation. It incenavised big tech to cater to Local despots so they could have locally curated internet. Basically the internet was no longer shielded by the US constitution.
  2. Trump won a victory by bypassing mainstream media bottlenecks. It was a wakeup called for the institutions. they realized they were getting left behind and they started to use money to strangle the internet. After 2016 youtube was flooded with AP, al jazira, cnn, abc, and msnbc.

Big tech micromanagement of influencers skyrocketed in 2016.
I see these stages of the internet:

  1. Underground - apranet, hackers
  2. Beakout - aol, .com boom
  3. Pull back - dot com bubble
  4. Adolecent Consolidation - MySpace, geocites, YouTube bought by Google arab spring
  5. Bull market - facebook, Craigslist, uber, Amazon boom
  6. Consolidation (the culling) - F.A.A.N.G supremacy. 2016 election.
  7. Bear winter… totalitarian lockdown, echo chambers, technocracy.

I say all this because I believe the same thing will happen with blockchain.

Right now its a chain that frees us, but there is an opportunity window that is closing, I believe we have about 5 years left and the window will be closed and the phase of power consolidation will happen.

  1. Underground - bitcoin
  2. Beakout - altcoin boom, eth, chainlink crypto millionares, whales
  3. Pull back - 2017 bear market, institutions getting in secret
  4. Adolescent Consolidation - institutions and gov trying to figure out how to assimilate. What chains will survive
  5. Bull market - mainstream adoption, institutional blessing, national level game theory.
  6. Consolidation (the culling) - new power axis established
  7. Bear winter… totalitarian lockdown

I believe we are in step 4 in crypto and step 7 in the internet. Long term i see blockchain as a tool of mass enslament. That’s why I am so hopeful for incognito.

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Damn JoyRaptor…hell of a post…I had to reread it twice…it’s heavy and definitely thought out…my compliments to you…by the way…Sato…once again your words are just as important and learned …thank you both for sharing… :100: :sunglasses:

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I had this conversation with someone yesterday who has also traveled the world. The United States has a lot of freedom, on paper. But other cultures embody freedom of speech as part of the culture more than the US, no paper needed. There are many places you won’t get fired for saying men shouldn’t compete against women in athletics. Many places where you can wear clothing supporting the current president without being physically attacked. Many places that are not literally asking for censorship.
Does the Constitution even matter? If the citizens don’t care then words on paper hold no weight.
As to where I am headed? Don’t worry about that:) If you think the US is the freest nation then I will not argue with you. Please enjoy the freedom. I’m not leaving in order to have the US version of freedom follow me. I’m not one of those guys who loves ruining a nice place by telling every average Joe about it.

Looks like they have released their proposal for the new regulation. You can check it out here: https://home.treasury.gov/news/press-releases/sm1216

Ad as @Mike_Wagner stated above, this is opening up the commenting period for the proposal.

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I assure you the Winklevoss twins will be sending their back channel lobbyists while publicly supporting it lol

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So looks like all traditional exchanges will have to ban XMR or privacy coins in general then. I would say somehow awesome news for us, as we become on of the best spots to trade XMR on the other side I’m not sure if this much of attention, which will come then to us is good in terms of regulators might trying to find a way to hurt us in this case as well. Right now we are in my opinion not decentralized enough to be unstoppable in terms of regulations. What do you think guys?

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Heh, fifteen days for public comments. Corrupt Bureaucratic Loophole achievement unlocked!
current
From §I.B. of the proposed regulation –

First, this proposed rule would require banks and MSBs to file a report with FinCEN containing certain information related to a customer’s CVC or LTDA transaction and counterparty (including name and physical address), and to verify the identity of their customer, if a counterparty to the transaction is using an unhosted or otherwise covered wallet and the transaction is greater than $10,000 (or the transaction is one of multiple CVC transactions involving such counterparty wallets and the customer flowing through the bank or MSB within a 24-hour period that aggregate to value in or value out of greater than $10,000). Second, this proposed rule would require banks and MSBs to keep records of a customer’s CVC or LTDA transaction and counterparty, including verifying the identity of their customer, if a counterparty is using an unhosted or otherwise covered wallet and the transaction is greater than $3,000.

The proposed rule provides that regulated entities (US-based exchanges, banks, MSBs, etc) will have to proactively file reports for transactions worth $10,000 or more, to private addresses. For transactions above $3,000 but below $10,000, regulated entities only need to keep and maintain records (but not necessarily send them to FinCEN proactively).

The records to be kept in either case are the KYC info of the regulated entity’s customer and the KYC info (without verification) of the other side of the transaction.
proposed
As @doc noted above, a viable workaround will be to transfer first to an address you control. This transaction stays within the proposed scope of this regulation. Then transfer to another address you also control. This second transaction is outside the scope of this regulation. It and any other down-chain transaction would again be pseudo-anonymous, or as they are now.

While certainly obnoxious, many folks are already doing this for other reasons. For example – as a work-around for the exchange-withdrawal-delay-to-deposit-time-window conundrum when depositing to Incognito directly from an exchange such as Cornbase.

This may become a bit of a cat-and-mouse with FinCEN in the future. Treasury responds by extending the regulation to two transactions to catch the above workaround. So “we” add another transaction to regain pseudoanonymity again. Treasury responds with new regulation requiring info for three transactions, then four then ten, etc, etc. And each time the response will be: add one more transaction to a controlled address to reestablish pseudoanonymity.

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From §I.A –

CVC is a medium of exchange, such as a cryptocurrency, that either has an equivalent value as currency, or acts as a substitute for currency, but lacks legal tender status.

This is so unnecessarily broad it could, in theory, apply to certain loyalty programs (think credit cards), certain types of rebates/rewards programs, certain types of store/vendor credits, in-game currency, etc.

From §II.A –

Additionally, because such transactions do not necessarily involve a regulated financial intermediary on at least one side of the transaction, they may never be scrutinized pursuant to any AML/CFT program.

“Such transactions” here are transactions involving privately hosted wallets. In essence, FinCEN is complaining that there exist transactions they can’t “scrutinize”.
And those transactions need to be scrutinized because terrorists.

From §VI.4 –

Has FinCEN struck a reasonable balance between financial inclusion and consumer privacy and the importance of preventing terrorism financing, money laundering, and other illicit financial activity? If not, what would be a more appropriate way to balance these objectives?

If transactions worth <$3000 is outside the purview of FinCEN, then that metric should apply to the IRS also. The IRS should exempt as taxable, any transaction worth less than $3000.

From §VIII.A –

Therefore a reasonable minimum estimate for the burden of administering this rule is approximately $30.8 million annually (1,284,349 hours multiplied by $24 per hour).

Or 617 full-time positions at the Federal level. That’s a got-d@mn new agency.

From §VIII.D.2 –

Estimated Total Additional Annual Burden Hours: 10,542 hours (10,542 banks x 1 hour / bank) + 194,545 hours (365 MSBs x 533 hours / MSB) = 205,087 hours.

Uh, what? 1 hour TOTAL additional ANNUAL burden for banks to comply with reporting requirements. And ~10 hours per week for MSBs to comply. Only a government estimator could “estimate” 1 hour for an entire year’s worth of compliance. Reading and absorbing the rule changes alone takes longer than an hour. Idiots. And they make the same/similar estimates in §VIII.D.3 for record-keeping/verification compliance.

Misc

  • Terrorism/terrorist/terror is mentioned 32 times in a 72 page document. That’s approximately once every other page.
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Moar dayz is moar dayz:

The Financial Crimes Enforcement Network (FinCEN) said Thursday it would reopen its proposed rulemaking period for an additional 15 days for its reporting requirements, and another 45 days for a requirement on recordkeeping and counterparty reporting requirements.

The clock restarts when the document is published in the Federal Register, the nation’s logbook. According to public documents, this will be Jan. 15.

Comments on reporting requirements will thus close (again) on Jan. 30.
Comments on recordkeeping including the counterparty reporting will thus close (again) on Mar. 1.

 
Interesting observation from the article:

Perhaps most important, the extension means Treasury Secretary Steven Mnuchin, who is said to be spearheading this effort, will be out of office by the time the comments period closes, perhaps allowing for FinCEN to better incorporate industry feedback.

 

And, one last thing –

Above still applies.

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:face_with_hand_over_mouth:

President Joe Biden has frozen all agency rulemaking, including former Treasury Secretary Steven Mnuchin’s controversial proposal on “unhosted wallets,” according to a prominent cryptocurrency lawyer.

3). With respect to rules that have been published in the Federal Register , or rules that have been issued in any manner, but have not taken effect, consider postponing the rules’ effective dates for 60 days from the date of this memorandum, consistent with applicable law and subject to the exceptions described in paragraph 1, for the purpose of reviewing any questions of fact, law, and policy the rules may raise. For rules postponed in this manner, during the 60-day period, where appropriate and consistent with applicable law, consider opening a 30-day comment period to allow interested parties to provide comments about issues of fact, law, and policy raised by those rules, and consider pending petitions for reconsideration involving such rules. As appropriate and consistent with applicable law, and where necessary to continue to review these questions of fact, law, and policy, consider further delaying, or publishing for notice and comment proposed rules further delaying, such rules beyond the 60-day period. Following the 60-day delay in effective date:

a. for those rules that raise no substantial questions of fact, law, or policy, no further action needs to be taken; and

b. for those rules that raise substantial questions of fact, law, or policy, agencies should notify the OMB Director and take further appropriate action in consultation with the OMB Director.

But then Janet Yellen said this nonsense on Tuesday:

I think many [cryptocurrencies] are used, at least in transactions sense, mainly for illicit financing and I think we really need to examine ways in which we can curtail their use and make sure that anti-money laundering doesn’t occur through those channels,” Yellen said Tuesday.

:man_facepalming:

Somebody toss an eight boat in the Hudson, fill it with Winklevii :rowing_man: and point it south towards DC. Somebody else polish up Armstrong’s cueball noggin with carnuba wax for some high-speed, low-drag lobbying.

Crypto needs our prominent CEOs to put their big boy pants on and be ready to greet Mrs. Yellen at Treasury’s front door with some FUD busters.

“mainly for illicit financing” :man_facepalming: We’re all kingpin criminals. Kingpins!

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