Expect new regulations on bitcoin and other cryptocurrencies in the next six-to-eight weeks, but the new rules won’t be disruptive, a top financial regulator told MSNBC.
Brian Brooks, the acting comptroller of the currency for the U.S. Treasury, told CNBC’s Melissa Lee on “Squawk Box” to expect “clarity” on cryptocurrency in the next six-to-eight weeks but said, “nobody’s going to ban bitcoin.”
“We’re very focused on getting this right. We’re very focused on not killing this,” Brooks said. “And it’s equally important that we develop the networks behind bitcoin and other cryptos as it is that we prevent money laundering and terrorism financing.”
The new regulations are “good news for crypto” and will help accelerate adoption of crypto by major financial players, Brooks said.
“It may have been a bubble two years ago, but with more clarity, institutions that see this as a real thing are going to adopt at scale, which they’ve already started to do,” Brooks said.
Bitcoin hit an all-time high of $19,783 on Cyber Monday after falling below $4,000 in March 2020 soon after the coronavirus pandemic started.
In 2020, institutional buying has been credited with helping push up the price of bitcoin.
Cryptocurrency enthusiast Jack Dorsey made what he described as a mission-driven investment earlier this year when his payments company, Square, purchased 4,709 bitcoins — a $50 million investment that represents 1 percent of the firm’s total assets.
PayPal followed suit, saying it plans to let customers and the 26 million merchants on its network buy, sell and shop using bitcoin and other virtual coins. It plans to expand the service to Venmo in 2021.
Hedge fund managers Paul Tudor Jones and Stanley Druckenmiller both say they’re bullish on bitcoin, MSNBC reported.
U.S. regulator the Office of the Comptroller of the Currency said recently that banks will be allowed to hold cryptocurrencies for customers.
“It may have been a bubble two years ago, but with more clarity, institutions that see this as a real thing are going to adopt at scale, which they’ve already started to do,” Brooks said.
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Brian Armstrong, the CEO of the digital currency exchange Coinbase, sent out a warning in November about potential crypto regulations. He tweeted that he’d heard rumors the Treasury Department was rushing out new crypto regulations ahead of President-elect Joe Biden’s January 2021 inauguration.
“I’m concerned that this would have unintended side effects,” Armstrong tweeted on Nov. 25. Specifically, Armstrong said he was concerned about regulating self-hosted crypto wallets.
“For those who don’t know – self-hosted crypto wallets (also known as non-custodial wallets or self-custody wallets) are a type of software that lets individuals store and use their own cryptocurrency, instead of needing to rely on a third party financial institution,” Armstrong tweeted. “
Self-hosted crypto wallets are important because they allow anyone to use this new technology to access basic financial services, Armstrong tweeted.
The open nature of cryptocurrency makes it a powerful tool for innovation and levels the playing field globally, he continued. “It is what is fueling innovation, such as in Defi. It has the potential to bring down the cost of financial services, and improve accessibility.”
But the proposed regulation “would, we think, require financial institutions like Coinbase to verify the recipient/owner of the self-hosted wallet, collecting identifying information on that party, before a withdrawal could be sent to that self-hosted wallet.
“This sounds like a reasonable idea on the surface, but it is a bad idea in practice because it is often impractical to collect identifying information on a recipient in the cryptoeconomy.”
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