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Tell HN: Coinbase now requires physical address of recipient in crypto transfers
387 points by jb1991 on June 24, 2022 | hide | past | favorite | 409 comments
Just got this email from Coinbase, and it seems one by one the promises of crypto of the last several years are evaporating:

Starting on June 27, Coinbase will introduce some changes required by local regulations. Specifically, when you send crypto outside of Coinbase, we are required to ask you for the name and physical address of the recipient and the purpose of transfer. In certain cases we may require you to link a Coinbase Wallet to your main Coinbase account in order to send crypto assets off the Coinbase platform. This allows us to verify that you control the Coinbase Wallet that is receiving the crypto assets.




> ... it seems one by one the promises of crypto of the last several years are evaporating ...

Hardly. What's happening is that a financial institution is being regulated and pro-actively adopting steps to please regulators. And those regulators will never be satisfied.

As regulators squeeze harder and harder, it will drive Coinbase under. That is not the disaster that some might think. It's a necessary next step for Bitcoin to prove that it can actually deliver on the promise of censorship-resistant money.

At the very least what's happening with exchanges, regulation, and the over-eager suits at Coinbase demonstrates the need for censorship-resistance in the first place. None of the new steps add anything whatsoever to the experience of the user. It's all about other people exercising control over that user's money.


You call this "censorship-resistance" but it seems to be "law-resistance." This is a point that critics of crypto have been making for awhile: crypto's only use-case seems to be to avoid the law. At least in the USA, the courts have typically granted wide latitude to technologies that have a mix of both legal and illegal uses, but crypto seems to only have illegal uses, so it looks more and more like one of those technologies where the courts often allow strict regulation or outright bans. Especially in the democratic nations, where the laws have the legitimacy granted by popular representation in the political process, there is no reason to tolerate a technology if that technology exists solely to evade the law -- there must be some clear legal purpose for the technology.


More directly, "censorship-resistence" == "criminal enabling".

In practice the primary use cases for Crypto Currency are:

1. Running scams (see: NFTs, most exchanges, etc...)

2. Speculation (HODL)

3. Laundering dirty money

4. Buying contraband (drugs, guns, etc...)

5. Tax evasion

6. Extortion payments (crypto-locking viruses, etc...)

7. 419 scam payments

8. There was once a way to pay for burritos from a specific restaurant using Bitcoin.

9. Everything else

It really shouldn't be a surprise that lawmakers have taken a dim view of the subject. That said, there are a handful of legitimate uses for cryptocurrency, but it's hard not to think that we could find better alternatives for those use cases, especially given the disastrous environmental impact of many of these crypto schemes.


Personally I have been using Bitcoin for legal & legit use cases for years. It is primarily a hobby, but personally I believe in the long run it will also benefit me financially. As a personal savings and checking account it works, though the volatility for many is understandably hard to bear.

For online purchases in my country Bitcoin works very nicely. Also for travel related purchases. I would estimate that maybe 60-70% of my purchases are in Bitcoin these days.


I would be fascinated to read the details about this kind of lifestyle. Buying groceries, plane tickets, concert tickets, etc... with Bitcoin.


Groceries I don't buy with BTC, because it is not possible. But basically all household items, thanks to several big online retailers accepting BTC in my country. Also all travel related stuff, hotels, flights, etc.

I very rarely use BTC in brick-n-mortar setups, in the last year once in a restaurant where I had a bigger bill and they had recently started accepting it - went actually very fluently.

It is not really that much different lifestyle to any normal life, I just pay with BTC where it works. And these days it works very fluently in online setups in my experience.


The lifestyles not that different, except the relative value of the currency you use on apparently a daily basis has dropped 52% this year? Do you hold bitcoin, or just convert whatever your employer pays you in fiat into btc every two weeks? With a limited number of potential retailers, how do you comparison shop? How do retailers handle pricing and the volatility of bitcoin?

I just don't see how this is at all possible. Like, who are you paying bitcoin to for flights?


But what are the advantages of BTC in these cases? Transaction fees + Processing Times are so high that make it uninteresting for many people.

It feels like translating the real value of something (say $5) to something else (e.g., 0.01 BTC) with every purchase. It's just overhead at this point.


It's life as usual - the biggest mainstream webshops here accept Bitcoin. I can buy anything I want that way - groceries, tech gadgets, kitchen machinery, garden equipment, whatever - with same-day or next-day delivery. The mainstream concert ticket sellers also accept BTC here. Not sure about plane travel, but I can use BTC to buy train tickets.

If I can't use Bitcoin at a store directly, I can simply take out some cash at a nearby Bitcoin ATM - nowadays there's more BTC ATMs than my bank's ATMs.


With Bitcoin directly? You'll be quite limited (though not impossible). If you are looking for non-KYC off-ramps, there are many; especially if you are living in a country where cash is widely accepted. P2P Bitcoin trading is quite widespread, though it requires some due diligence to find reasonable and trustworthy people to exchange with.

For most of your online purchases, you can go with a gift-card; though it's an annoyance compared to just having one single card with rewards and cashback.


You can already do that, but with other tokens. Maybe you should read more about other blockchains other than bitcoin.


I read this and think ".. and a16z is doubling, even tripling down on cryptocurrency?" Do they not have the self/brand awareness that they are over-indexing on this area? It doesn't deserve zero funding, but maybe not launching fund over fund dedicated to it? Did a16z jump the shark?


Hacker news is a bubble of crypto haters, everything positive gets downvoted here.

There are hundreds of apps in DeFi, was 250B invested, over 10MM paid per day just in transaction fees, and 20k developers. The amount of users is growing as fast as the internet was during the 90s (we're equivalent to 1998 now) and almost every usage graph is up and to the right exponentially. Can see many of the metrics at https://defillama.com and https://link.medium.com/readqva7brb

Ethereum by the metrics looks like the greatest startup investment of all time. It was also the quickest to reach $500B market cap. But alas many are going to miss out because they miss the forest for the trees.

A16Z is definitely making the right moves based on the metrics. HN folk are blinded by emotions, and not bothering to do the research. The person you're responding to doesn't even know DeFi.

If you want to understand what DeFi is check my post history. I often talk about it yet every crypto thread is always the same dumb "only criminals use it" comments voted to the top.


I'm not a big crypto person. But I do think that it does one thing well, it enables the transmission of value digitally. The same way I can transmit a file to you over the internet, I can now transmit a crypto coin of value.

Now, personally I don't have a lot of issues with the prevailing system, venmo and similar apps. I don't have any issues buying what I need online since credit cards work and are widely available.

I suppose crypto could be useful for industries that are legal, but banks do not like engaging with. Like adult entertainment.


The thing is, crypto coins tend to be terrible ways to transmit value. They usually have massive overhead compared to pretty much every other system and are often quite slow.

Anybody who has tried to pay for something directly with Bitcoin will see the problem instantly. The mining fee is a significant percentage of your transfer unless you're sending literally thousands of dollars worth of Bitcoin and it typically takes 4-24 hours for the transaction to clear unless you're willing to increase the transaction fee significantly.

Crypto currencies are so bad at this that PayPal is a better way to transfer money. Let that sink in.


Comparing a Bitcoin transaction to a PayPal transactions is comparing Apples to Elephants. They have different value proposition. A more fair comparison is comparing a PayPal transaction to a Coinbase one. In which case they are the same (haven't used PayPal for a while, so not sure if they are charging fees for P2P transfers).


I have been using Bitcoin for various online purchases for many years. For me it always works fluently. In fact I have had more cumbersome experiences with fiat payments.

Not that I have much problems with any payment methods. I just prefer to hold Bitcoin and use it as my primary currency. I'm willing to willing to spend some extra effort to pay with it, but if it gets too difficult I'll resort to fiat.


I can Paypal and Apple Pay and ACH you already. For likely much cheaper.

Crypto adds nothing.


Not sure about "likely much cheaper". Those methods are either funded by VC money (for the case of early startups) or in the case of bigger companies, their other products that monetize you in other ways.

BTC is expensive to transfer, but other options like LTC are not. It takes a small fraction of a penny (in USD value).


But then how am I supposed to commit crimes!?


There are other ways to do crimes with USD.


At least with USD, when you gotta do it, you can do it.

https://www.youtube.com/watch?v=7HrmD_vIMIk


what value are you talking about? currency themselves have no inherent value and are only backed by the confidence that people have of the issuer.


The value is whatever you may exchange the crypto for. Much in the same way that the value of a dollar is what it buys you.


Censorship-resistance == law-resistance. Rules for censoring are imposed by state entities or by private entities enforcing state-defined rules


When the social contract is so deteriorated and government so corrupt. Is that a bad thing?


Would you make this same argument regarding, for example, Tor? Why or why not?

To me it's the same thing. "Law resistance" is a prerequisite for censorship resistance, because governments are often the ones doing the censoring.


But originally, crypto was built with the expectation of being illegal and yes, to facilitate only illegal transactions, that live and die illegal with no communication with "white" money. It's only in the recent few years - to attract normies' money - it started to make weird detours into the legal space.

I think there is no need mixing the two. Use normal banking, companies and taxable jurisdictions for white money - everyone needs some white income to explain what they are doing - and crypto for the rest.

Crypto people i know (the real ones), want it illegal, because then their work has fewest impediments - it becomes nothing but coding in R, Solidity, some Python, and occasional visits to a guy next block for a pack of cash. No paperwork.


Sounds like bullshit. Yes there have been criminals using Bitcoin since the early days. But there have been always a lot of people promoting it for normal merchants. There are lots of shops accepting Bitcoin these days, depending where you live though.


The only 'legal' purpose is speculation around 'decentralized innovation'. It is legal to speculate that Bitcoin or NFTs may be more useful someday, therefore more in demand. Obviously that makes it no different than beanie babies, but buying beanie babies is legal and a lot of people did it.


I think a very legitimate, legal purpose of the technology is for the implementation of financial systems. How many billions of dollars of computers, networks, mainframes, and engineers are dedicate to running the financial system? Distributed ledgers are basically an abstraction for implementing financial systems. Think about them as C for the financial system, where the current financial system is assembly. The doesn't mean public, decentralized blockchains are the answer the any particular problem, but blockchain technology can be useful even if they exist mostly as private chains run by financial institutions.


You're never going to have a currency that can operate outside of black markets avoiding regulation.

Every connection to any legal entity is going to be regulated, full stop. There is no promise crypto can make to get around this.


Or avoid being scammed, becoming scams or being wholly manipulated. I don't know how people think cryptocurrency will just 'work itself out' as some decentralised system with no oversight somehow free of corruption and illegality... that holds a steady, useful value within regulated and legal markets.


The liberal exchange of currency (arguably money in this case) is not a "black market." It's only a black market in the context that a government thinks it has the right to regulate private transactions to the extent that the physical address of a recipient needs to be on record. Is it a black market when I pay the neighbor kid to mow my lawn and don't report their address? Nonsense.


> Is it black market when I pay the neighbor kid to mow my lawn and don't report their address? Nonsense.

No, but it is illegal for financial institutions (and many industries) to provide services without knowing who they are serving. Not sure how anyone is surprised that KYC requirements are coming for crypto..


Never attribute to malice that which can be explained by ignorance.


Probably because banking stuff is cryptic and KYC sounds like something that is dredged in flour and 21 seasonings before being fried crisp instead of a very real obligation.


The government has this right.

And they are right to assert that, because the alternative is all sorts of bad actors using this alternative currency to do all sorts of things we don't want as a society (money laundering, drug trade, human trafficking).


No they don't, at least not in the United States. The Government has no rights. It has privileges given to it by the people. Only individuals and corporations have rights. Corruption may have been subverting that principle since time immemorial, but that does not change the fact.

The federal government, if it was motivated enough, has the capability to bust your door down and hold you in a cell indefinitely with no trial if it wanted to. That doesn't mean they have a right to do so. It only means the people have allowed them to do it.

> all sorts of things we don't want as a society (money laundering, drug trade, human trafficking).

Oh, you mean the eternal bogeyman that can be used to justify any conceivable invasion of your privacy by government? Right.

What do you say to The Government requiring that your home and all new homes contain cameras and microphones to detect bad actors doing all sorts of things we don't want as a society, like money laundering, drug trade, and human trafficking?

Somehow I doubt you'd be on board with that, which is the entire point. You would draw a line in the sand because The Government does not have a right to do that, and those unsavory things that could possibly happen in your home are not a good enough excuse for them to subvert your rights.


Detailing discussions by questioning definitions doesn’t help advance your point. A black market is a market that is illegal, not just a market that you personally don’t approve of. Governments are doing what their laws say they can, trying to disambiguate between “right” and “privilege” doesn’t change this.

Your point seems to be “they can’t do that because I don’t like it”, which is the basis of a political movement, not a discussion of what can actually legally be done right now.

KYC laws are pretty universal, they’re not going away because you say they shouldn’t be real.


You are not obligated to follow a law purely because it exists. I realise you will immediately jump to the alternative here but you should take a step back and consider the implications of being obligated to follow any harebrained, harmful and sometimes downright evil law that has ever existed.

Legal and ethical are not the same thing. If a law is any of the above things plus unenforceable I would argue it makes zero sense to obey it.


You're obligated to follow a law because if you don't someone will hit you with you a stick, kidnap you, and lock you in a tiny room. You're right that governments don't have "rights." They have abilities.


Exactly. Which is why I also added unenforceable. The government can make idiotic evil and harmful laws till the cows come home, and history shows that indeed they do.

The value in innovations like cryptocurrency are about making a particular class of the above idiotic laws unenforceable, to the extent they are successful. Other similar products exist which make other forms of law similarly unenforceable, for example Tor for dissidents in totalitarian regimes looking to smuggle information into or out of their open air prison camps, etc.

The harder agencies try that produce and attempt to enforce these fundamentally unenforceable laws, over time, the less able they will be to do so, because the nature of cryptography is that the mathematics massively favours the defender to such an extent that even the lumbering behemoths we have in nation states are inadequate to breach it if done correctly. The best they can do is breach supporting infrastructure around it, which just ends up as an evolutionary fitness function for the removal of such vulnerable supporting infrastructure, until they end up creating the monster they simply can't kill.

Which is fortunate, because I dread to imagine a world they actually had the absolute power they so desperately covet.


You mean if you remove Bitcoin/Cryptocurrency, the drug trade and human trafficking will stop? The only thing that I can, kind off, agree on is Cyber Crime (Cryptolocker and friends).

Also, you can't launder money with Bitcoin. Bitcoin financial network is strictly separated from the main stream "legitimate" network where you need to launder your money. Hide your money? maybe, if you can bear the volatility; but not launder money.


The US federal government does not have this right. Policing powers belong to the states. Federal government economic concerns are limited to international borders and keeping interstate commerce moving.

If you want to make an argument that the federal government can stop states from adopting cryptocurrency as money you would be right. The Constitution explicitly says they can't.


In the US, if you pay him over $650 a year, you have to file a 1099 with the IRS.


I just googled 1099 and this is what I found:

> If you made a payment during the calendar year as a small business or self-employed (individual), you are most likely required to file an information return to the IRS.

I don’t think that covers a homeowner paying for services. I’ve paid an appliance repair person more than that this year. I’m thinking about updating my home’s HVAC and that’s going to be way more than that. I hired a plumber earlier this year and spent about that. None of these things require a 1099 to be filed and I don’t wee why landscaping would be different.


You paid a registered business that pays their own taxes and reports their own income, sales tax was paid, you were the customer.

For business to business transactions for contract work or person to person transactions beyond a certain threshold, 1099s are legally required.

The difference is if you’re hiring “some guy” vs being a customer of a business.


I have no idea if the plumber or HVAC or any of the other people I hire pay their taxes or reports their income.


I double checked. You are correct. Only businesses need to file 1099s for contractors.


That's precisely what a black market is.


Regulated, perhaps. But regulation shouldn't entail handing vast amounts of personal details, and the ability of intermediates to be able to track you fully afterwards. I want to be able to buy stuff without centralized entities following me everywhere.


> I want to be able to buy stuff without centralized entities following me everywhere.

Isn't the blockchain a record of everything you do from here until eternity? I understand your wallet might not be connected to you but that's only going to last for so long. I'm not completely up to speed on this so I could be wrong.


Second layer decentralized solutions for this exist: Lightning Network.


Monero is supposedly designed to prevent this, but most of the big chains are completely open.


I haven't studied it, but I believe ZCash https://z.cash/ is not designed to eliminate that record (that's what a blockchain is right?), but to encrypt it and then use zero-knowledge proofs to show the validity of the transactions.

That seems like it might be the best of both worlds in some ways: laws can be enforced when it's genuinely important to do so (the record is there so presumably if you seize people's keys you can verify transactions), but not so cheaply as to entail practical mass surveillance and tyranny. In principle presumably a possible weakness is later large-scale decryption if the encryption gets broken -- but that's arguably much less useful to the would-be tyrants and surveillers.


> I want to be able to buy stuff without centralized entities following me everywhere.

Use cash.


Cash is close to being outlawed. Once CBDCs are a thing cash will be phased out. They'll claim paper is too expensive or helps criminals or terrorists or whatever.


I upvoted you. It is easy to see the end game.


In many countries (EU for example) is illegal for a seller to accept over a certain amount of cash for a purchase. The maximum allowed amount can be as low as a few thousand USD.


Ah yes, the ragpaper that has a unique serial number could never be tracked. /s


It was never that it was impossible, just that it wasn't cheap enough to allow mass surveillance, right?


In order to implement mass surveillance with dollar serial numbers, you would have to identify people during transactions and record them. Nobody taking cash does this outside of ATMs possibly. When I go to the store they don't ask for my ID to pay with cash, they don't record serial numbers, it would be a lot of technology and effort and there's no justification for why. When doing transactions with computers, there's usually a reason for attaching an identity to a transaction, a reason for keeping track of things, addresses, account information, login details, etc above and beyond just banks being required to keep this information.


I don't disagree with you.

The post I replied to said "could never be tracked". People using cash can be tracked if it's important to do so. Mass surveillance on cash transactions is trickier (though maybe with machine learning we'll decide that it's a great idea to track physical transactions of any kind using video etc.).


Monero is touted as digital cash fro this reason. Even if you buy it from an exchange, it's the equivalent of taking cash out from an ATM. There is no way to track where/what you spent that money on.


The ledger for the most popular crypto currencies is public, right?

As in, I don’t even have to be an intermediary to see your transaction history for all time.


> But regulation shouldn't entail handing vast amounts of personal details

Please, do tell, how one can regulate and curtail illegal activities without asking for these details?

> the ability of intermediates to be able to track you fully afterwards.

Fair. This should not be allowed.


Use cash. The moment you go through a computer, you're already screwed.


Cash's days are numbered. It won't be a thing in 15 years.


This kind of thing always depends entirely on what ideas people end up believing, and the details of the problem-situation when that comes about. I know: "obviously" people will never take the threat of tyranny and mass surveillance seriously. Just like obviously women couldn't possibly get the vote from a position of not having the vote in the first place with which to wield power. It was obvious! But it wasn't true.


I think you forgot there’s whole planet with billions of people beyond the USA borders. Something what doesn’t follow every single us regulation != black market.


For better or worse, US law extends to anything that touches our financial network. Even a whiff of a connection to a US financial institution can get you prosecuted by the US. The Bank of Somewhereelse really wants to be able to continue doing business with the Bank of America, so they accept regulation.


please go to Dubai and learn Arabic edit or Farsi or Mandarin, if they confide in you, report back on the universality of the US banks.. secondly, I send you a beaming picture of BRICS leaders this week to reinforce the "fish sees no water" nature of your statement. American here


"A former executive of collapsed Dubai private equity firm Abraaj Capital Ltd on Friday pleaded guilty to U.S. fraud and conspiracy charges"

https://www.reuters.com/article/us-abraaj-usa-crime/former-a...

"A Dubai resident who flaunted his extravagant lifestyle on social media has arrived in the United States to face criminal charges alleging he conspired to launder hundreds of millions of dollars from business email compromise (BEC) frauds and other scams, including schemes targeting a U.S. law firm, a foreign bank and an English Premier League soccer club."

https://www.justice.gov/usao-cdca/pr/nigerian-national-broug...

"United States and United Arab Emirates Sign Bilateral Agreement Enhancing Law Enforcement Cooperation"

https://www.justice.gov/opa/pr/united-states-and-united-arab...

1 minute of googling


What are you talking about, the US successfully imposed FATCA on nearly every bank institution on the planet, and none of them or their government even tried to push back.


That why a lot of people bankside outside the US will refuse to accept US customers. The reporting obligation is only applicable if they have US customers.


Almost every nation allows the US to spy on their citizens' bank accounts. Its part of allowing them to bank with the US.


What they can see and dislike may still be legal in the jurisdiction it's happening in.


This is called the "Travel Rule", and it's part of an international effort to regulate crypto transfers analogously to bank transfers. When you send a wire transfer, you include the address of the recipient and your bank includes your address in the transfer.

It's technically a FINCEN/FINTRAC requirement in the US and Canada, but they imposed the rule before any of the tooling existed... so there's a bit of a scramble happening right now to figure out how to comply with the rule. Coinbase put together a consortium with other centralized exchanges in an attempt to create a common standard that should hopefully reduce the manual work required by customers, but this is absolutely not isolated to them.


As regulators squeeze harder and harder, it will drive Coinbase under.

This seems more like wishful thinking than objective analysis.

It's a necessary next step for Bitcoin to prove that it can actually deliver on the promise of censorship-resistant money.

I've observed three pro-cryptocurrency arguments:

1. It is a store of value (ex: inflation hedge)

2. It is a replacement for x% of monetary transaction (ex: Web 3.0)

3. It is a way to exchange value outside of government intervention

You seem to be in Camp #3. With government controlling money for all of recorded history, why do you think cryptocurrency will be different? There's some compelling evidence that government will continue to exercise control over all currency including cryptocurrency. Just one example:

https://www.thomsonreuters.com/en-us/posts/investigation-fra...


The government has had practically zero control over cash transactions, historically speaking. The only real power governments have over their money supplies are the power to create and destroy money with impunity, that is all.


The government has had practically zero control over cash transactions, historically speaking.

Government has had extremely tight control over cash transactions.

1. Try to give someone $100,000,000 in cash. It literally weighs over a ton. The government stopped printing bills > $100 in 1946 explicitly to control cash transactions. With inflation, the largest bills we have to work with are worth about $30 in 1946 dollars.

2. Look up AML and BSA legislation, "Know Your Customer" regulations, Form 8300, Structuring Deposits. Did you know that a bank has to report you to the government if you deposit more than $10,000 in cash? And that if you deposit $6,000 on a Wednesday and $4,000 on a Thursday with perfectly legal money in an attempt to avoid the reporting that you have broken the law? (https://www.irs.gov/irm/part4/irm_04-026-013#:~:text=Structu....)

3. Try to open up a bank account and tell them you'll be depositing lots of cash. They'll refuse to open an account for you.

And admittedly this is today's U.S. government. But governments haven't just taken a "oh well" approach to cash ever in all of history.


And while not disputing any of that, as far as I know, every single transaction I've ever made with cash has not been logged in my name and is not cheaply trackable. That's a good thing because it avoids heavy concentration of power.


> 1. Try to give someone $100,000,000 in cash. It literally weighs over a ton.

Is this a common problem? I don't normally transact $100M on a normal basis, and the few times I've transacted anything more than even $5k or so usually involved some form with the government involving a title transfer or something along those lines. So then the argument of needing to do it privately is a bit of a moot point anyways.


> As regulators squeeze harder and harder

I used to work for government regulators and this is a such a bizarre view of regulation.

Trust me, people on my team weren't up at night scheming how we might put the squeeze on a companies, and what nice new regulations we might implement to make things harder on businesses.

We barely had the resources to enforce important regulations that everyone would agree should exist.

Please read up on the history of any regulatory body in the US. Nearly every governing body we have and every regulation on the books was create after there was abuse. Regulations in the Federal government are almost never proactive, and as a general rule the regulators I knew had no interest in expanding their purview.

In fact, it's quite uncommon for regulations of any kind to be enforced until you basically force yourself to get caught. Most regulatory agencies are underfunded and understaffed by design. It's a reason so many startups perform regulatory arbitrage for years without consequences, even when their actions are quite harmful to the society overall.


Lots of people are negatively impacted by these regulations, even if you personally didn't feel as if you were making much headway in enforcing them. The difference is that you only see meaningful results if you can enforce the regulations nearly all of the time, whereas the individual victims of these regulations are significantly harmed when they're enforced even once.


> Lots of people are negatively impacted by these regulations

And lots of people are protected by these regulations. I don't really see any data either way about the ratio of people helped versus harmed.


Nerds like us make the same mistake over and over again. "If an HTTP request receives a 200 OK response, then that is by definition proof that a request for access was made and granted." No, no, no, a million times no. The government can make a law that regulates which requests are legitimate and which aren't. And they can compel you to follow those rules. And they can come to your house with guns if you don't. And they can put your physical body in a holding cell if you resist. It literally doesn't matter what the protocol says. Code is not in fact law.


To be fair, everytime there's a thread on HN about a crypto scam/fraud/run etc, there are a ton of comments that read that there isn't enough regulation and the crypto world is learning the lessons learned in the past 100 years or so in the finance/banking world. Now there's news of some regulation in the crypto world and people don't like it either.


Those arguments are from different groups of people. I'm in the camp of wanting crypto to have way more regulation. I would also like us to not hasten a climate crisis by turning on coal power plants to mine crypto that is useless.


Crypto space feels a lot like anarchist space.

Both are incredibly naive. They think there's this magic that will allow them to do whatever they want while being protected from others taking advantage of them.

"You can't tell me I can't run a farm to table restaurant in my own home."

AND

"You have to make Bob refund me for giving me food poisoning at his farm to table restaurant run out of his home."


It is nativity. I know someone who constantly talks about the environment and also is a big crypto supporter and even runs a mini g setup! What hypocrisy!


How is it any surprise that different people don't agree on this?


Do you really think the person you responded to made the claim that it was the same person flip-flopping their opinion? Obviously it's no surprise.

Nonetheless, what OP was getting at is that there is a clear trend on HN to semi-blindly hate everything crypto related, no matter the narrative (regulation good vs regulation bad). At least that's how I took it.

Crypto (for lack of a better word to lump everything together) is probably not the answer to the world's problems, but it's not as incredibly dumb of an idea as your average HN thread makes it out to be.


He explicitly said "people don't like it either", meaning the same people flip-flopping, not "other people don't like it".

You're making unwarranted and derogatory assumptions and mistakes about people's reasons for opposing cryptography.

Do you claim that Bruce Schneier semi-blindly hates everything crypto related? He certainly believes and says cryptocurrencies are an incredibly dumb and useless idea, and he's extremely well qualified and respected in the field, and a lot of people on HN read what he writes, agree with him, and base their opinions on the facts and experience and wisdom he and other trustworthy experts write about, instead of getting their information from crypto shills with fraudulent financial agendas. Is that what you mean by "semi-blindly"?

Your assumption that everyone on HN who opposes crypto is doing it semi-blindly is quite rude and insulting, and you simply don't know where they got their beliefs, in spite of your completely blind and false claims to somehow know other people's motivations and sources of information.

What are your qualifications that make you know so much more about crypto than Bruce Schneier, and give you such deep insight into why everyone on HN holds their beliefs and where they get their information about crypto?

Schneier on Security: On the Dangers of Cryptocurrencies and the Uselessness of Blockchain

https://www.schneier.com/blog/archives/2022/06/on-the-danger...


How is being regulated wastes less energy?


Exactly. Coinbase is not part of the "crypto promises". It's like any other centralized financial institution that happens to deal with crypto currencies.

Just send the crypto from Coinbase to a wallet you control (outside Coinbase) and send to anyone from there through the blockchain. No questions asked.

Is that double trouble? Yes, but if you choose to leave the blockchain for a centralized institution, you can't complain about having to go back in order to enjoy blockchain benefits...


That will work some smallish number of times; the worrying (from a btc / freedom perspective) is that Coinbase and other exchanges start to have opinions abt what you do even after you move your btc off the exchange, e.g., with mixing. That, I think, is what's going to force this showdown and lead to the end game, whatever it turns out to be.


Currently this seems to apply only for customers in the Netherlands:

https://help.coinbase.com/en/coinbase/trading-and-funding/se...

Related to this:

In 2020 the Netherlands approved the implementation for the European fifth Anti-Money Laundering Directive (AMLD5). Crypto providers operating in or from the Netherlands also needed to apply for registration with the Dutch Central Bank (DNB). Besides the AMLD5 implementation DNB required from crypto providers to implement additional measures, which is the same wallet verification that Coinbase now requires.

Bitonic (a dutch crypto broker/provider) filed a lawsuit against DNB regarding the additional wallet verification requirement, which was not part of AMLD5. DNB formally acknowledged the complaints from Bitonic and revoked the wallet verification. I'm not sure but I believe (until now) it has only be revoked for Bitonic.

Bitonic published some articles on their site:

https://bitonic.nl/en/news/206/dutch-amld5-implementation-la...

https://bitonic.nl/en/news/224/lawsuit-bitonic-vs-dutch-cent...

https://bitonic.nl/en/news/231/dnb-formally-acknowledges-com...


I got the e-mail too; probably for the best, but for a good while now I couldn't send money to Coinbase, probably also for legal reasons.


> and it seems one by one the promises of crypto of the last several years are evaporating

Promises of crypto have nothing to do with some random US-based centralized entity. Not your keys, not your coins.


Aye, in theory, but in practice technology has to fit into social context and coinbase is the result you get.

If you don’t like the result, you need to redesign the technology so it works within the real world that exists. And it don’t.


There is nothing wrong with Coinbase. It's an easy-to-use onramp and offramp, which is a valuable service. But people need to realize that Coinbase has nothing to do with the promise of crypto. You can trade crypto assets without ever using Coinbase or any other centralized exchange. Lots of people do that.

Once you use Coinbase, you are out of the self-custodial crypto ecosystem and you pay a price for it. You give up all control over your assets. In return you gain convenience and the security of something backed by the US government.

For some people that tradeoff is worth it, for other it isn't. The point of crypto is that you have the option to not do that. Nobody ever forces you to use centralized exchanges.


>You can trade crypto assets without ever using Coinbase or any other centralized exchange.

I'm genuinely curious how one could do this at scale. I'm not talking about buying $1,000 of BTC on a P2P marketplace so you can then use it to buy drugs somewhere. I'm talking about someone wanting to buy $1 Million worth of BTC, then exchange half of it for ETH, then convert all of the BTC and ETH for fiat. How would one do this quickly and cost effectively without the use of any sort of exchange?


Easy, you take your tokens on a flash drive and fly to the Bahamas, where you meet in a back alley with Giancarlo and Paolo, who give you the keys from a dump truck full of unmarked twenties. And there reverse is possible of course - you get the dollars to Giancarlo, end he gives you his IGUs (it's like IOUs, but without "O", because he officially doesn't "owe" you anything, as per terms of service). This is called "institutional investors". It is fun to stay rich :)


I’m myself traded over 1M regularly the last year. We even developed a decentralized exchange for Chinese customer (although with nasdaq traded parent) that made over billion dollars in stabelcoins in just about 12 weeks. DEXs usage is big. Perhaps you mixed two different thighs: fiat on ramp, and exchange ? If so, as far as I concerned even at the beginning of defi summer 2020 bestchange ramps in Moscow city alone had around $30m a day against fiat. I can’t verify this numbers but given the level of crypto adoption in eastern Europe these numbers don’t seem very off really.


By your reference to stable coins, it's unclear if any of the values you talk about are real dollars (or euros or rubles or any other fiat money), or just the dollar equivalent in crypto.


Uniswap (a completely decentralized on-chain exchange) process over $1 Billion in volume per day, that $1M is a tiny drop in the bucket. You can load that BTC on Ethereum as WBTC, swap for ETH, then swap for DAI/USDC and withdraw via about 50 different offramps. None of these trades will give even 0.01% slippage and total cost will be about $50 on Ethereum, or 10c on Polygon.


Look up “OTC desk.”


There are otc desks that will do that small a transaction? Where?


Why would you do that (the fiat)?

Remove the fiat part from the equation, and the way to answer is easy, you can trade crypto-tokens in the many decentralized exchanges.

And if you just want to hold volatile currency, you can trade the BTC or ETH for some stable token (like DAI, synthetix USD if you don't want to rely on fintech-backed tokens. If you are fine with using tokens backed by more credible institutions, you can hold USDC or Gemini USD)


My model for stable coins is that they're either backed by risk-free assets (cash/short term gov) which are externally audited, or they're not stable. I have no idea which of the above meet that criteria.

Irrespective, if I want to lock in trading gains I want FIAT. Because that's what I use to buy stuff. Sticking it in some proxy to FIAT is taking counterparty/credit/etc risk for no return.


DAI track record for the last 4.5 years had proven you wrong. It’s either

1)centralized and has all these centralization risks (USDT had frozen 360M on ether alone),

2) crypto-overcallaterized that has less centralization risks but limits in stability.

3) or something else, that usually doesn’t work (terraUSD)

I keep 99% on my money in crypto (plus I recently got pretty much excluded from banking system) so i have my money where my mouth is: DAI. I don’t like everything about it, like lots of USDC is collateral, or ineffective liquidation system, and for that reason I’m participating in StableUnitDAO to build far-better alternative (feel free to join us, i bet all my lifesavings on this project) but for sake of this argument it’s not good fiat vs bad crypto stablecoins. For lots of people it’s strictly opposite.


I think I am spending a couple of hours every day here arguing with the barrage of web3 skeptics, trying to spread the message that crypto can be a net positive for society without replacing traditional finance.

That the important thing is giving people an option, and not just some high-stakes casino.

And then:

> I bet all my lifesavings on this project.

You are not helping me, dude. You are not helping anyone...

> I recently got pretty much excluded from banking system

Does it have anything to do with xSigma, perhaps?


> DAI track record for the last 4.5 years had proven you wrong.

4.5 years is not a lot of history. I wouldn't fit a basic credit model on that much data.

open disclosure, I know nothing of DAI (indeed little of crypto). But if I want a dollar-like asset, a risk free asset, then "limits in stability" is not compatible with that.


> Because that's what I use to buy stuff.

For now, for lack of competitive alternatives.

I'm not even saying that you will be buying everything with crypto in the coming years. But I do see a future where it can be more secure and more practical to buy some things with crypto: digital goods, concert tickets, service subscriptions... put all of these things together and suddenly we will find ourselves with a crypto wallet making transactions worth a few hundred dollars every month.


I'm always amazed at how many years into the future crypto enthusiasts are willing to wait for the basic use case of their product to be practical. "Sure, you can't use this currency for day to day transactions, and it's incredibly volatile and risky to hold significant amounts of it, but one day, by magic one assumes, it might be useful!"


It took many thousands of years to switch from gold/silver money to paper (fiat) money. It was tried many times and failed each time until the US succeeded in the 20th century. Even that final transition took 38 years to complete from 1933-1971 despite the US having the power of both nuclear weapons and the world's reserve currency after 1945.

The transition from paper fiat dollars to electronic (credit/debit cards and later NFC apps) for ordinary everyday payments which began in ernest ~1990* is still not complete (30+ years). This is despite the fact that it is only a different method of payment, not a change in monetary system like gold/silver -> fiat was.

Why would anyone expect a transition from fiat (paper and/or electronic) money to crypto to only take 10 years?

* one of the places I worked in high school in 1988 was People's Drug (CVS). While we did have the primitive early electronic swipe terminals for credit cards, they were only used by the cashier for pre-authorizations (replacing the earlier method of calling an 800 number). The pre-auth step could take several minutes. We then had to imprint the card on carbon paper vouchers with the mechanical "click-clack" machines and write down various information on the vouchers with ballpoint pens. Fortunately very few customers used credit cards due to this long tedious process. Payment by check wasn't much faster as we had to write down driver's license number and address on the check by hand.

In 1990 or so the first gas stations started to accept payments at the pump. Before that you had to walk inside and pay with paper money or the old slow mechanical credit card method or checks. For the first few years they only accepted debit cards at the pump, not credit. A few grocery stores started accepting debit cards around the same time as the gas stations.


If this comment means "the current transition to crypto is likely to fail" then we agree.


Many central banks including the Fed are looking into CBDC's. While not quite the same as the distributed consensus based algorithm of Bitcoin, there are too many benefits to governments/central banks to ignore the technology.

The question is not whether cryptographically secured algorithmic money will be a part of future monetary systems but who will control the algorithm and/or how will different systems compete with each other.


Don't be discouraged if what you produce initially is something other people dismiss as a toy. In fact, that's a good sign. That's probably why everyone else has been overlooking the idea. The first microcomputers were dismissed as toys. And the first planes, and the first cars. At this point, when someone comes to us with something that users like but that we could envision forum trolls dismissing as a toy, it makes us especially likely to invest.

(http://www.paulgraham.com/organic.html)

> you can't use this currency for day to day transactions

Not with this attitude, you can't. ;)

What currency is "this"? BTC, ETH, Doge, USDC, DAI?

> incredibly volatile

How volatile is USDC, DAI, GUSD?

> risky to hold significant amounts of it

It's also risky to walk around with significant amounts of cash in the wallet. It doesn't stop people from wanting to carry some money around. And more importantly, the alternative of "going cashless" is a whole other set of systemic risks.

> it might be useful!

The use cases exist already. Micropayments and streaming transfers (as an alternative for subscriptions) using stable currencies are already possible. If you don't care about it, it's a different story.


I'm not dismissing crypto as a toy. Most cryptos are Ponzi Schemes. BTC and ETH I'm dismissing as not practical.


The part where you moved BTC and ETH from the 'ponzi' slot to the 'not practical' slot will continue for other elements. BTC will slide into the next slot soon probably, going from 'not practical' to 'practical for a very narrow set of things that aren't the set of things people originally expected.' So it goes.


For the purposes of an application, calling it "not practical" is the same as calling it a "toy".


Eeeeh? I think not. A toy implies that is has no, or cannot have, practical uses and is a property of the object or idea. Not practical is an engineering problem, it is contingent on external factors. A fidget spinner is a toy, a space elevator is not practical.

They are both ways to dismiss an idea though.


> Don't be discouraged if what you produce initially is something other people dismiss as a toy.

You could make that argument 10 years ago. It's been plenty long enough to find a use case that isn't breaking laws.


> It's been plenty long enough to find a use case that isn't breaking laws.

It's impressive... Like clockwork, there will always be one coming to throw the "only use-case is illegal stuff!" line. It's like people can't wait to throw their opinions about a topic while displaying their complete ignorance of it.

Tell me how you can do the use-case for Brave - ie, sharing revenue from the ads with millions of users from anywhere in the world - within the traditional payment networks.

You can't. There is no Paypal or any other financial institution interested in making monthly transactions that can go as low as a few dollar cents. And somehow Brave does it, legally, and it all works out.


> Tell me how you can do the use-case for Brave - ie, sharing revenue from the ads with millions of users from anywhere in the world - within the traditional payment networks

Brave collects money from advertisers, Brave sends money to sites and users. Nothing in that requires any sort of blockchain. If the monthly amounts are so small as to make flat transaction costs significant, then the amounts are themselves insignificant. None of this requires a decentralized trustless ledger.


> If the monthly amounts are so small as to make flat transaction costs significant, then the amounts are themselves insignificant.

That is the hole in your argument. Imagine the amount of business opportunities if the total cost of a transaction was a fraction of a cent.

> None of this requires a decentralized trustless ledger.

That is an implementation detail. If you find any other method to securely send value across the world for fractions of a cent (even if with intermediaries), I'm all for it.


Quoting Paul Graham simply makes you look as incompetent as he is, watch out.


Of all the insults you could throw at PG as an attempt to make an ad-hominem, are you really going to stick with incompetent?


I could also go with full of himself, pompous, pretentious, more-boring-than-a-slatestarcodex-post-at-3AM-without-drugs, but incompetent is a good recap for a man whose career can be resumed as "got lucky during the dot com boom and has been riding that money ever since"


Paul Graham is a successful entrepreneur, investor, and essayist. He's done multiple things which have a global impact - YC and HN for example. He's made a billion plus dollars for himself. Calling him "incompetent" is, objectively, wrong.


And we all wished that he skipped the essays part, because it's a bunch of self centered bullshit from a man who got rich and had an easy life.

YC is not a miracle product. The man had money and said "Hey I'm going to give it to higher risk companies to get some money back". It takes zero ability. Venture capital has existed for centuries. He's a glorified bank, except my bank doesn't put out pompous essays on their blog at least.

HN, aside from being a great purveyor of laughably inaccurate comments does not nearly have the global impact you think it has. It's the laughing stock of most of the tech internet. But at least sometimes the links posted are good.


And creating YC after and completely changing the nature of venture capital, that doesn't count as well. Right?

Anyway, I'd be eager to hear all the amazing achievements from Mr. ohgodplsno. You must be very fun at parties.


You're damn right, I'm fucking hilarious at parties. But maybe not the ones where it's just a bunch of VC bros.

Once again, you said it yourself. His accomplishments are "he made money" and "he found ways to give money". Let's not mention the fact that YC has funded many extremely dubious companies and that _giving money isn't work_. Had PG not been here, someone else would have had that money, and would have given it to startups. He's a glorified (quite bad) essayist with money.


I am not into VC parties either, and I have no intention of budding with anyone into the Silicon Valley life.

Anyway, I've heard lots of PG critics, and some of them I even say I'd admire because they actually did something of interest and according to their values. But you? You haven't shown anything of value that you can do. Let me repeat: I'd love to know more about your accomplishments.


My man, I am not looking for your admiration. And I'm not looking to make you an admirer either. Worship your billionaires all you want, and I have nothing to prove to you.

But if anything, you just keep proving that you might just have a talent for egregiously mind numbing, self absorbed essays just like PG


Paul Graham is incompetent??


Eeeeh, a lot of stuff we think of as being normal or obvious took a really long time to develop into something useful, so I don't know if "early adopters excited about technology well before it becomes useful or even has a clear use" is really the strongest point you can make. Especially on a tech centered forum right?


Because you still have to buy food with Fiat


OP was not asking how to buy $1M worth of food. OP was asking how to trade large amounts at scale.

(It's amazing how inconsistent the skeptics are, when they are only trying to score some cheap points against what they don't like)


> amazing how inconsistent the skeptics are

Most people looking to trade large quantities of crypto have most of their wealth in other assets and expect to be able to convert between them, with the dollar as the default go-between.

This is true of practically every traded asset, including FX. It’s not true of e.g. MGM tokens. But that disparity highlights the difference between crypto and other traded assets.


That is anyway still beyond what was asked. The question was "how can anyone trade large amounts of crypto without a centralized exchange?"

Also, the fact that people currently use USD as "the default go-between" does not mean that people have to keep using it. Crypto OTC desks already exist.


> question was "how can anyone trade large amounts of crypto without a centralized exchange?"

OTC desks are the correct answer, not “why would you want to” use a dollar. Yes, in a hypothetical world people wouldn’t use dollars as a go between, but instead use [insert theme of the decade]. In reality, we do and will for the foreseeable future.

Also, a crypto OTC desk that doesn’t ask for KYC is by almost every country’s law laundering money. So it doesn’t sidestep the core issue of this post.


I am not even challenging the need for KYC, but I would challenge the expectation that USD will remain king for the foreseeable future.

If the idea is, like you said, just about being able to convert between different asset classes, we could have OTC desks that would be taking crypto and (after following proper KYC/AML regulations) giving you any of stock/bonds/real estate titles/commodities/etc, and vice-versa, without any need of USD as intermediary.


The only currency denomination that could work to evade the feds for a contract like what you're describing is CNY, which would basically require you to be Chinese and/or have a trusted party and be big enough to negotiate something like this. Maybe a couple thousand people in the world could do it


Who is talking about evading the feds?


Why else would you want to avoid transacting in USD?


- The exchange rate from USD <-> country where I live can be expensive

- Because every USD <-> local currency may have processing fees (credit cards on retail, withdrawal fees for large FX traders)

- Because some banks use the opportunity to slap tons of other fees

By holding crypto, one can legally avoid all of these costs.


I asked another poster who mentioned an OTC desk so I’ll ask here to. I have functionally no experience with crypto but am pretty well versed in traditional fx. The amount the op mentioned would be quite hard to trade otc unless you were doing it frequently (read daily) with a fx partner. It’s just too small an amount.

It’s almost exactly the use case you want for an exchange (or really in fx a consumer liquidity platform as they aren’t really traditional exchanges).

Is that different in the crypto world? If so why? All of the costs (ie risk management) seem more expensive in crypto than fiat.


https://www.kraken.com/en-us/features/otc-exchange


Yes, however trading also implies the ability to liquidate positions and "cash out". Imagine a world in which a "stock trader" can exchange shares of one company for another but can never liquidate all of their positions and go to cash. Most people would not consider that to be stock trading at scale.


> the security of something backed by the US government.

What do you mean? If Coinbase goes bust or steals your assets you’re just an unsecured creditor.

It isn’t like a brokerage in regulated markets or a bank, which have specific rules protecting your money.


Crypto assets may not be FDIC insured, but Coinbase can't just steal and run away with your assets without facing legal ramifications in the U.S. And that would also mean founders/shareholders face consequences (look at Theranos). Of course they can still go bankrupt. But then, again, the U.S. courts would decide what happens to their assets and yours. In either case it's up to the U.S. legal system, i.e. government.

That's very different from managing your own keys. Nobody can take anything from you. But you also have zero legal protection against an attacker stealing your keys. In other words, you are in full control, for better or worse.


> Coinbase can't just steal and run away with your assets

That seems hard to believe in light of Coinbase's own recent disclosure: https://www.barrons.com/articles/coinbase-customers-crypto-b...


> Coinbase: Customers Could Lose Crypto if It Ever Went Bankrupt

Investment funds suffer from the same problem. And so do banks, for amounts exceeding the FDIC insurance.


> Investment funds suffer from the same problem. And so do banks, for amounts exceeding the FDIC insurance.

This hand-waves away a century of banking and investment protections everyone with assets at Coinbase willingly waives. Your funds at Fidelity are insured up to $500k by the SIPC [1]. Every person at Chase is insured up to $250k by the U.S. government, which backs the FDIC with its full “faith and credit” [2], a number which happily doubles with your account at Bank of America. (People concerned about this sweep [3] their money across multiple banks.)

When Lehman went bankrupt, customers’ assets were ringfenced [4]. A private equity firm can’t buy a bank, lever it up and gamble away customers’ deposits and assets.

None of the above apply to Coinbase. Nor should they. Everyone in crypto opted out of that system.

[1] https://www.sipc.org/for-investors/what-sipc-protects

[2] https://www.fdic.gov/resources/

[3] https://en.m.wikipedia.org/wiki/Sweep_account

[4] https://corpgov.law.harvard.edu/wp-content/uploads/2008/10/0...


Sorry, _why_ shouldn't the above apply to Coinbase?


> _why_ shouldn't the above apply to Coinbase?

Running the banking system on permissioned blockchains, where it makes sense, is simpler than extending federal protection to what currently behaves like a gambling industry. Also, spending the tax dollars of the young, poor and/or financially-conservative to subsidise a demographically-constrained pursuing a high risk / high reward strategy is inefficient.


As I understand it, because the Cryptocurrencies are not legal tender:

"Cryptocurrency is not legal tender and is not backed by the government. Cryptocurrency, (including but not limited to tokens such as bitcoin, litecoin and ethereum, and stablecoins such as USDC), is not subject to Federal Deposit Insurance Corporation (“FDIC”) or Securities Investor Protection Corporation protections." [https://help.coinbase.com/en/coinbase/other-topics/legal-pol...]

So any Bitcoin etc... you hold in your wallet at Coinbase could just be sold off to pay for debt if a bankruptcy occurs (which doesn't happen if a FDIC bank goes bankrupt).


I don’t know about “should” but those protections don’t extend for Coinbase customers

Taking those protections would mean a lot more regulation for the industry, regulation they’ve worked hard to avoid


Because their customers' assets are not segregated.


Cash held at Coinbase is insured by the FDIC to $250,000.

https://help.coinbase.com/en/coinbase/other-topics/legal-pol...


> Cash held at Coinbase is insured by the FDIC to $250,000

You’re protected “against the risk of loss should any FDIC-insured bank(s) where [Coinbase] maintain custodial accounts fail[s]” [1]. If Coinbase maintains “accurate records,” which nobody is checking, and “on determinations of the FDIC as receiver at the time of a receivership of a bank holding a custodial account.”

If Coinbase itself fails, you’re just another unsecured creditor. Maybe a bankruptcy judge will find your deposits to be a § 507(a)(7) customer deposit, in which case $2,600 of it is a priority claim [2]. For the rest of it, you’re a general unsecured creditor. Behind every lender.

Note that the Coinbase FAQ we cite is worded in an intentionally misleading manner. That copy wouldn’t fly at a bank, or, at the very least, produce liability for it in a manner that would actually pay out.

[1] https://help.coinbase.com/en/coinbase/other-topics/legal-pol...

[2] https://www.bdo.com/insights/industries/retail-consumer-prod...


Reading the text a couple of times, it's actually far, far less secure than that:

> Fiat balances, such as U.S. dollars, British pounds, or euros, are held in your Coinbase e-money wallets as a balance in your Coinbase or Coinbase Pro account(s). For U.S. customers, Coinbase combines your balance with the balances of other customers and holds those funds in either: custodial accounts at U.S. banks and/or invests those funds in liquid U.S. Treasuries, or USD denominated money market funds in accordance with state money transmitter laws.

> Funds could be held in any one of these three manners so customers should not assume that funds are being held in one manner over the other.

So, if your funds were held in the custodial account (which you're explicitly told not to assume), and if Coinbase maintained "accurate records" (lolwut?), and if the bank where the custodial account is failed, then you're going to be made whole. Notably, Coinbase itself failing isn't part of that "if" chain.


Many types of financial organizations such as stock brokers (which seem an appropriate analogy for coinbase) have specific legal protections for customer funds in their custody, where even in bankruptcy the creditors of the organization do not have any claim on the customer assets, which are not treated as part of the organizations' debt but is held separately from their own balance sheet assets/liabilities.


If my broker goes bankrupt, the shares I have through them are indisputably mine, and the government will help me retain them.


Anyone who has to worry about losing money above $250k per bank can bloody well afford it.

To handwave away the FDIC insurance like that makes you sound like you think everyone under that threshold just doesn't matter.


It's not $250k per bank. It's $250k per account type. So you get your savings, money market, checking and CD and boom, it's a million at a single bank FDIC insured.


It's $250k per per depositor, per insured bank, for each account ownership category. So if you'd need to move your CD, savings, checking, etc. into separate ownership categories (e.g. one held in a single account, another held in a joint account, another held in a revocable trust) for that to work.


Ah, I missed the nuance. I knew that it was possible to duplicate coverage and misunderstood how.


My apologies; I was unaware of that nuance.

I doubt I'll ever be able have over $250k in savings at any one time, so it wasn't something that seemed too much worth my time to learn more about.


Sorry, I had the wrong nuance. According to the other poster, it's by ownership type, not account type.


> In either case it's up to the U.S. legal system, i.e. government.

This is an incredibly misleading way to describe the difference between unsecured deposits in Coinbase and FDIC insured deposits. Because the U.S. Government is involved in both bankruptcy proceedings and FDIC liquidations, there's no difference in how likely it is a person will be made whole? No, that's not how it works.

> Of course they can still go bankrupt. But then, again, the U.S. courts would decide what happens to their assets and yours.

Right, but Coinbase has explicitly stated that in the case of bankruptcy, users with deposits are considered unsecured creditors. In the case of bankruptcy, your assets are now coinbase's assets, coinbase's other creditors can go after the assets you deposited and you are last in line to salvage whatever is left.

Coinbase wanted people to think it was as conventional and safe as any other federally-insured brokerage because that's the only way they were going to appeal to the average casual investor. But they aren't a brokerage, and you're fucked if they go bankrupt, which is the reason coinbase stock plunged in May when they updated the risk disclosure to their quaterly statement.


> The U.S. legal system, i.e. government

I agree with your overall point, but these two things are not the same.


Being an unsecured creditor under US law is much better than the law of the jungle, where rug-pulls are just tough luck. Unsecured creditors are still ahead of stockholders in the event of a bankruptcy.


That’s very cold comfort. As an unsecured creditor you’re back of the line among creditors in a situation when there manifestly are not enough assets to pay creditors


Centralized exchanges are a necessity. Who can you trust to trade into and out of fiat? Who can you trust to make a exchange? Who can you trust to use security that works with your wallet? Sure there are decentralized exchanges but how much does anyone trust those, and how decentralized are they really? What happens if those go down? Hell most people don’t buy their own crypto just because they don’t trust random websites that claim to have secure wallets let alone that if they make a non-reversible transaction that the other party will come through. There needs to be an enforcer, most likely a government, that adds threats if someone breaks any of the trust above. There needs to be a centralized exchange to facilitate all these activities. It isn’t forced but anything else is just not as practical, so the majority of people won’t do it outside of an exchange.


I don't think you have an understanding of how Ethereum or DeFi works. What you are saying makes no sense except for one point (see below). The whole purpose of DeFi and chains like Ethereum is that you don't need to trust decentralized exchanges or apps on top of Ethereum. The system is trustless. These exchanges don't have any control over your assets. They can't "go down" or disappear with your assets because they don't have access to them in the first place. There also is no counterparty risk and wallet security is a totally different thing that's unrelated to any application.

I looked at your comment history and you vehemently argue against DeFi but your posts show that you have little understanding of any technology behind it.

Where you ARE right is that centralized exchanges/entities are needed as a fiat on-ramp and off-ramp. There is no way to get around interacting with centralized governments if you want to use government-issued fiat currency.


I’m not even talking about defi here. Let’s say I just want to trade ETH into BTC or some random coin. I need to trust some website to get that done and be the decentralized exchange. Sure 1000s if websites claim to be decentralized exchanges but how as a user are you supposed to know they are working as they describe themselves? Simply you can’t without an insane amount of digging, so you have to trust a centralized exchange that is regulated by the government. Otherwise if the exchanges cheat you, steal from you, freeze your coins, go under, you just have zero recourse.


> I need to trust some website to get that done and be the decentralized exchange

You don't. You don't need to interact with any websites to make transactions. It's on-chain. You can always run a (light, non-archival) node to ensure the transaction does exactly what you expect it to (before submitting it) do without ever going to a website.

You're right that if you trust absolutely nobody, not even chain explorers, you need to put in more work, do some digging and understand how the system works. You're exchanging usability for security/trust. The point is that you have the option to do that. If you are paranoid and don't trust centralized entities you don't have to. Decentralized exchanges can't cheat you, steal from you, freeze your coins, or go under. It's technically impossible because they don't have custody of your coins at all.


I’m taking about working between chains, not staying on a chain or other cryptos built on the same chain. Someone is building a decentralized exchange, the interaction or adding the next new crypto currency to that exchange and choosing how it is setting the price of the exchange or possibly relaying on other centralized exchanges - typically to set the exchange rate you would rely on the bid ask spread, but if it doesn’t look at other exchanges someone can just buy from one exchange where it’s cheaper and sell on the other. Have you seen office space? The movie where they make the program steel fractions of a penny in each transaction? This is doable in the setting of the prices and fees and the way rewards are set for liquidity, benefiting the person who created them - so who knows how these places work, no one except programmers, and maybe they gain trust over time from others that never had a problem with them before. But when something does goes wrong, who will foot the bill and be held accountable. That’s why centralized exchanges are a must because if something goes wrong you call the police.


Decentralized exchanges don't use an order book, they are Automatic Market Makers (AMM's) that use a bonding curve instead. They don't rely on centralized exchanges at all.

There is a lot of arbitragers on all chains equalizing prices between them all. What you've described with office space is known as MEV in the DeFi world.

All the exchanges are completely open source, you can learn how they work if you put the time into it. I recommend the Balancer whitepaper.

If you can figure out how they can go wrong feel free to explain. But it seems you don't actually understand them yet and are just making assumptions.

Your belief that we need centralized exchanges is just an opinion, and it's wrong, which you'll discover as you dive deeper into seeing how they work.


You can repeat these claims all you want but ultimately we're going to just find out if this is true. It seems to me more likely its not true. At least, that a hypothetical future with minimal centralized exchange activity is also one where crypto is one of if not the predominant forms of held capital.


The whole point of cryptocurrencies was to use them for everything without converting to fiat currency. There should be no need to trade into or out of fiat in the first place. Everything that's wrong with cryptocurrencies today can be traced back to exchanges showing up.


Is it possible to acquire crytpo through a non-centralized way?

Beyond mining, how do I exchange $100 of USD for Crypto without going through a trusted party to ensure my $$ gets me BTC?


Sure, ask a friend or someone in your local crypto community. P2P is the default in crypto.


You and counterparty agree on source of truth (e.g. some bank’s database) and use some sort of proof framework. It’s just an off-chain computation.


I don’t think an average person would understand a word of what you just wrote.


Just use a proof framework and off-chain computation, you dolt! Monads are just burritos!


Mining is the solution to this problem. It's a simple USD -> electricity -> computer -> cryptocurrency process.


That’s interesting. It’s essentially a push right?

Do not wildly profitable to mine; but you can untraceably convert USD to crypto via mining.

Curious what it looks like to do this with large sums of cash.


> In return you gain convenience and the security of something backed by the US government.

Crypto holdings in Coinbase are backed by the US government? By what mechanism?


What is the advantage of crypto over dollars when using Coinbase? Why not just use a traditional bank and dollars to trade goods and services?


Coinbase is not backed by the US government


Neither is my bank. Only banks and government agencies have accounts with the central bank.


Coinbase has _everything_ to do with Crypto, and that is precisely my point.


> It's an easy-to-use onramp and offramp

> You can trade crypto assets without ever using Coinbase or any other centralized exchange

Do tell, how do you expect the average person to convert fiat to cryptocoins?


I'm interested in approaches for this, bearing in mind that I don't know people in real life who I can give cash for crypto, and can't mine coins. I wanted to buy some tokens to set up a side project, but the prospect of giving all my details to Coinbase or some other exchange is unappealing.


There are various p2p platforms for meeting people with whom you can exchange fiat for crypto (and vice-versa) directly. Some of these platforms include an escrow system (LocalBitcoins is the most well-known of that type, but I think it has KYC requirements), others rely on a 'web of trust' style system, etc.


It's a similar question to "do tell how the average person is going to benefit from the right to repair?", or "do tell how the average person is going to benefit from free software?". All these three questions have the same answer: By relying on the free market competition, by paying someone sufficient money, or by learning to use the technical tools.

Crypto can be exchanged locally and anonymously with your friends, too.


Cool, so do explain. This is HN, I’m sure we’d all like to understand.


Eh, I'm not sure it's possible to redesign "anonymous, unregulated internet money, great for drug sales, scams and cryptolocker payments" to fit into the social context "financial system under strict government control, absolutely no anonymous payments, protect people from scams, freeze out small-time crime (and Wikileaks)"


True, crypto and totalitarianism don't mix well.


Coinbase is a result, but not the only result. Coinbase is how your grandmother can operate on the blockchain, but it doesn't need to be how you operate on the blockchain, and the more liquid the Bitcoin market is, the better off everyone involved is, as prices will be less volatile.


In practice if you want to do something private with your crypto just send it from Coinbase to your own wallet and thence to something like a privacy coin like Monero. Privacy tech exists, it's just not Coinbase.


Promises of crypto has a lot to do with how crypto as a system actually manifests in the real world with real people. If I say "promises of email have nothing to do with a random, US-based centralized entity like GMail. Not your server, not your emails." that would be a very silly thing to say.


Well, that might not be a very silly thing to say.


I figured it was obvious, given 1.5B people use GMail so it's probably the largest receiver of email in the world. So even if "email is open" if there's a closed system on the receiving end of your message it doesn't do you much good.

Maybe it's not obvious though, and we're just talking theoretical techno-utopias.


I think this is a false dichotomy. Gmail is popular, does not undermine the “openness of email”. Both statements are true, and people can and do run their own mail servers, or choose other more trusted providers. It’s a good analogy to crypto actually.

Google scanning all your emails does not undermine the promise of email, just as coinbase forcing addresses doesn’t undermine the promise of crypto.


Gmail absolutely undermines the openness of email. That's fine, it's a choice users made because they don't want to run their own email servers, so they offload it to Google. Google decides what to classify as spam. As such, if I stand up a new email server and start sending email to Gmail addresses, I am at the whims of Google deciding what email from me gets delivered.

The protocol is open and designed to be decentralized, but the system as implemented in the real world is fairly centralized at this point. Saying "you can run your own mail server" doesn't matter if virtually nobody actually does.

If the end state of crypto will just be a bunch of web2 style companies running centralized servers that (maybe) interact with blockchains, and we say "that doesn't undermine the promise of crypto, you can run your own node", I guess I'll have to agree to disagree.


"As such, if I stand up a new email server and start sending email to Gmail addresses, I am at the whims of Google deciding what email from me gets delivered."

This is the critical point. Adoption matters, and always ends up with consolidated power. It's just how things are, and how they stay, short of the severe intervention of dramatically easy-to-use tools for "click to host your own stuff".


Yes. I think this is an important distinction, freedom to do something is still important even if the majority don’t do it.

It allows us to trust gmail/coinbase more knowing we can move away from it if required. Because they know that too


Exactly.

This is why the Kraken CEO [0] recently told its customers to take their coins off of their exchange and put it your own wallet. Brian Armstrong (Coinbase CEO) also said the same thing on Twitter: [1].

[0] https://twitter.com/jespow/status/1494462097161220104

[1] https://twitter.com/brian_armstrong/status/14934534250102988...


> This is why the Kraken CEO recently told its customers [those who are worried about it] to take their coins off of their exchange and put it your own wallet.


It does have something to do with US entities. If the goal was anonymity, this move shows that it’s possible for it to be taken away by local entities. Imagine if all countries and localities did this.

Also: re your comment below a reply, yeah sure you don’t need Coinbase to trade crypto. coin ase is complying with local regulations, others will have to follow. So again, the original comment from OP around promises of Crypto is still accurate


> If the goal was anonymity

its a public ledger, the goal wasnt anonymity, it was autonomy


that's moving the goalposts. It was about anonymity too.


Bitcoin's original design was a public ledger with all transactions publicly visible. That has never changed since the beginning.


True, but a not insignificant part of the pitch was also pseudonymity (rephrased from anonymity from strofcon's comment).


Just a nit - it was about pseudonymity, not anonymity.

Still worthless tech, but in the interest of fairness. :-D


This article only applies to Dutch coinbase users.


Aren’t we all Dutch in spirit?

Also not as sensational if you tell people that.


Those entities (US-based and international) are what gives Bitcoin its value in fiat. Otherwise Bitcoin would still be denominated in thousands of Bitcoin per pizza.


I thought bitcoin value was decoupled from fiat though ? Where are all the "I believe in the project" people these days ? looks like they only believe in it when they're in the green


They aren't random, and they're not doing this for random reasons. They're an industry leading exchange acting rationally at least from some perspective. Which means there are at least some practical reasons why 'real people' and 'addresses' etc. might be useful in financial transactions.


> might be useful in financial transactions

This is likely to satisfy regulators. I highly doubt that this change has anything to do with practical usefulness


? Hmm ... and why might 'regulations' be in place such that when large sums of money change hands, there's some way to know who's involved, or at least to attribute the transaction to some legal entity ?


We can turn this to a semantic argument over the meaning of "practical usefulness", but in my opinion collecting such information provides no additional benefit to Coinbase other than keeping regulators at bay and avoiding future fines and restrictions.

> why might 'regulations' be in place such that when large sums of money change hands

I have done some work in the financial compliance space. You would be surprised how small some of these "large sums" are and they keep getting smaller even while inflation weakens the value of the currency involved. In some locations, the limit is as low as ~$1000 USD.

Yes the motivation is anti-terrorism, protect the children, national security etc... but in practice it is just a vehicle for governments to collect data on its people. In this case, good actors will behave the same while their data is collected and shared. Bad actors who are aware of these restrictions can just pay the $0.25 to transfer through a newly created wallet and then send without these restrictions while regulators pat themselves on the back for stopping money laundering.

What can end up happening with policies like this? Well if governments, regulators, or monopolies get out of hand all of a sudden you cannot send money to a political party. Maybe all your bank accounts are frozen for supporting a protest or all of a sudden you have no way to purchase a flight to leave. Maybe Mastercard/Visa ban donations to entities like Wikileaks for "moral reasons" while allowing donations to the KKK and other similar organizations. These changes don't typically happen all at once. Freedoms are salami sliced away at a rate that doesn't upset the majority and the norm slowly moves to believe that these restrictions are for our own good. (sorry I went a bit off topic here)

Also, why was "regulations" in quotes? Sorry if I missed something or misinterpreted your tone here. Hopefully I answered your question.


It's not 'semantics', it's the opposite of 'semantics'.

It's not mostly 'terrorism and protect the children' - it's tax evasion, wire fraud, bribery, insider trading, financial fraud, scams etc.

Without fairly consistent regulations up and down the financial spectrum, civil society basically would not exist.

We mostly derive our protections from 'government overreach' via the constitution, not anonymity.


> It's not 'semantics', it's the opposite of 'semantics'.

Is there an opposite of "semantics"? Isn't semantics just the topic around the meaning of words and communication? Is the opposite just everything else?

Anyways the point was that Coinbase is likely acting not because it extends the "practical usefulness" of their products, i.e. it adds no new features or functionality. They are likely acting out of regulatory necessity.

The semantic argument is whether regulatory necessity falls under "practical usefulness". I'd argue no, as the usefulness of their product as it applies to users either doesn't change or actually goes down as a result of this, but one can similarly argue that not satisfying regulators likely results in the loss of the product altogether.

> It's not mostly 'terrorism and protect the children' - it's tax evasion, wire fraud, bribery, insider trading, financial fraud, scams etc.

Can you elaborate on this a bit? Collecting beneficiary data is useful for things like redundant checks against sanction lists such as OFAC (terrorism, organized crime, and human trafficking falls under here). I don't see how tax evasion, insider trading, and bribery even apply here.

- Tax evasion would likely deal with the exchange reporting both trades and received funds for a user, neither of which applies to beneficiary data on outgoing funds afaik

- How is insider trading relevant here? Would that not be dependent on trading and not the transferring of assets. Does providing beneficiary data do anything to shed light on trading with privileged data?

- Bribery? Maybe, but seeing as this still happens fairly regularly with traditional finance, I doubt that this will curb much behavior.

> We mostly derive our protections from 'government overreach' via the constitution, not anonymity.

I assume you are talking about the US constitution which doesn't much apply to non-US persons. The US Constitution doesn't provide much context or protection around the financial system either.

In Section 8 we have

> "Congress shall have Power [...] to coin Money, regulate the Value thereof, and of foreign Coin."

And in Section 10,

> "no state [...] shall make any Thing but gold and silver Coin a Tender in Payment of Debts."


These are just the application of normal anti money laundering regulations which are useful only to regulators.

I don't care if someone is not paying taxes, good for them if they can avoid having the government steal their profits and stay out of jail. I don't even care if they're doing something the government deems illegal, especially if it's a victimless crime.

Regardless, I'd rather have the victims pursue the offenders through legal means (which, in a world without a government with monopoly on violence, will likely take the shape of multiple competing protection agencies) and victimless crimes not to be considered crimes at all.

I agree for some transactions you may want to exchange data and legal jurisdictions or setup a contract so that goods / services (+ future support) and money are exchanged safely and without scams - but that's irrespective from the means of payment.


"I don't care if someone is not paying taxes"

... that's you're right but 'we' don't care if you don't care.

We know that without decent regulation, tax evasion on a massive scale, money laundering, criminal activities, insider trading, bribery, extortion, illegal political influence etc. etc. will seriously degrade civil society.

So 'we' put some regulations in there for those reasons.

And without attributing financial transactions to specific legal entities, there's no way to facilitate commercial or litigation otherwise, thereby destroying trust in even regular business transactions, which makes commerce impossible.

'The Means of Payment' is the mechanism by which the transaction is effective, so we'd rather have that in place or not.

For small sums, under $500, it's unlikely we need to worry, but beyond that it gets tricky.


>We know that without decent regulation, tax evasion on a massive scale, money laundering, criminal activities, insider trading, bribery, extortion, illegal political influence etc. etc. will seriously degrade civil society.

You don't know that.

When has it ever been tried?

We didn't explore societies where transactions are voluntarily (eg. no taxes) and we don't persecute victimless crimes (eg. drugs)

I argue my interests are aligned with the majority of non political people.

That said I'm not a proponent of crypto, I think private banks without government regulations are a more efficient alternative than a blockchain.


I don't understand who it is who has to supply the address. Like, if I want to run an anonymous youtube channel and accept crypto donations, I have to report the income and I guess my bank and the IRS need my physical address, but I wouldn't want my viewers to be able to show up at my doorstep that easily.

Chaum's original digicash worked something like that. It could only be transferred anonymously once. It could only be converted to and from regular cash at regulated entities like banks. So you'd buy some coins at the bank. You could then use the one anonymous transfer to send them to some youtuber. Neither the youtuber nor the government would have any way to learn who sent these coins. But, the youtuber would have no way to send them to a third random person. The only thing he or she could do with them would be bring them to a bank and convert them back to normal currency--along with doing any required tax reporting that is required when you bring cash to a bank. All this was mathematically enforced by the crypto protocol (blinded RSA signatures). It wasn't that great for libertarian madness like Bitcoin supposedly was, but we've since seen how that turned out.

Maybe it's time to revisit Digicash, especially since the patents have expired.


> But, the youtuber would have no way to send them to a third random person.

Nothing in the Digicash blinded RSA signature scheme would prevent the tokens from being traded person-to-person any number of times before being presented back to the issuer. It requires some trust in the previous token holders, much like exchanging BTC by trading private keys in place of on-chain transactions, but it's perfectly doable given some other means of discouraging defection. And of course the blinding system itself ensures that the tokens being deposited can't be linked to any particular withdrawals.


It would reveal your private key, which might be bound to your identity in other ways. The other person could then forge your signature on whatever they wanted.


You're thinking of Bitcoin. In the RSA blinded signature scheme the token holder doesn't need a private key, so there's nothing to reveal. The tokens are signed by the issuer (i.e. the bank), using the issuer's private key, and the blinding ensures that the issuer can't see the actual tokens at the time they're signed—that's revealed only when they're redeemed. The tokens themselves are just unique random numbers and not associated with anyone's identity. The issuer keeps track of which ones have been redeemed so that they can't be claimed twice. That's the risk you take by not turning them in immediately: anyone who had the token before you could claim it first, and then your copy of the token would be worthless.

Edit: In the case of off-chain exchange of Bitcoin wallets it would reveal the private key (naturally, since that's what you're exchanging) but for that reason you would only trade a wallet with a unique private key not used anywhere else. The only thing that key is useful for is spending the funds in that wallet. It's not linked to your identity. This is exactly like the "physical bitcoin" model (BitBills, Cascascius coins, etc.) except there is no tamper-evident hologram to prove that the private key hasn't been accessed—you're taking that on trust until you empty the wallet or hand it off to someone else.


> I don't care if someone is not paying taxes, good for them if they can avoid having the government steal their profits and stay out of jail.

Out of curiosity, what percentage of the population could skip paying taxes before you would care?

Are you okay with the government having no funds whatsoever?


And: Would they be ok with their government having no funds but other governments being still funded by taxes.

Publicly funded armies replaced hired mercenary forces for a reason.


This is heavily dependent, probably even correlated, with the way the government currently uses taxes. For developed nations this is a no-brainer, of course they need the taxes to supply services to the population.

For developing nations? I know a few countries were the government having little to no funding would make very little material difference to daily life, since they already steal so much public funding that private services have long since filled the gap. In this case the percentage for caring about tax payment is zero, or close to it


Governments (with monetary sovereignty) are not funded by taxes they are currency issuers, this is a fallacy.


Yes, I hope they wouldn't exist and that people would setup new companies to replace governmental service (for a voluntary fee).

Read about agorism (konkin) and anarchocapitalism (rothbard, friedman).


Boom! There it is


The promise of crypto is that if you buy some you’ll end up making money on the deal.

If you think there’s some other reason all those billions of dollars got poured into it you’re delusional.


Funny! Dutch coinbase users are now on the hook for American regulations that have been used to strong-arm EU central banks into compliance with anti money laundering and terrorist financing rules.

Meanwhile, in the USA there is no such requirement. NL is ahead of the curve here because the banks here have received some pretty massive fines for not having their house in order to so now they want to show they're good boys & girls.


> Funny! Dutch coinbase users are now on the hook for American regulations

A country losing its sovereignty ... not entirely sure I'd tuck that in the "Funny" drawer.


The degree to which economies are interconnected now makes us all co-dependent.

And truth be told: NL banks were making a serious mess of their KYC processes.


> makes us all co-dependent.

Co-dependent isn't synonymous with subservient.

To convince yourself of that fact, try to find an instance of a situation where the NL forced the US to comply to an NL-originated rule and was successful.


This happens all the time, so I'm not too worried about that.

As for the 'subservient': international finance is a complex and extremely delicate subject, what triggered all this oversight was that Europe had become the laundromat of the world, and things were really getting out of hand.

For instance:

https://www.wsj.com/articles/once-a-money-laundering-risk-la...

Similar stories about dutch (large) banks:

https://www.om.nl/actueel/nieuws/2021/04/19/abn-amro-betaalt...

This isn't a theoretical risk, no matter where the rule originated. Financial law - like copyright law - is international and the countries that collaborate a lot on this sort of thing because they trade a lot between them would gain an immediate advantage if the rest would play by the same ruleset and one would purposefully break those rules.

The deal is that we won't do that. AML and ATF rules exist for a reason and even if the US originated the rules they are in the end quite effective and serve a real purpose, in Europe as well.

Finally, the only penalty that US has that it can give is to revoke these banks' ability to do business in USD, and that card can be played exactly once so it's in the end in the banks own interest to play ball.

You are mixing NL and EU and probably are not aware that the ECB has decided to enforce a similar regime voluntarily long before individual banks ended up crossing the lines for profit. Of course even though the ECB is not in the pocket of the Americans it is clear that pressure has been brought to bear, but in this particular case it was beneficial, the EU was awash with criminal money seeking all kinds of ways into the respectable world.


I don't think it's good that tiny fish are continually being required to take on extra administrative burdens because of the actions of big bad fish. The US is now toying with the idea of enforcing reporting requirements for any transactions over $600, and ID is demanded for all sorts of minor transactions. I don't want so much 'protection.'


That won't fly due to practical limitations but it certainly makes you wonder why they would even want such ridiculously low limits to begin with. And agreed, that much 'protection' is ridiculous. But the current 40K limit is manageable for small businesses, who rarely transact such amounts in one go. I've had maybe 10 of those over the last five years and in each case the reporting requirement was easily dealt with.


> try to find an instance of a situation where the NL forced the US to comply to an NL-originated rule and was successful

European countries routinely force American firms to do things [1]. Coinbase asking a Dutch user to follow American law isn’t dissimilar from an American having to follow Dutch law when using a Dutch service. No governments are forcing other governments to do anything in this case.

[1] https://corpgov.law.harvard.edu/2012/02/18/dutch-court-decis...


I'd rather have good and close relationships with political/military/trade partners than to be sovereign to be honest.

Anyway these regulations only apply if you want to deal with a US-based company. If you want to deal with a US company, you have to abide by their rules. I don't believe that's excessive.


> sovereignty

There is no such thing these days, if there ever was any. Nation states are inherently unstable and dependent on other nation states for their survival. It doesn't matter how big you are. For example, Russia has no modern oil and gas technology of their own and China has no modern vaccines. Both are causing giant respective headaches. So much for that "sovereignty"


Rather lose a bit of sovereignty to align with trade partners, than to lose everything to corruption.


I like it when the US gets another vassal state

We’re really aiming for Greenland so this is a great step by getting the kingdom’s banks to be subservient


Central banks or private banks?


The central banks set the rules, the private banks follow them (in theory...), so that part of the comment is about the private banks. (Even though they may well have the local government as shareholders)


1) This is only for the Netherlands. This should really be stated in the title; the post is extremely misleading as it is.

2) It is a meaningless and merely slightly inconvenient rule. It simply adds an extra step: withdraw to your own wallet, then transfer with whomever you want and you don't need to tell Coinbase about them. It is better to transact with third parties from your own wallet anyway.


"It is a meaningless and merely slightly inconvenient rule. It simply adds an extra step: withdraw to your own wallet, then transfer with whomever you want and you don't need to tell Coinbase about them. It is better to transact with third parties from your own wallet anyway. "

Except that you'd be committing a crime in doing so (from my understanding of the law). You can't get around anti money laundering regulation by claiming "oh I did it with my personal wallet not Coinbase's"


The regulations do not apply to individuals using their own wallets. It is not unusual for different laws to apply to businesses and individuals.


Specifically, taking actions to evade AML regulations also gets you in trouble.

Withdrawing money from the bank for your own purposes is fine; withdrawing $9500 multiple times is fine. Making multiple withdrawals of $9500 to avoid reporting a transaction of $10,000 or more gets you in trouble, once someone notices.

Making withdrawals to yourself from Coinbase is analogously fine (to this non-lawyer), but doing so to avoid reporting transactions you are otherwise obligated to will eventually get you in trouble.


Yes, this seems like one of the least newsworthy stories to make it to the frontpage today.


yo those btc fees add up


You forgot to mention the extra step costs extra money. That’s not merely slightly inconvenient, it has material consequences.


Bitcoin transfers are pretty cheap for modestly decent amounts at the moment. Sure it sucks, but most of the practical low volume transactions are going to happen via VISA or MasterCard anyway.


This is pretty brutal regulation as it basically forces users to pay twice - once to transfer to a non custodial wallet they own and have KYC’d, and then again on-chain to transfer out to the desired beneficiary to maintain the receivers privacy. It’s the kind of cookie popup law that does nothing to stop bad actors, but does everything to make the average user experience worse.

The regulation here feels invasive and poorly constructed - no surprise it is coming from the EU which is also attempting to put surveillance mechanisms into E2EE chat apps.

EDIT: to the OP, Coinbase is not the promise of crypto. The promise of crypto is non custodial access to digital assets and peer to peer exchange. but it can be nice to have easier, cheaper, and privacy preserving on and off ramps into this ecosystem, something this kind of stiff regulation is fighting against.


If you're a regulator, having all of the transactions on the interface between institutions and individuals pinned to PII, following money around the public ledger becomes significantly easier.

If you're, say, a drug dealer only taking bitcoin, the police just have to buy some of your drugs and watch where the money goes to have a pretty good idea of all of your clients, your entire business history, and the names and addresses of your customers. It is perhaps sometimes technically possible to have good OpSec and launder the crypto so it can't be traced, but this is really hard and not making big mistakes is as well (and people breaking laws are often pretty stupid about it).

Unless you are very competent and very paranoid, the advertised benefits of crypto are very hard to achieve.


The advertised benefits - non custodial ownership and peer to peer exchange - still work fine. Privacy is not a design goal of every chain but even on a public chain like Eth it’s easy to use privacy solutions like Tornado and now Aztec to achieve a level of privacy most of us would say is adequate - a similar level as Tor and E2EE messaging apps.

This regulation does little except to add an extra hurdle and unnecessary additional costs for average CEX users who want to withdraw assets to a wallet on the network.


Looks like yet another reason to switch to modern crypto currencies with low transfer fees.


> one by one the promises of crypto

Many countries have anti-money-laundering provisions. It shouldn't be any surprise that entities like Coinbase are forcing users through due-diligence checks; they'd be torn apart otherwise.

If you need anonymity and want to evade the legal checks, and declarations that your government might require, you have to rely on the protocol, not interstitial companies. But also if you're not declaring required information to your government, don't be too shocked when they knock your door down.


The promise of crypto is still valid. It’s the centralized idea of crypto platforms like Coinbase that is evaporating, and that’s a good thing.


How would I purchase Bitcoin anonymously? I can't, because there is no way to exchange my cash for (significant) amount of Bitcoin. If I can't get Bitcoin anonymously, how is the promise of crypto still valid for newcomers?


> If I can't get Bitcoin anonymously, how is the promise of crypto still valid for newcomers

The promise of Bitcoin was never "You are able to be anonymous" since one of the core features of it is a distributed public ledger of all transactions on the network. It goes against the fundamental idea of Bitcoin, that everything is public.

Other cryptocurrencies have made "You are able to be anonymous" a core feature in their protocols, see zCash or Monero for example. But most cryptocurrencies go with how Bitcoin implemented things, meaning everything is public.

One of the core value propositions of Bitcoin (and most cryptocurrencies) has always been "If you own the keys and can connect to the network, no one can stop you from making a transaction".


> It goes against the fundamental idea of Bitcoin, that everything is public.

Anonymous doesn't mean invisible, it means without connection to an identity.

The only identity that you have on chain is an address, which most people would consider equivalent to anonymity.


In order to broadcast a transaction, you need to be connected to the network, which requires a IP, which I'd consider part of identity.

If that identity belongs to your ISP or a VPN or something else is irrelevant, as that would be anonymity on the IP level rather than the level of the Bitcoin protocol.


You do not need an IP to broadcast a transaction, you could feasibly do it on paper, or broadcast through a remote node or overlay network gateway through TOR, I2P etc.


> you could feasibly do it on paper

Have you done this? You know of anyone who have done this? I know in theory it's possible to do, but claiming it's "feasible" I'm not sure is accurate.

> broadcast through a remote node

Which requires you to connect to the remote node, again using the traditional TCP/IP stack.

> overlay network gateway through TOR, I2P

Yeah, that would mask your IP, but IP still required, meaning your anonymous on the IP level, just like I argued in my previous comment.


Calm down sport I'm just trying to supply some options just in case someone else is in a bind. There are always options. Borrow an ethernet port at a hospital or something and use a VPN if you're super worried.


Sorry, I'm already calm, my bad if you got the impression I'm not.

While the context might have been lost these deep in the thread, I was simply trying to rebut "If I can't get Bitcoin anonymously, how is the promise of crypto still valid?" which WA wrote earlier.


It's pretty far from anonyminity when you have exchanges KYCing users and companies like chiphertrace actively tracking them


> exchanges KYCing

Offchain.

> companies like chiphertrace actively tracking them

Mostly without attribution, which people would consider anonymous.


You can buy bitcoin with cash.

You can work and get paid in bitcoin.

You can sell stuff for bitcoin.

You can mine bitcoin.

If you want something, you will find a way.


> You can buy bitcoin with cash.

Where can I buy 500,000€ worth of Bitcoin with cash?

> You can work and get paid in bitcoin.

That's usually not anonymous.

> You can sell stuff for bitcoin.

I don't own stuff worth 500,000€, except cash and stocks.

> You can mine bitcoin.

Not in a significant way, no.

> If you want something, you will find a way.

You ran out of arguments. My point still holds: Crypto isn't anonymous, because you can't easily get in and out of it anonymously.


I think you've missed the point entirely.

Practically, there are a ton of ways to turn 500,000 EUR into "anonymous" crypto, depending on what you mean by "anonymous".

You can use an exchange (KYC or non-KYC) that lets you trade USDT/XMR pairs. Wire 500,000 EUR and convert to USDT. Buy the full amount worth of XMR and send it to your own XMR hardware wallet. You now have anonymous XMR (assuming you trust their math).

You can do something similar with ZEC shielded transactions. Many KYC exchanges support ZEC (but without shielded transactions). You can get your ZEC this way and then shield it.

If you're interested in anonymous crypto, XMR or ZEC is probably what you'd want to have anyway instead of BTC.

Also, LTC recently adopted a new privacy-enabling feature. It's not functional yet as far as I know, but it did cause LTC to be delisted from several korean exchanges last week. This one is interesting because of the widespread adoption of litecoin before it added privacy features.

Or if you'd rather use the ETH ecosystem, you can use https://tornado.cash/. Buy your KYC'd ETH, send to tornado.cash, wait, withdraw a partial amount to a fresh anonymous ethereum address.

There are even privacy-oriented wallets like https://unstoppable.money/ that can use tor to further improve anonymity while doing wallet actions.

But let's say you really do want bitcoin only. Take your 500,000 EUR and wire it to a KYC exchange. Buy your bitcoin and send it to your wallet. Send that BTC into renVM pools, wait, send your renBTC to a new address, release renBTC back to BTC on the new address: https://bridge.renproject.io/.

In other words, your point does not hold at all. There are probably a dozen different ways to get anonymous crypto right now. In the near future, many common coins will have privacy features anyway, maybe even by default.

You have to think about what level of anonymity you want and what premium you're willing to pay, but there's a wide spectrum of options.

And if you think it's not easy enough yet, just wait. The math works, it's just not wrapped up into a convenient user experience yet.


"Just follow these 17 arcane steps and boom! Problem solved!" isn't a great flex.

That goes waayyy beyond "not wrapped up in a convenient user experience". Talking of finances is not so trivial a proposition as... Well, anything else that might have started our complicated on the internet.


I mean, they gave like 5 different options to do exactly what was asked, each with different trade-offs and levels of difficulty.

Surely there is better criticism than, "stop being so thorough"?


Same holds true for Gold or Cash in some (most EU) countries. In my jurisdiction, commercial gold traders are required to KYC process above a certain amount (15.000€ here), in other countries this is limited to 1.000€ (IIRC Spain). In Italy, two completely private entities can not deal in Cash for any amounts over 1.000€ without comiting a felony (maybe misdemenour) - electronic transfers requirement with KYC.

Funny thing is, as a EU foreigner in Spain I can legally withdraw/buy up to 10.000€ per day in BTC anonymously, while a spanish citizen is limited to 1.000€ (I've used BTC ATMs on occasions in Spain, which is completely anonymous below that threshold).


Who told you "Crypto" was supposed to be anonymous and that every cryptocurrency has the same properties? BTC != XMR and at best BTC is pseudo-anonymous.

I suppose if you really want to have 500k in anonymous crypto (one way to do it):

1. Buy it in BTC. 2. Exchange it for XMR. 3. ... 4. Profit!


There’s a place near my house that can exchange in/out of Bitcoin roughly $200k USD at a time without an appointment and they don’t ask for ID. They can do more if you schedule in advance.

I don’t live in a lawless third-world country. It’s very modern and safe here. Statistically safer than the US and other superpower countries.

It’s not fair to count your own country’s unfair regulations as a negative against Bitcoin itself.


At least in my country (Argentina) it's quite easy to purchase fairly large amounts of crypto face to face.

Of course it's probably easier here than other places because we already have an extremely strong culture of purchasing US Dollars bills face to face under the table.


The main (and probably naive) idea of bitcoin is that you don't have to purchase it. Did you purchase the fiat money that you have on your bank account? No, you did something useful for someone and they paid you. Same for bitcoin – do something, or sell something for bitcoin, or do something useful for the network itself (mine your 6 coins per block), and boom you have coins.


Some combination of XMR <-> BTC atomic swaps (https://www.getmonero.org/2021/08/20/atomic-swaps.html the latter function not being implemented yet) and non-KYC exchanges.


make some artwork or music, mint as nft via a gasless minting service. sell your nft work for eth. tornado cash eth. swap eth for wbtc, claim wbtc over bridge.

its clunky but i actually think this is a pretty fun on ramp. im all for people getting paid crypto as a way in rather than buying it.


good way to obtain tainted btc.


The very fact that such exchanges exist kind of abnegate the promise of crypto.

Coinbase is asking for this information for very rational reasons ... the crypto space is re-learning all the problems that pop up when it comes to money and implementing regulations ad hoc.

There are definitely arguments to be made one way or another about such regulations either government or industry sanctioned ... but what we can't ignore is that money is important, and usually needs something more than what crypto offers in terms of practical integrity.


As someone with only a cursory knowledge of crypto, what are the decentralised alternatives to the likes of Coinbase to buy/sell crypto assets?


You can use a decentralized exchange like Bisq but liquidity is horrible. Hopefully more people make the switch.


It's a hard problem to solve, which doesn't have any fool-proof solutions (yet?).

Imagine, someone creates a centralized Twitter and a decentralized Twitter. How can you connect them two and being able to trust any data you receive 3rd-hand which is supposed to originate from the centralized version? The only information you can really trust, is the one you get from the centralized version, as it was built with that principle in mind, that you get it first-hand.

Similar problem with hooking together two monetary systems, one which is centralized and one which is decentralized. How could you include a centralized system within the decentralized one without making trade-offs that could potentially ruin the whole integration?

There are attempts at it, but as the problem is generally hard to solve (cryptocurrencies or tweets or any other data structure), it's hard to solve with cryptocurrencies as well.


Look into P2P crypto trading


https://uniswap.org/


uniswap is for exchanging crypto assets. you can’t use it to exchange non-crypto ($USD from your bank) assets with crypto assets. it’s not an on-ramp.


Question:

How many people would use cryptocurrencies without such platforms?


If you want to buy drugs, ransomware, tax fraud (i.e. theft[1]), fake IDs, or have someone whacked, then you'll still use it.

So this only affects the single other use case, the legal one: greater fool speculation.

[1] before anarchist libertarians object saying "taxation is theft": Please don't start that conversation if you've ever used public roads, parks, or even passively benefited from the security provided by your country having police or a judicial system.


...or been to a public school, or ever interacted with someone who went to a public school, or, or, or.....

If you don't want taxes, you don't want society.


I mean, there's a few people that move to a cabin in the woods off the grid for that reason, which is fine if they want to live like that.

There's a lot of people however that want the benefits of society (for example to make money) without contributing back.


I think that there is some value in these platforms too. They provide a service after all. Given they are not regulated to death.


Aside of evil nature of such regulations, it’s annoying af for me as a digital nomad. I DO NOT HAVE a physical address. Just don’t. No, no electricity bills. No, I don’t receive correspondence. There are more a more people like myself who got essentially a excluded from important services because of archaic regulations written by old people.


I pay $20/month to have a postal address with a mail processor, and know other digital nomads who do as well. You do not? Odd, as it’s cheaper than dealing with issues like this saying “I have no address.” My financial service providers (bank, brokerage, credit cards) require an address for example.

I agree with you asking for addresses is starting to become silly in certain situations, but don’t swim upstream.


A mail processor is not a physical address and will not be accepted by banks that require one for KYC purposes.


This has not been my experience with my mail processor (possibly because they enable you to establish residency/domicile as part of your service and have the address put on your drivers license or state ID). Don’t tell Fidelity or American Express shhh.

(humorously I work in risk mgmt at a fintech and AML/KYC controls are a part of that)


I'd love to know which mail processor does that (mine does not), though I still doubt they would provide that service in the state where I've established permanent residence.


If you don't want to advertise the mail processor publicly, my email is in my profile. Thank you!


I think it is important to note that the regulations (edit: in the US) in question do not require banks to ask for a physical address. That is one of several possible methods of identity verification.

When a bank requires a physical address, that is the bank being lazy and forcing people to use the identity verification that is easiest for the bank.

The only way to fix that is to require banks to offer other verification methods through regulation.


There are many tactics for receiving mail as a digital nomad. For examples, see:

https://goremote.virtualpostmail.com/article/how-to-manage-y...

https://nomadtactics.com/nomadic-life-prep/how-to-have-a-per...

https://nomadjunkies.com/en/canada-digital-mailbox-how-to-de...


Yes, and none of those count as an address that can be used for KYC purposes.


Does anybody know in which countries they are doing this?

Anyhow, I think it is not as bad as it sounds.

If you use Coinbase like a "crypto bank" that does the crypto stuff on your behalf - then yes, this makes things even more annoying than using a fiat bank.

But the way I understand the announcement, it means nothing changes when you use Coinbase simply to buy Bitcoin or other cryptocurrencies. After you moved the coins to your wallet, Coinbase is not involved anymore, and you can do whatever you want in a decentralized fashion.

Overall, my image of Coinbase has gone down quite a bit lately. It seems they are not embracing decentralization and just hope to build a strong crypto company. One that makes the more money, the more centralized this industry will become. Reminds me of AOL. And of Yahoo under Marissa Mayer.

A big indicator for this is that they have so little focus on the Lightning Network. That reminds me of how Yahoo tried to use their portal to become a media company rather than an internet company. And then Google came along and got way bigger than Yahoo. By letting people explore the open web. I remember a Google employee once saying "Our goal is that the user leaves our website as soon as possible. Because that means they found what they were looking for.". Coinbase seems to not have that mindset. They seem to bet on becoming "the crypto everything company". A bank, a marketplace, a social network, a browser .... did this "We will do everything" ever work for a young company? But maybe it will now, that so much money flows into tech companies? The market cap of Coinbase at IPO was 50x bigger than that of Yahoo.

It will be interesting to watch this company progress.


> Does anybody know in which countries they are doing this?

At least in The Netherlands. I got the mail too.


EU was talking about that, but currently I heard only Netherlands are doing that.


Bitonic filed a lawsuit last year (and won) against the Dutch DNB [1][2] about the verification of wallet addresses. Does anyone know the current state of regulations (in NL) about this subject?

[1] https://www-rechtspraak-nl.translate.goog/Organisatie-en-con...

[2] https://bitonic-nl.translate.goog/news/231/dnb-stelt-bitonic...


Still full KYC here.


I am surprised that "Know your customer" regulations have taking this long to arrive at a fairly reputable exchange.


They've been in place since forever for withdrawing cash


Many exchanges have applied the 'know your customer' stuff only for withdrawing and depositing fiat.

I think they argue that crypto is effectively worthless and therefore financial regulations don't apply.


Pretty sure Coinbase already requires a photo ID if you want to send or receive any coin to or from an external address. I know this because a few years ago I decided to completely pull (what little I had) out of crypto, and couldn’t send BTC from my Coinbase account to my own wallet without submitting a photo ID, which was not what I signed up for. Apparently having a U.S. bank account linked wasn’t enough at that point.


I don't understand why people think that they can link crypto currency systems to fiat currency systems without the government regulations getting involved.

Sovereign nations have borders, citizens, and currency. If you are a citizen, live within those borders, or use the currency then they make the rules.


You sort of can. I mean once you have USDT or USDC you can trade them in a decentralised and permissionless way


Stop using these token casinos. Selling you unregulated securities and creating bag holder "communities" is all they are good for. They know how gross they are so they're going to kowtow to the regulators so the regulators don't make them register all those securities. It's gross self preservation. There are much better options.


I got banned from Coinbase years ago because they think I'm a decade younger than I actually and because they don't serve minors. But I was 18+ before Coinbase existed. If memory serves, I got banned after they first implemented identity verification, or at least a form of it that required me to upload a photo of my ID, which I did. They must have misread the birthyear on the ID but I don't understand how that's possible since the mistake would require replacing 19xx with 20xx. A handful of support tickets never got anywhere. I had already bought and sold hundreds of dollars worth of crypto at that point, linked a bank account, etc.

I had already exited crypto at that point so it didn't really matter to me, so I let it be. I thought it was amusing at that point, because of where crypto appeared to be headed.

I've always thought poorly of Coinbase since then.


This is so funny.

Like, yo, how? What does it even mean?

Cryptocurrency addresses don't have names or physical addresses. There is no recipient. It could be a multisig address with ten owners, it could be a smart contract, it could be fully computerised in which case the address is like some AWS datacenter somewhere, etc.

The idea that an address is under the control of a single person who lives at a single place is like, the entire concept that cryptocurrency was designed to eliminate, just layers of fluff on fluff.


If you want to send crypto in the Netherlands that’s you’re problem to solve. From Coinbase or other exchanges it’ll be as simple as denying the transfer if the requirements aren’t met. Just the same as wire or money transfers today.


I deny you the ability to read this comment using a Nike trainer.

It really makes no sense, lol.


Coinbase has never been down on the core principles underlying Bitcoin.

From day one, their only motivation has been to benefit from the ecosystem without ever paying attention to why it existed in the first plate nor giving back to it.

Worse they have actually constructed something that goes exactly against those principles.

   - centralized

   - not your keys, not your coins

   - requires KYC

   - tracks where the BTC you deposit comes from and arbitrarily closes accounts if the don't like what they see.

   - tracks where the BTC you *withdraw* go and how they are used. Arbitrarily closes you account if they don't like what they see.

   - and now this, basically requiring KYC on the *recipients*, what a bunch of losers.
They are basically ruining Bitcoin's fungibility (unfortunately one of the weak points of BTC as compared to more recent coins like zcash, monero, grin and beam).

This dumpster fire of a company can't go bankrupt soon enough in my book, and it'll be a good thing for the Bitcoin ecosystem.

And PLEASE don't make the simple-minded mistake the OP makes of confusing/amalgamating coinbase and Crypto.

One is a random US-based corporation that leverages the lack of knowledge of their customers, specifically the fact that the so-called "service" they provide is something that provides exactly zero additional value over managing your coins yourselves.

The other is permission-less, decentralized, and if managed properly quasi-anonymous money, something that - as wikileaks and the crazy run of the printing press leading to 8% inflation in the amply demonstrated - the planet needs badly.


> - tracks where the BTC you deposit comes from and arbitrarily closes accounts if the don't like what they see.

> - tracks where the BTC you withdraw go and how they are used. Arbitrarily closes you account if they don't like what they see.

Wouldn't it be great if it was impossible to do these things based on the currency's intrinsic properties?


> Wouldn't it be great if it was impossible to do these things based on the currency's intrinsic properties?

It would indeed, which is what I meant by saying this is one established weakness of Bitcoin, which some of its successors (monero, zcash, grin, beam, etc...) try to fix.


There have been a number of liquidity problems at exchanges and similar entities over the last few weeks and multiple exchanges have placed strong limits on withdrawals and transfers. This additional barrier to moving money around will absolutely reduce the sums that can be quickly withdrawn. I wonder if part of this additional friction is something that Counbase actively wants


This is so dumb. Trivially bypassed by sending coins to yourself first and then to the actual recipient.


> it seems one by one the promises of crypto of the last several years are evaporating

Cryptocurrencies as originally envisioned was over the second these exchanges showed up. They're literally banks with all the associated government bureaucracy but none of the benefits.


KYC stuff is and will continue to be a requirement to do business in any country. I wouldn't be surprised if we see other countries implement requirements for firms to do further strict checks on people moving money into and out of cryptocurrency accounts.


Coinbase is a representative of crypto as much as China is a representative of the USD.

It exists only to exchange crypto for fiat. That means it _must_ be subject to regulation. Only yourself to blame if you thought otherwise.

Inb4 anonymity in crypto: says who? Monero is an actually private chain, and as a result you can't trust the claims it makes. "Just believe us" nah, I won't.

Bitcoin, on the other hand, is a publicly auditable chain. It's not anonymous or private. You can tie identity to a wallet if you know how (nation states for example, or just knowing your friend's address).

It's really not that hard to wrap your head around, but if all you do is meme trade well then someone thanks you for their Lamborghini.


> Specifically, when you send crypto outside of Coinbase, we are required to ask you for the name and physical address of the recipient and the purpose of transfer.

So how do you pay off your ransomware? They don't tell you their name and address.


Send to your own privately controlled wallet and then transfer as your heart desires.


exactly. It is not easy to regulate unhosted wallets :)


I understand the logic of KYC but 3rd parties are not "customers".

This is almost like mandatory doxxing. Brave new world!

Of course, one could just send tokens to a separate wallet outside Coinbase and then send from that wallet to 3rd parties.


wow, this really undermines the privacy aspect of cryptocurrencies. i guess more reason to move off of exchanges.


"Promises of crypto" have never been about being able to have reasonable regulations for crypto. In the opposite, heavy regulations were expected to be coming from the very early days.


Crypto in a Coinbase wallet isn't your crypto, it's a promise by Coinbase to give you that crypto when you ask. Of course if the government tells them they now have to attach conditions to that promise, they will do it — their only alternative is to stop offering their services in that market.

> it seems one by one the promises of crypto of the last several years are evaporating

I don't think "the promises of crypto" have anything to do with the actions of Coinbase or any other centralised custodial entity.


Contrary to what the anti-crypto keep on screeching about these money launderers using crypto, as soon as they send the funds to an exchange they are going to be met with a bunch of KYC/AML/ID checks and that is even before they are able to use the withdraw button.

Money launderers, criminals and scammers are running out of options to cash out some cryptocurrencies as many exchanges are also increasing compliance with regulations and are already delisting privacy coins.


Where does Julian Assange fall in that very neat and convenient dichotomy of yours?


Coinbase is an unregulated casino, full of s-coins, I would stay away, as far away as you could. And never leave any coins on there. Hopefully the only coins you stack or bitcoins. All the rest are scams, with pre-mines, venture backing, marketing budgets, centralization, and get rich quick teams and investors selling their pre-mine coins to you, the bag holder. Coinbase on the other exchanges profit massively by providing a platform for the scam.


> Just got this email from Coinbase, and it seems one by one the promises of crypto of the last several years are evaporating

This is a a somewhat weird take to not say uneducated. What coinbase does has nothing to do with promises of crypto, if those promises existed to begin with.

The fact that OP omitted the part of the message that specifies that such measures are meant to comply with Dutch laws also tells me there is some dishonesty at play here.


Cryptocurrencies have long made promises of decentralisation and fairness and, despite that, people still centralise around exchanges in the same way that people centralise around traditional banks. To that end, what the exchanges do is far more important than people seem to think. Financial institutions have always operated on a reputational basis and KYC has long been important to that (if nothing else because it allows them to shift some liability).

In theory, anyone can run a bank. That doesn’t mean that anyone else in the world has to trust your bank if they believe that you represent bad actors or don’t take due diligence. There’s currently no reason to believe that cryptocurrency exchanges will (or should) be any different.


> Cryptocurrencies have long made promises of decentralisation and fairness and, despite that, people still centralise around exchanges in the same way that people centralise around traditional banks.

This is the value of crypto. People can choose how much they want to trust 3rd parties and how much personal responsibility they want to take on. Some people may always choose a centralized mechanism for managing their assets, some will choose to manage their assets completely on their own, and others will decide on a case-by-case basis if they want a 3rd party involved.


"This is the value of cash. People can choose how much they want to trust 3rd parties and how much personal responsibility they want to take on. Some people may always choose a centralized mechanism for managing their assets, some will choose to manage their assets completely on their own, and others will decide on a case-by-case basis if they want a 3rd party involved."

Fixed that for ya.


Cash is fantastic for personal freedom, but for many reasons, cash isn’t a viable alternative in the digital age, especially as we move to fully digital, government-controlled money that loses all the freedoms that come with using cash.

Cash is also hard to move and secure in large quantities, which makes it impractical to self-custody.


> despite that, people still

So the problem are people not some cryptocurrency problem. Maybe not even "people" as a whole since such arguments are made from a very US/EU privileged perspective which frankly doesn't reflect the realities of the rest of the world.

On the other hand, as long as you have your keys you can transact on legit systems like Bitcoin and Ethereum. KYC and travel rules do not exist within the protocol. It doesn't care about you, your opinions, Coinbase or your governments laws and restrictions.

It is dishonest to affirm that cryptocurrency fails because a centralized on and off ramp where you convert form and off a centralized currency is enforcing a centralizing rule.

Why is this so hard to make such distinctions? Oh I might know it. Remember when I said OP purposely chose to omit the fact that Dutch users received this message? This happens because cryptocurrencies are a touchy political charged subject.


I can only laugh at the absurdity of the situation. Cryptocurrency was invented specifically to liberate people from the allseeing eyes of governments.


I no longer care about crypto. It's finally in its last cyclical stage. Although I'm curious what the next "crypto" will be.

In the 90s it was e-gold, early 2000s, it was liberty reserve, then bitcoin and crypto derivatives.

This is perhaps the most destructive wave. Some countries that went thru a ponzi frenzy did not recover: Albania.


open source finance = ded rite?

check back in 20 yrs. doubt it.


> ...it seems one by one the promises of crypto of the last several years are evaporating...

Did you even read it?

> Starting on June 27, Coinbase will introduce some changes required by local regulations...

How is this hardly Coinbase or crypto's fault? Sounds like local regulations made by local people who don't understand it at all.


Of course this is only for the Netherlands...

https://help.coinbase.com/en/coinbase/trading-and-funding/se...


I'm pretty sure coinbase users don't send crypto anywhere. They just "invest" in crypto.


That's a mighty giant brush you have there


Bitcoin was invented so that anybody could be a bank. Therefore, Coinbase will fail in the long term if Bitcoin will succeed. I think one day we'll invent biometric access to bitcoin wallet so there is no more worry to lose the private key because we'll also able to restore it.


why would you keep your crypto on "Coinbase" wallet? People deserve to have their funds frozen indefinitely a'la PayPal mode. "crypto" currency was about "owning" your money not handing it into a paypal-like walled garden.


Knowing the recipients home address helps tremendously with performing the 5$ wrench attack.


Yes and a group of us are doing everything we can to make it worse because electronic currency is a grift.

https://concerned.tech/


Solution: Don't use a publically trading, US-based company for trading crypto.


Practically speaking this isn’t a big deal. Just transfer to a wallet you own and from there you can do whatever you want without providing that additional detail.

Also this silly rule only applies in a particular country.


Just send it to your node first. This is trivial to get around. Coinbase is for exchanging crypto and dollars not for a wallet, you should never use an exchange for a wallet.


You should use P2P transfers to exchange bitcoins. You should avoid any kind of centralized exchanges. That defeats the whole idea of crypto currency.


Why are you leaving your crypto on an exchange wallet? There's something called counterparty risk, that these crypto folks need to read up on.


Most people obtain cryptocurrency for the purpose of speculating on its value. "Investing" is by far the most popular use of crypto (excluding criminal activity).


The instrument used to speculate on the price of cryptocurrency is a CFD, in which case you take gains in stablecoins like Tether. It's foolish to leave any cryptocurrency long-term on an exchange wallet. If you're trading the spot market directly, you should take the cryptocurrency off the exchange immediately, as soon as you buy it.


Not surprised. Monero, the privacy centric crypto, has always been barred from Coinbase. That told me everything about Coinbase's philosophy.


So what I'm getting from this is buy a bunch of stuff now and get it off the platform before it's too late?


Who ever has the wallet is the owner. If coinbase has a copy of your private wallet then they are part owner of it.


Using centralized shitcoin casinos, why would you expect to take advantage of the "promises of crypto"?


Can you send it to yourself and then send it again somewhere else?

Or do you not have actual keys with a the “Coinbase Wallet”?


Oh, you mean KYC and AML?

Turns out "math" doesn't make legislators and regulators go "oh, it's math? Ok, then I have no requirements".

I've said it many times before: Cryptocurrency and smart contracts just does not solve any of the hard problems in their space. It tries to solve some of the most simple problems in the whole domain, at a cost of making the hard problems even harder.


You don't need to use centralized exchanges. In fact you aren't even using crypto when you use centralized exchanges.


Unlike the other guy I agree with you, on both your sentences. But none of this contradicts what I said.

Not using an exchange does mean it's harder to enforce, especially at scale, but "not getting caught" is not the same as "not committing a crime". And I have no sympathy for all the people e.g. trading crypto and then getting all surprised when they owe capital gains tax. They thought it was "just math" and that "math is law".

Turns out math isn't law.


This is... A bizarre take. Impressive how wrong you can be in just two sentences. Kudos! :-)


Would you mind actually pointing out what I said is wrong, instead of just saying "You're wrong lol"?


Im pulling out of coinbase. They are more difficult to use than my local bank at this point. No thanks.


You’re still not getting it. Crypto isn’t meant to be converted to fiat, it’s meant to replace fiat.


Delete coinbase, they've completely sold out many years ago. Not your keys, not your coins.


How is that in anyway a tech news ? Is Hackernews now just a crypto-bro link aggregator ?


They should do that so that they can send tax reports to a relevant state.


That's a good move, whatever it takes to slow down sinking reserve.


Can you work around this by sending it to your own wallet first?


The whole idea was to not have a "bank" in between!


You can make up an address. How can they verify it?


That sounds like a HUGE legal liability.

Ask your lawyer first.


They're doing way too much now


Just send it to yourself first?


How many TWh crypto consumed? Would one be able to build Egyptian pyramids with this amount of energy?


Clearly, yes.

Building a pyramid, in the ideal case, simply requires the energy to lift each stone into place. Lifting 6.5 million tons of stone on average 40 meters (remember that most of the weight of a pyramid is at the bottom!) uses 6.5e9 * 40 * 10 Joules of energy, which is 722 MWh, which costs $144,000 in (California) electricity. Okay - thats a lot more than I expected actually...


This is for Netherlands.


Nail in the coffin


There's a lot of confusion regarding this.

TLDR: This actually involves two pieces of legislation: - Travel Rule - unhosted wallet verification

Both are Anti Money Laundering (AML) laws and not Know Your Customer (KYC) laws. On any exchange you have to tell the exchange who you are.

The first is global FATF[1] wrote a 'recommendation' and all jurisdiction on the world are expected to implement it. It mandates the exchange of originator/beneficiary data. When you do a regular/fiat bank transfer you also need to fill out the name of the beneficiary. This legislation brings that to crypto.

The second much less global. The Netherlands wants it, but the EU and UK (to a degree) will follow suite. The reasoning behind this law is that IF you DO NOT provider beneficiary data THEN you must be transferring to an unhosted/private wallet. You need to prove that you do.

Coinbase is merely a trailblazer here. Every single exchange will do this in the near future (within 2 years).

Elaboration:

This move has been a long time coming. FATF published their recommendation in 2019 and ever since the industry has been working to come of with a solution. There are MANY different approaches: TRP[2], TRISA[3], TRUST[4], Netki[5], VerifyVASP[6], Shyft[7], Sygna[8]. Some are purely a protocol, others are purely a SaaS offering and anything in between.

The main trouble with these laws is that exchanges need to exchange data. That means they need to talk to each other via mutually agreed upon standards. Added difficultly is that some exchanges are in a jurisdiction that requires this, while their counterparty is in a jurisdiction that doesn't require this. Solutions to this and more need to be devised.

Coinbase is heavily involved, and one of the initiators of TRUST. They are pushing this more than anyone else and see being compliant early as a competitive advantage. Binance, for example, got a reprimand of the Dutch National Bank. Making it harder for them to do business there.

While I'm not a fan of this regulation I believe this to be a crucial step into making Bitcoin (and others) mainstream. Without clear regulation institutionals won't enter. Retail will see this as a clear sign of endorsement from the government. The challenge is now to make the implementation of these new laws as sensible as possible, preserving privacy. Some initiatives I listed do that better than others.

The EU will have legislation in place in 24 months. The UK will start enforcing this in September 2023. Switzerland and Liechtenstein already enforce this since a couple of years. Singapore started to enforce this since not too long ago. As does South Korea. It is not clear to me when the US will actually start to enforce.

Disclaimer: I am one of the co-founders of 21 Analytics[9] and we are trying to make a living keeping the Travel Rule compliance space sane and clear.

[1]: https://en.wikipedia.org/wiki/Financial_Action_Task_Force [2]: https://www.travelruleprotocol.org/ [3]: https://trisa.io/ [4]: https://www.coinbase.com/travelrule [5]: https://www.netki.com/ [6]: https://verifyvasp.com/ [7]: https://www.veriscope.network/ [8]: https://www.sygna.io/ [9]: https://21analytics.ch/


“Wow, Mickey Mouse and Donald Duck are getting a lot of withdrawals lately!”


Are other exchanges doing the same thing?


WHAT! Coinbase just became PayPal

Doesn’t matter anyway. The coup de grace is coming in days, maybe weeks. Bye bye Bitcoin. Thanks for burning down a forest.


Stop abusing "Tell HN".


I know in these crypto threads there are always some questionable characters who turn up and say "Well actually <obviously bad thing> is really good". In this case I'm going to kind of be that person. Very often with tech start ups a big part of their success is basically breaking the standard rules whilst they grow. Like Uber operating illegally in NYC or skirting employment laws in various jurisdictions.

Inevitably as those types of businesses grow they have to move into line with the actual law, and it's not a bad thing, Uber doesn't have to hand back the growth that they got with that dodgy behavior, now they're the market leader. Sure, it cuts into their profits, but the cost of continuing to break those rules was slowly going to cost them more and more. In the case of Uber it was things like facing an outright ban from London for example.

So on balance I think this is a good indicator that Coinbase is maturing into a stable business. Maybe that means some of the libertarian dreams die, but from a wider business point of view I think this is natural and fine. It's perfectly fine to run an exchange, it's a decent business. CME Group has a P/E ratio of 27 versus a P/E ratio of 6 for coinbase (for obvious reasons it's not doing well right now). I've said before, if COIN drops into the $5-10Bn range it would be a great acquisition target.


Key difference - Uber didn't break the law while wiping out entire life savings volumes.

I understand that's a much broader-scoped situation than mentioned in the article (who cares about one country getting certain regs enforced), but the point stands - coinbase is a literally Ponzi scheme, and comparing it to other "eventually became legal" business models seems disingenuous.




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