Kim Dotcom Envisions Harsh Crypto Crackdown in the US
In 2020, stricter rules have been planned, but there may also be unexpected crackdowns against the crypto sector.
Kim Dotcom envisions a serious crackdown on the US crypto sector, possibly making crypto assets illegal. For now, the US agencies have kept to a regulatory regime, making a difference between coins and tokens. But using Bitcoin (BTC) is being scrutinized more often.
Kim Dotcom, founder of Megaupload, called for transacting anonymously when possible.
There are currently no signs of a direct crackdown on crypto usage. However, the vulnerabilities depend on the type of asset and network. The US Internal Revenue Service is well-aware of the record potential of Bitcoin’s network, and has started to require a history of transactions. In 2019, it became virtually impossible to exchange any significant amount of crypto for fiat, without sharing detailed customer data.
Coin mixing, one tool for anonymous use, is also viewed with skepticism. A recent report saw Binance’s team react to a perceived attempt to mix coins after withdrawals.
The US is one of the strictest regimes for crypto usage, and some exchanges and brokers boast of being fully compliant. However, it is much more difficult for crypto startups, and the US Securities and Exchange Commission is especially vigilant about Ponzi scams disguised as crypto projects.
In 2020, exchanges may start scrutinizing the blockchain itself, with the aid of CipherTrace. Beyond Bitcoin and the major coins, a record of token transactions will also be included in exchange record-keeping.
Kim Dotcom himself has felt the pressure of US regulators. The planned token sale through Bitfinex fell through, citing an unfavorable regulatory climate. Raising funds for the K.im platform turned out to be problematic, as token sales are tested for unregistered security status.
So far, censoring the actual Bitcoin network has not been done. But the US is also one of the biggest hubs for nodes, often using cloud services. This means a significant part of the Bitcoin network can, in theory, be taken offline or censored, as it does not run on independent machines.
But Bitcoin also has enough international nodes to keep the distributed ledger without censorship.