As regulators become increasingly concerned about investors moving their cryptocurrencies off of centralized exchanges, an industry executive has weighed in on the likelihood of a possible ban on non-custodial wallets.
Stepan Uherik, CFO of SatoshiLabs, the company behind the Trezor hardware wallet, is confident that it is highly unlikely that governments around the world will ever succeed in banning the use of non-custodial wallets.
“It is highly unlikely that all countries will ban non-custodial wallets, or any other aspect of the Bitcoin peer-to-peer network for that matter,” the CFO told Cointelegraph.
Uherik said that potential efforts to ban non-custodial wallets would likely be similar to certain countries that have banned things like crypto or torrenting in the past. “The adoption of these technologies continued unabated. In a sense, attempts by governments to ban a certain technology are good marketing for it,” he pointed.
Also known as self-custody wallets, Non-custodial cryptocurrency wallets are designed to give the user full control of the cryptocurrencies they own. Unlike custodial wallets, non-custodial wallets eliminate the need to rely on a third party that could recover, freeze or confiscate the user’s crypto assets. This makes the user solely responsible for storing the private keys.
Since non-custodial wallets essentially allow users to “be their own bank,” many financial regulators and banking institutions became concerned about the potential risks behind these tools.
Earlier this week, a major banking association in Russia proposed to criminalize certain cases of non-custodial wallet use due to reasons such as the complexity of seizing crypto assets from such wallets. Earlier, a European Parliament committee approved a regulatory update that could potentially interfere with exchanges’ ability to deal with non-custodial cryptocurrency wallets.
There seem to be some ways for governments to limit the use of non-custodial wallets, but there is no chance of banning them outright, according to SatoshiLabs’ CFO.
Governments could try to ban certain non-custodial wallets through mobile app stores, as there are only two dominant mobile app providers, Google and Apple. Uherik suggested, adding:
“Such a ban would be easy to enact, but it would only cover a portion of non-custodial wallets and likely encourage users to look beyond popular app stores. Hardware and desktop wallets would not be affected.”
Any attempt to ban non-custodial wallets would also provoke a strong reaction from consumer protection NGOs, because such censorship “has no place in civilized countries”, said.
Uherik also stated that open source hardware wallets are resistant to any ban, while hardware wallet manufacturers are better off than most Bitcoin companies from a regulatory standpoint, because they do not offer custody solutions. or financial services. He concluded:
“Governments can curb Bitcoin adoption, but in the end Bitcoin will prevail. Bitcoin is an idea whose time has come, and no one can fight that.”
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