As regulators become increasingly concerned about investors moving their cryptocurrency off centralized exchanges, an industry expert has assessed the likelihood of a potential ban on non-custodial wallets.
Stepan Uherik, Chief Financial Officer of SatoshiLabs, the company behind the Trezor hardware wallet, is confident that it is highly unlikely that governments around the world will one day be able to ban the use of non-custodial wallets .
“It is highly unlikely that all countries would ban non-custodial wallets or other aspects of Bitcoin’s peer-to-peer network,” the CFO told Cointelegraph.
Uherik said potential efforts to ban non-custodial wallets would likely be similar to certain countries that have banned things like crypto or torrents in the past. “The adoption of these technologies has continued unabated. In a way, government attempts to ban certain technologies are good marketing for that technology,” he noted.
Also known as self-custodial wallets, non-custodial cryptocurrency wallets are designed to give the user full control over their own cryptos. Unlike custodial wallets, non-custodial wallets eliminate the need to rely on a third party who could recover, freeze, or confiscate the user’s crypto assets. This makes the user solely responsible for storing the private keys.
Because non-custodial wallets essentially allow users to “be their own bank,” many financial regulators and banking institutions became concerned about potential risks behind such tools.
Earlier this week, a major banking association in Russia proposed criminalizing certain use cases of non-custodial wallets on grounds such as the complexity of seizing crypto assets from such wallets. Earlier, a European Parliament committee approved a regulatory update that could potentially affect exchanges’ ability to handle crypto wallets without custody.
According to SatoshiLabs’ CFO, there appear to be some ways for governments to restrict the use of non-custodial wallets, but there’s no way to ban them outright.
Governments could seek to ban certain non-custodial wallets via mobile app stores as there are only two dominant mainstream mobile app providers, Google and Apple, Uherik suggested, adding:
“Such a ban would be easy to enact, but it would only cover a subset of non-custodial wallets and would likely motivate users to look beyond the popular app stores. Hardware and desktop wallets would not be affected.”
Any effort to ban non-custodial wallets would also draw strong backlash from consumer NGOs, as such censorship “has no place in civilized countries,” he said.
Related: Crypto industry hits back after EU vote to block ‘unhosted’ wallets
Uherik also explained that open-source hardware wallets are resistant to any ban, while hardware wallet manufacturers are in a better regulatory position than most other bitcoin companies, as they do not offer custodial solutions or financial services. He concluded:
“Governments can slow bitcoin adoption, but bitcoin will prevail in the end. Bitcoin is an idea whose time has come and nobody can fight it.”
https://cointelegraph.com/news/noncustodial-bitcoin-wallets-unbannable-says-exec-behind-trezor-wallets Noncustodial Bitcoin wallets cannot be banned, says the executive behind Trezor wallets