Just another day in crypto. KYC and self-custody.
Traders are removing funds from exchanges.
The price of Bitcoin has come down a lot since its all-time high a few weeks ago, and it has taken the whole crypto market down with it. It is not only Bitocin that is down in price. It is all assets across the market as well. Even the stock market was going down when Bitcoin was dumping. I guess the market is going to do what it must do. But despite the current selloff, traders are moving their funds away from exchanges.
I guess now traders understand that not our keys, not your coins, and people are moving their funds out of exchanges. It is bullish because it means that people understand what crypto assets stand for and that people understand the need to be responsible for their accounts without relying on third-party holders or custodians. It is just the first step in the right direction.
The long-term storage of Bitcoin and other assets into non-custodial accounts is good because it removes funds from exchanges that may or may not engage in market manipulation. It also means that users understand the risk of leaving funds with third parties where governments could order the seizure of funds. Once you hold your private keys in a secure place and your coins within those private keys, no government or institution can seize your funds.
All could also be a sign of things to come for the whole economy. We all know that when governments lose their monetary control, they start enacting draconian laws to keep the wealth within their borders. Still, the only reason wealth wants to leave is because such a location has created laws that destroy wealth, making it more complicated to make a profit. That's when the rich go when they can't make a penny even if they try because either money policies or fiat money is losing value thanks to money printing or irresponsible politicians crafting absurd laws.
Many other governments are also cracking down on unregulated exchanges, with Japan and the UK being the last examples. What makes an exchange unregulated is the fact such an exchange it's not registered within a territory, and so the government doesn't know the users' data. One exchange that is always in the eye of regulators is Binance, and it is because of the nature of the exchange itself. No KYC means governments can't see a penny on taxes because they don't know you or have any data on you. They want Binance to give them your data so they can tax you for trading, including crypto-to-crypto exchanges.
Both countries have capital gains laws which in turn means they want to tax their citizens on top of whatever other taxes they may already have, and this is why decentralized exchanges and decentralized finance is a thing. Government can only try to control the on and off-ramps into fiat because once the money is in crypto, you can use Dexes and many other tools to have the financial freedom you always wanted.
El Salvador.
El Salvador government will be buying some Bitcoin because it will give its citizens $30 in Bitcoin for those to register their accounts using the application called Chivo. In the case of El Salvador, most citizens will have to use custodian solutions like Wallet of Satoshi, Strike, Bluewallet, and many others because they won't be able to afford the on-chain fees of Bitcoin BTC. They will also be able to use LN the right way, but they will have to pay the price for it, so most will use the government sponsor application.
Many citizens in El Salvador don't have a bank account with Chivo. They will have a bank account sponsored by the government (Chivo is a bank account, nothing more, nothing less) with the option of using dollars or Bitcoin. Once it comes across the country, people can access the broader crypto market by exchanging their balance for other altcoins. Salvadorians will have the choice to use Bitcoin on-chain using genuine LN wallets and custodian wallets, which in turn means that if they wish, they could invest a small amount of their income into other assets for investment purposes.
Most Salvadorians can't access the international stock market, but with the help of custodial services, they could access a broader market than the one on their territory. They can use LN exchanges to exchange into other altcoins and invest that way outside custodian Bitcoin accounts and dollars. Will they take that opportunity? That is something else. But with a $ 10-a-day minimum wage, their investment options are also limited, and assets such as Bitcoin Cash could be attractive because they are cheap and valuable on-chain without high fees to use the network.
