Coinbase is collapsing in the face of declining investments from its users, who are no longer finding an opportunity to invest in cryptocurrencies at a time when the market is experiencing a general downturn. In the stock market, the cryptocurrency exchange business lost 24% on Wednesday. Users panicked, fearing a bankruptcy would force Coinbase to forfeit the funds. For them, Coinbase can rely on the digital assets of its customers in the event of a blow.
This exaggerated explanation took on gigantic proportions until it reached Coinbase CEO Brian Armstrong, who was quick to respond on Twitter in an effort to reduce the pressure. for him, “It is unlikely that a court will decide to consider clients’ assets as part of the business in bankruptcy proceedings.”. Unlikely, but possible then.
How to protect your cryptocurrency purchased via Coinbase?
Impossible is not part of the lexical domain of the crypto market (we saw it with the collapse of Luna and UST). But in the case of Coinbase, solutions are available today for users to protect themselves. Because if Coinbase offers to store cryptocurrencies for its clients, the latter has the right to transfer them to another wallet on another platform.
Thus, if you no longer trust Coinbase and if you fear that there is a flaw in the platform, we invite you to transfer your funds to another crypto wallet. And for once, you have two options. First, choose a wallet on another central platform. Second, choose a physical self-hosted wallet like the one in the French Ledger.
The peculiarity of a self-hosted wallet (also called a “non-wallet”) is that you are the only person with the private key that allows you to use the funds. On centralized platforms, with so-called ‘clipboard’ wallets, the platform keeps your private key. So you don’t have your money right there, and only a secret phrase that unlocks the private key gives you the rights to your wallet.
Relying on a central entity to maintain your cryptocurrency no longer seems like the best solution, especially in the face of requisition concerns like Coinbase does. But, there is a but. At the end of March, discussions about the European MiCA framework project on digital assets particularly threatened these self-hosted physical wallets.
The reason relates to their risk of monitoring transactions in cryptocurrencies against the background of anti-money laundering. The European Parliament, during an ad hoc committee, voted at the end of March 2022 in favor of a motion to regulate service providers such as Ledger (93 votes, 14 votes, 14 abstentions).
If the parliamentary shuttle leads to the adoption of a law, the companies behind dishonest wallets will have to promote information sharing about their users’ transactions. This is no small feat for products that are a little monitored. For example, a ledger will be required to collect information on the nature of remittances and owners of funds. Therefore, wallet owners will have to inform the recipient of the transaction.
For Leger’s head of public policy, Seth Hertlein, Europe would be “the wrong way” and would undermine “financial freedom”. Among his arguments is the fact that only 0.05% of the total volume of cryptocurrency transactions in 2021 correspond to money laundering activities. “Entrepreneurs, innovators, and the current blockchain industry in Europe will have more incentive to leave or expand their businesses elsewhere.”Ledger added.