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Coinbase Users Called to Transfer Crypto to Hardware Wallets

14 points by firstSpeaker 4y ago

charles_f 4y ago
> Coins left on Coinbase would become collateral for the company in bankruptcy proceedings Sounds so weird to me. I get they're not a bank, but if a storage place was about to be broke, I doubt whatever is still stored in there on behalf of customers would serve as collateral.
- nybble41 4y ago
  The difference is that a storage facility is holding property which belongs to its customers, while Coinbase merely owes its customers a service—there is no property involved, as the assets are all virtual. Banks are somewhere in between; they owe their depositors property (cash) upon request, not merely a service, but unlike a storage facility until that withdrawal is made the money belongs to the bank (more-or-less like a loan). They are also subject to regulations specific to banks which place those withdrawal claims in a special category.
cko 4y ago
"What the heck were you thinking? If I am getting bank interest, I want complete security. Heck, FDIC. I don't see nothing like that here." - Wade Gustafson, Fargo
joezydeco 4y ago
Normal business for Coinbase during a crypto crisis is to go dark for a week or so. Starting a bank run on itself? Now that's novel. Bravo.
runnerup 4y ago
Given the new rules on transferring money from “unhosted wallets” (really, just a standard old school wallet) to USD exchanges it may be a bit harder to use these bitcoins in the medium term future. When you go to cash out the standard wallet can’t provide a VASP number to the exchange to prove it has a AML chain of custody. So you’ll have to provide additional information about who the funds come from to the receiving exchange yourself. See regulations 1506-AB41 and 1506-AB47
- nybble41 4y ago
  > So you’ll have to provide additional information about who the funds come from to the receiving exchange yourself. It's your wallet, so the funds come from you. You may need to sign a message to prove that. The exchange already has your information as the account holder.
  - verdverm 4y ago
    Where did the funds in your wallet come from, is the point
    - Cypher 4y ago
      It's a mute point. It's only relevant for VASP to VASP transfer.
kkielhofner 4y ago
This will be interesting. What often isn’t understood by many is the fact that if you entire experience with blockchain/cryptocurrencies is use of an exchange you actually have no experience with blockchain. Exchanges essentially run an order book that, unless you transfer crypto in/out, doesn’t interact with the blockchains at all. This is due to blockchain transaction speed, cost, etc. Users are going to learn some hard lessons. Blockchains are somewhat brittle. They’re slow. They’re relatively expensive. The UI/UX has a very long way to go. We can all expect to see a flood of stories in the coming months of users losing their cryptocurrencies due to human error, forgetting their password(s), etc. Blockchains are extremely complex and unforgiving. I don’t think the vast majority of Coinbase users are prepared to interact with it directly.

14 points by firstSpeaker 4y ago

> Coins left on Coinbase would become collateral for the company in bankruptcy proceedings Sounds so weird to me. I get they're not a bank, but if a storage place was about to be broke, I doubt whatever is still stored in there on behalf of customers would serve as collateral.

nybble41 4y ago
The difference is that a storage facility is holding property which belongs to its customers, while Coinbase merely owes its customers a service—there is no property involved, as the assets are all virtual. Banks are somewhere in between; they owe their depositors property (cash) upon request, not merely a service, but unlike a storage facility until that withdrawal is made the money belongs to the bank (more-or-less like a loan). They are also subject to regulations specific to banks which place those withdrawal claims in a special category.

cko 4y ago

"What the heck were you thinking? If I am getting bank interest, I want complete security. Heck, FDIC. I don't see nothing like that here." - Wade Gustafson, Fargo

joezydeco 4y ago

Normal business for Coinbase during a crypto crisis is to go dark for a week or so. Starting a bank run on itself? Now that's novel. Bravo.

runnerup 4y ago

Given the new rules on transferring money from “unhosted wallets” (really, just a standard old school wallet) to USD exchanges it may be a bit harder to use these bitcoins in the medium term future. When you go to cash out the standard wallet can’t provide a VASP number to the exchange to prove it has a AML chain of custody. So you’ll have to provide additional information about who the funds come from to the receiving exchange yourself. See regulations 1506-AB41 and 1506-AB47

nybble41 4y ago
> So you’ll have to provide additional information about who the funds come from to the receiving exchange yourself. It's your wallet, so the funds come from you. You may need to sign a message to prove that. The exchange already has your information as the account holder.
- verdverm 4y ago
  Where did the funds in your wallet come from, is the point
  - Cypher 4y ago
    It's a mute point. It's only relevant for VASP to VASP transfer.

kkielhofner 4y ago

This will be interesting. What often isn’t understood by many is the fact that if you entire experience with blockchain/cryptocurrencies is use of an exchange you actually have no experience with blockchain. Exchanges essentially run an order book that, unless you transfer crypto in/out, doesn’t interact with the blockchains at all. This is due to blockchain transaction speed, cost, etc. Users are going to learn some hard lessons. Blockchains are somewhat brittle. They’re slow. They’re relatively expensive. The UI/UX has a very long way to go. We can all expect to see a flood of stories in the coming months of users losing their cryptocurrencies due to human error, forgetting their password(s), etc. Blockchains are extremely complex and unforgiving. I don’t think the vast majority of Coinbase users are prepared to interact with it directly.