"Self-custody" & "self-hosted"

Is anyone else concerned with terms like “self-custody” and “self-hosted” wallets?

We don’t refer to physical cash in our possession as being in our “self-custody wallet” – we’d say that we have cash in our wallet.

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Good point. This language is an industry response (I also endorsed it when we were brainstorming) to language being used by FATF, FinCEN and other regulatory actors referring to them as “unhosted wallets.” It’s an attempt to shift the language and perception as “unhosted” is an attempt to color them as anonymous black boxes that shouldn’t be trusted.

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Great context, @joshs, also highlighted by Deputy Treasury Secretary Wally Adeyemo’s remarks at Consensys last week [Remarks by Deputy Secretary of the Treasury Wally Adeyemo at Consensus 2022]

Second, we are working to address the unique risks associated with unhosted wallets. Because unhosted wallets are effectively just addresses on a blockchain, it can be difficult to determine who really owns and controls them—creating opportunities to abuse this heightened anonymity. Fundamentally, financial institutions need to know who they are transacting and doing business with to make sure they are not making payments to criminals, sanctioned entities, or others. When it comes to unhosted wallets, we are working to provide them the information they need to avoid facilitating these kinds of illicit payments.

seems pretty silly when read without unhosted, doesn’t it?


This warning strikes me as ominous–even existential–for zcash. Particularly with permissionless interoperability (e.g. renZec) connecting ETH and ZEC.

Glad to see the ECC hiring a Head of Regulatory Relations - Electric Coin Company

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It’s all very well and good that ECC is hiring lawyers or whomever to shovel sand against the oncoming regulatory tide.

But to me it’s clear how that is going to end. Governments in pursuit of total control have spent decades wishing they could ban cash once and for all, and now they are salivating at the prospect of Central Bank Digital Currencies that will finally let them do just that. There is no way they are going to sit back and let Zcash get in the way of that goal, not when a formal corporate entity like ECC exists for them to get their hooks into.

At some point ECC is going to be strong-armed into some sort of regulatory compliance that will be at odds with the vision of financial privacy that attracted us all to Zcash. At that time it will be necessary for some new entity to step up, hoist the black flag, and explicitly oppose the whole concept of letting governments have control of cryptocurrencies.

I would love to see some signs that the Zcash community realizes this and is creating tech that is explicitly intended to defeat a hostile regulatory apparatus. Are there any nascent efforts on that front? I don’t notice any. I hope I am wrong, but my impression is that people naively think that the regulatory alligator will be content to just nibble at the edges of Zcash. In fact it wants to swallow the whole thing.

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We have had conversations with regulators where requests and suggestions were made that are not only unacceptable, but also impossible. I suspect those requests and questions will persist.

There are strong proponents of privacy among policy makers in the US, but not yet enough education of nuances. Privacy is not binary - most don’t yet understand that or the implications. I also think that the tide will eventually turn against fully transparent storage and transactions due to foreign mass surveillance by other nation states and exploitive commercial entities.

That said, I believe that we need further decentralization of Zcash that is inclusive of the geographic dispersion of supporting orgs. I also contend that we need DEX options and other access to ZEC that doesn’t require CEXs. Thorchain is a good step forward. Cross-chain interop is important.

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