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Soon Most Exchanges Will Withdraw Crypto Only to "Whitelisted" Wallets: BlockTower Capital CIO

Wed, 08/26/2020 - 12:41
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Yuri Molchan
BlockTower Capital's Ari Paul shares his take on how regulation rules may change in one or two years and impact crypto exchanges, cryptocurrencies, money laundering, etc.
Soon Most Exchanges Will Withdraw Crypto Only to "Whitelisted" Wallets: BlockTower Capital CIO
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Chief investment officer at BlockTower Capital, Ari Paul, has taken to Twitter to share his conclusions as to what crypto regulation may look like in the near future (1-2 years) and how it is likely to shape the cryptocurrency sphere. His discussion involved exchanges, the privacy of transactions and balances and more.

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"Withdrawals allowed only to whitelisted wallets"

Paul has posted a Twitter thread, starting with the assumption that, within a year or two, the majority of crypto exchanges will be regulated to such an extent that withdrawals will only be made to whitelisted wallets.

He believes that, in the near future, the regulation of the industry will lead to the existence of "clean" and legitimate coins versus "everything else."

Clean coins, he continues, will be transferred between regulated institutions and/or between non-anonymous wallets.

"Exchanges are in a rush to comply with regulation rules"

Ari Paul wrote that all top-tier crypto exchanges "are racing to put in place processes to comply with financial regulation." Recently, he added, crypto exchanges were told that they were out of compliance, so he expects enforcement of the regulation to start soon.

However, his vision as to whether the enforcement will be strict or minimal is vague so far. He recalls a ‘sloppy’ regulation that was enforced to ICOs and says that when regulators lay their hands on exchanges, there still may be a lot of people who will be easily laundering crypto sending it between CEXs (centralized exchanges) and DEXes (decentralized ones).

“As with ICO enforcement, enforcement here may be minimal or sloppy.  There may be plenty of people who can easily "launder" crypto in bulk from DEXs to CEXs and vice versa.  Or maybe enforcement will be strict...I don't know.”

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Grey crypto market and new business opportunities

Being unable to look into the future beyond the obvious, Ari Paul expects that even with regulation at hand, there will be a big ecosystem of whitelisted coins, but so will a big grey market with small channels connecting them.

He also reckons that if there are to be legal and illegal markets, the business of laundering blacklisted coins into the whitelisted system will be huge.

“As in traditional finance, "laundering" of coins, just to be able to get them into the whitelisted system will become a huge business.”

He reminds the readers of the thread, though, that the circumstances may play out differently and the picture he has painted in the thread is not guaranteed.

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About the author

Yuri is a crypto journalist interested in technology and technical innovations. He has been in crypto since 2017. Believes that blockchain and cryptocurrencies have a potential to transform the world in the future in many of its aspects. ‘Hodls’ major cryptocurrencies and has written for multiple crypto media outlets. 

His articles have been quoted by such crypto influencers as Tyler Winklevoss, John McAfee, CZ Binance, Max Keiser, etc.

Currently Yuri is a news writer at U.Today and can be contacted at