Bitcoin, AOPP and The Swiss Travel Rule

A true fuss started on Twitter on Thursday as news surfaced that Trezor, a popular maker of Bitcoin hardware wallets, had integrated Address Ownership Proof Protocol (AOPP) to streamline the process of address verification for users withdrawing bitcoin from regulated exchanges, a requirement in some jurisdictions, CoinDesk first reported.

Trezor released a statement on Twitter soon after the Bitcoin community started raising questions in regards to the initiative.

“Not supporting AOPP will lead to helping the government fence people on exchanges, and our motivation to add direct support was exactly to keep the government from doing so,” Trezor said.

Despite having some logic, Trezor’s action actually undermines the very set of principles it is trying to create. The purpose of having self-custodial bitcoin wallets is to give power to the individual, and by stamping a name, social security number, and home address to a bitcoin unspent output, the network’s pseudonymity is lost as knowledge of ownership is raised from an assumption to a certainty. The best course of action is to fight back against such rules, as showcased in the Netherlands.

In November 2020, the Dutch Central Bank (DNB) mandated that cryptocurrency exchanges and service providers in the country required proof from users that the address they were requesting the bitcoin to be withdrawn to was actually theirs. The measure was enforced by having users provide a screenshot of their wallets or sign a message. The country’s oldest cryptocurrency exchange, Bitonic, set in motion a legal action in court soon after to dispute and object to the DNB’s resolution, claiming that the requirements were unlawful and should never have been made. In May 2021, the DNB formally acknowledged Bitonic’s complaints and revoked the wallet verification requirements.



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