- Ledger suffered a massive database breach
- The Treasury Department proposed new regulations concerning unhosted wallets
- The new regulatory proposal was first hinted at by Coinbase CEO Brian Armstrong last month
Bitcoin suffered its worst drop in nearly a month amid reports of a database breach to hardware wallet company Ledger and upcoming rules from the Treasury Department and the Financial Crimes Enforcement Network (FinCEN).
Bitcoin experienced its second red candle in the last 10 days, dropping to as low as $21,922 before closing at 22,729 on Coinbase Monday. Bitcoin is still up 21% versus the previous month and 217% since the year began.
The recent drop in the price of Bitcoin affected the entire cryptocurrency market. Ethereum went under $599, while LINK is back at $12.22.
While technical indicators do suggest that the current rally is near exhausted, analysts said two fundamental factors likely contributed to the recent price drop, Business Insider reported.
Ledger, makers of popular cryptocurrency hardware wallets, recently disclosed that its database was hacked. The data, which contains personal information of customers, including their emails, phone numbers and residential addresses, has been posted on several data dump websites.
About 1 million email addresses and 272,000 names have been leaked, a far cry from the numbers Ledger initially reported in July when it was first made aware of the hacking. At the time, Ledger said 9,500 people were affected.
“It is a massive understatement to say we sincerely regret this situation. We take privacy extremely seriously,” the company said in a tweet about the issue.
Still, many observers have wondered why Ledger would keep all that data in the first place for longer periods of time. Customers are advised to change their passwords and warned not to open or click any link in emails that would most likely be phishing scams.
Ledgers are popular hardware wallets that are “unhosted” — if a user transfers their Bitcoin to these Ledgers, not even Ledger would have access to those coins. This is different from cryptocurrency in a third-party wallet, such as Coinbase.
The Treasury Department is recommending changes regarding how regulated cryptocurrency exchanges and wallets should interact with unhosted wallets, as first mentioned by Coinbase CEO Brian Armstrong one month ago.
Treasury Secretary Steven Mnuchin said if a user in a cryptocurrency exchange like Coinbase wants to transfer $10,000 to an unhosted wallet, the exchange must compel the user to disclose who the owner of the unhosted wallet is. The exchange is then compelled by the Treasury to report such transactions to the FinCEN.
Similarly, any transactions involving the transfer of coins worth $3,000 and above must be taken note of by the regulated exchange. It should require the user transferring the coins to disclose the owner of the unhosted wallet.
Despite the bearish move of Bitcoin, it’s still the best performing asset of the year, and those who obtained BTC while it was still under $10,000 have profited. As the Treasury Department awaits further comments from relevant institutions regarding its proposals, it remains to be seen how the Bitcoin price will react once the proposal has taken effect.