LogicallyMinded on Nostr: Enforcing KYC check through a multisig provides less flexibility than through a ...

Enforcing KYC check through a multisig provides less flexibility than through a #covenant. It’s true that no one can force you to generate a recursive covenant for your self-hosted #Bitcoin but any outputs that at any point in time will touch a regulated entity (exchange, ETF, corporation etc.) will be required to generate a recursive covenant enforcing KYC check to send the coins out. This means that the Bitcoin network will see an ever growing share of its supply being compliant with on-chain KYC. You can keep holding your non-KYC #BTC but these won’t be fungible with KYC addresses. The liquidity of your assets will decrease over time with the risk of seeing two exchange rates, one for KYCed bitcoins and one for non KYCed bitcoins. The only way your bitcoins will be usable is through a circular economy that is accepting non-KYC bitcoins.