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Correct. Unfortunately UnarmedMastery won't benefit you while you have Handwraps equipped. That's an unfortunate side-effect. Hand Wraps are, however, setup to use the Unarmed skill so their...

Hand Wraps weren't created to be a weapon for Monks and that is why they add little to no damage beyond unarmed. They were added to the game so that Monks and Disciples weren't penalized by the...