Four US lawmakers have sent a letter to Treasury Secretary Steven Mnuchin warning of the risks of restricting the use of self-hosted cryptocurrency wallets. Their concerns follow reports that the Treasury Department is about to impose such strict cryptocurrency regulations targeting self-hosted crypto wallets.
Crypto regulations that can turn existing self-hosted wallet users into criminals
US Congressmen Warren Davidson, Tom Emmer, Ted Budd and Scott Perry sent one letter to Treasury Secretary Steven Mnuchin on Wednesday about their “concerns about reports that the Treasury Department is considering issuing regulations that would restrict the use of self-hosted wallets.”
The lawmakers warned that if the planned regulation “ requires a company to determine the owner of a self-hosted wallet with which the company’s users want to transact, Americans’ use of digital asset transactions would be put at a significant disadvantage to our global competitors. . They further noted that “such a regulation could in fact undermine the Treasury Department in order to prevent illegal actors from exploiting the financial system”, explaining:
The envisaged regulation would not meaningfully support law enforcement, raise privacy concerns and impose impractical regulatory burdens on users of digital assets and businesses.
The letter explains the benefits of using self-hosted wallets. “Eliminating the middleman through the use of self-hosted wallets means that consumers can maintain privacy and conduct business freely, which is critical as individuals increasingly conduct their financial lives digitally,” congressmen wrote. By comparison, “Such freedom is in stark contrast to China’s digital yuan, where citizens’ transactions are monitored and transactions involving individuals or activities that are disgraced can be censored.”
In addition, the letter points out that while “private transactions between two parties can be exploited for illegal purposes, the reality is that the same vulnerability exists with cash,” highlighting that “multiple reports have shown that digital assets are not widely used by illegal actors. ”The legislators then asked:
Many people already have self-hosted wallets because they are currently legal, used legally, and quickly adopted. An ordinance, as it is now being reported, could effectively turn these individuals into criminals. What would happen to their belongings?
With regard to anti-money laundering (AML) or know-your-customer (KYC) requirements, the letter suggests that “there must be regulatory parity between the traditional financial system and the digital asset ecosystem.”
In conclusion, lawmakers asked the Treasury Department to “consult with Congress and industry stakeholders before taking any decisive action,” asking the department to “provide details of any proposal currently under consideration and an explanation of how to do so. the rationale “.
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