They fear that applying “excessive regulation” to self-custodial purses would violate the financial privacy of users.
Four lawmakers from the United States Congress asked Treasury Secretary Steven Mnuchin to retreat any intention to apply hasty regulations to self-custodial bitcoin (BTC) and cryptocurrency wallets. The representatives asked the official to consult them before issuing potential guidelines for the use of wallets of this nature, in which the user has possession of the private keys.
The Republican legislator for the state of Ohio, Warren Davidson, assured that “excessive regulation will crush a nascent industry and leave the United States behind the rest of the world to harness the power of blockchain and cryptocurrencies.” Congressmen Tom Emmer, Ted Budd, and Scott Perry also joined the request.
Even though neither Mnuchin nor the Treasury Department have formalized any kind of regulation since November rumors about a possible inspection of the purses are circling the crypto world. Recently, Coinbase CEO Brian Armstrong expressed his fears about this possibility.
“The wrong regulations will violate the financial privacy of users and send a message to the world that you should not build businesses or test new use cases for blockchains in the United States. I hope the Treasury Department will carefully consider any action it takes on self-custodial purses”, Said Davinson.
Lawmakers called the issue “important” to the development of financial technology in the United States. Also, they pointed out that, in the event of executing any regulation, the Treasury Department could undermine its actions to stop “illicit agents”.
Nobody knows what the regulatory measures could be, but the guidelines would be aiming at the application of KYC measures (know your client) before sending funds, something that opposes what is right about the privacy of any user.
Circle against regular bitcoin wallets
Requests to reject a potential regulation continued to spread with a letter from Circle CEO Jeremy Allaire. The executive also questioned the possibility of regulation of self-custodial purses and said that it could lead to unnecessary harm:
“With all due respect, I believe that the proposal would inadequately address the real risks at stake, would significantly harm industry and US competitiveness, and would continue to provide economic and industrial advantages to Chinese companies,” was part of the message from Allaire, who added that the regulation would have unexpected consequences.
The voices against unofficial regulation prove that the Treasury Department, at least, would have shown their intentions by putting the issue on the table. However, the situation still does not go beyond the unconfirmed rumors.
In the bitcoin ecosystem, there are dozens of wallets of this nature through which users can send and receive bitcoin and cryptocurrencies. A self-custodial purse is one in which the owner has control and keeps safe the private keys that grant him access to the funds.
A wallet is and will keep being a software that manages addresses (accounts) and keys (passwords) of blockchains; there, users can consult, send, and receive crypto assets.
By Jenson Nuñez
