US Lawmakers Tell Mnuchin to Back Off From Potential Crypto Wallet Regs

US Lawmakers Tell Mnuchin to Back Off From Potential Crypto Wallet Regs
U.S. Rep. Warren Davidson
(Office of Warren Davidson)

Four U.S. lawmakers want Treasury Secretary Steven Mnuchin to rethink his rumored crypto wallet regulations.

Reps. Warren Davidson (R-Ohio), Tom Emmer (R-Minn.), Ted Budd (R-N.C.) and Scott Perry (R-Penn.) to Mnuchin Wednesday, “expressing our concern” about rumored self-hosted wallet regulations that the Secretary apparently intends to implement in the coming weeks.

Coinbase CEO Brian Armstrong that Mnuchin was “planning to rush out” these new regulations, which would apparently require crypto exchanges to verify know-your-customer data for self-hosted wallets before they could send cryptocurrencies off of their platforms and into the wallets.

According to Wednesday’s letter, this potential regulation would “hinder American leadership,” preclude U.S. actors from participating in the space, and “undermine the Treasury Department from stopping illicit actors from exploiting the financial system.”

Requiring exchanges to maintain this much KYC data could also threaten user privacy, the lawmakers wrote. Rather, the U.S. should have “regulatory parity” between the traditional financial system and the crypto ecosystem.

Implementing regulations around self-hosted wallets might have the unintended effect of turning anyone who currently uses one into a criminal, the letter added.

In a statement , Davidson said “before Treasury issues midnight rules on the regulation of self-hosted wallets, Secretary Mnuchin should come to the Peoples’ House and speak to representatives about what his regulations would do.”

“Over-regulating self-hosted wallets will crush a nascent industry and leave the United States behind the rest of the world when it comes to harnessing the power of blockchain and cryptocurrency,” he added.

This is the second letter most of these lawmakers sent Wednesday; earlier in the day, Emmer sent to Securities and Exchange Commission Chairman Jay Clayton, asking the securities regulator to create some clear guidance on crypto custody and direct the Financial Industry Regulatory Authority to approve broker-dealers from the space.

Clayton intends to step down from his role at the end of 2020.

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