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The four US lawmakers—Reps. Warren Davidson (R-Ohio), Tom Emmer (R-Minn.), Ted Budd (R-N.C.), and Scott Perry (R-Penn.)—sent a letter to Treasury Secretary Mnuchin on Wednesday to express concern over the rumors that the Secretary plans to implement self-hosted wallet regulations as the Trump administration exits the White House.
In a post on Twitter on Dec.10, Rep. Warren Davidson attached a copy of the letter and wrote:
“I’m troubled by rumors that @StevenMnuchin1 plans to enact burdensome regulations on digital self-hosted wallets. My colleagues @RepTomEmmer, @RepTedBudd, and @RepScottPerry have sent a letter to @USTreasury urging him to rethink these regs & consult with Congress on #FinTech.”
The rumors began when Coinbase CEO Brian Armstrong tweeted last month that he had heard whispers of Mnuchin’s plans to rush out the crypto wallet regulations. According to Armstrong, the regulations would apparently require cryptocurrency exchanges to verify all know-your-customer data for self-hosted wallets before they could send cryptocurrencies off of their platforms and into the wallets. This type of verification would be incredibly tedious and ongoing.
According to the Congress members’ letter sent on Dec. 9, the lawmakers believe that if realized, the potential regulation would greatly hinder America’s ability to become a leader in this emerging digital space and could exclude US actors from participating in the space entirely. The letter further highlights that the regulations would also, “undermine the Treasury Department from stopping illicit actors from exploiting the financial system.”
The US lawmakers argue that requiring exchanges to maintain this amount of KYC data would likely threaten user privacy and called for the US to approach regulation in this space with parity for both the traditional financial system and the crypto ecosystem.
The letter reads:
“The contemplated regulation would not meaningfully support law enforcement, while it would raise privacy concerns and place impractical regulatory burdens on digital asset users and companies.”
The Lawmakers also explain to the Treasury in the letter that implementing such regulations around crypto wallets could the unintended effect of turning anyone who currently uses self-hosted wallets into a criminal.
Reps. Warren Davidson (R-Ohio) wrote in a statement online prior to the letter being sent:
“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 Unites States behind the rest of the world when it comes to harnessing the power of blockchain and cryptocurrency.”
In words that would be echoed in the joint letter to the Treasury, Davidson further stated:
“The wrong regulations will violate the financial privacy of users and send a message to the world that you shouldn’t build businesses or try new use cases for blockchain in the United States. I hope Treasury will carefully consider any action it takes on self-hosted wallets. I look forward to working with Secretary Mnuchin on this important issue for US financial technology.”