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.) sent a letter to Mnuchin on Wednesday, "expressing our concern" about rumored self-hosted wallet regulations Mnuchin apparently intends to implement in the coming weeks.
Coinbase CEO Brian Armstrong tweeted last month that Mnuchin was "planning to rush out" these new regulations, which would apparently require crypto exchanges to verify know-your-customer (KYC) 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 published online, Davidson said that "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 led a letter 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.
The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.
Learn more about Consensus 2023, CoinDesk’s longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to consensus.coindesk.com to register and buy your pass now.