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New US Bill to Protect Self-Hosted Wallets from Federal Agencies

Legal

tokenist.com 16 February 2022 12:31, UTC
  
Reading time: ~3 m

American Congressman Warren Davidson, recently introduced a new bill on the floor of congress to protect self-hosted crypto wallets from government tampering. The new legislation seeks to prevent Federal agencies from restricting a person’s use of convertible virtual money to carry out physical transactions. 

The crypto-friendly congressman is a member of the congressional blockchain Caucasus. The bipartisan group comprises Congress members who make recommendations on regulations for cryptocurrencies to Congress. His efforts to pass legislation supporting the country’s budding blockchain industry has earned the nickname “Crypto Congressman” among cryptocurrency enthusiasts.

“Crypto Congressman” Warren Seeks To Address Self-Custody Wallet Issue

The new bill seeks to address concerns over self-custody wallets, which were under fire around the end of 2020 and the start of 2021 in the US. The Treasury Department, led by then-Secretary, Steven Mnuchin, sought to impose constraints on crypto exchanges interacting with unknown parties. However, Janet Yellen’s leadership put the contentious wallet monitoring rule on hold.

Despite the Treasury Department sidelining the idea, concerns remain about the need for certain intermediaries to identify crypto users behind transactions. In light of this apprehension, a new bill is being proposed. Davidson expressed his wariness about a return to the initial treasury department proposal without some form of protection. He further went on to clarify that he supports crypto’s independence in general, noting,

“People should run their own nodes and have self-custody over some portion of their digital assets.”

Davidson has been in the news lately due to crypto-related matters. Last week, the Congressman spoke about the financial risk posed by stablecoins, calling tether a ticking bomb. Stablecoins have continued to come under congress scrutiny, with the US Senate urging stablecoin issuers to choose between three different regulatory models.

Davidson urged the regulatory body to get its arms around tether while referring to a recent controversial Securities and Exchange Commission(SEC) enforcement action. Tether, which retained 53% of the stablecoin market share and was absent from the most significant crypto hearing, has come under severe scrutiny again. Doubts cast over Tether’s USD collateralization have seen it lose ground to other alternative stablecoins like the USDC.

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Crypto-Friendly Lawmaker Also Introduced The Token Taxonomy Act

The new bill to protect self-hosted wallets is not the first legislation introduced by Congressman Warren Davidson. He was also responsible for reintroducing the Token Taxonomy Act last year. This law provides much-needed clarity for businesses, consumers, and regulators involved in the rapidly emerging blockchain ecosystem in the United States.

Although a fan of Bitcoin, Davidson believes the Act is crucial for entrepreneurs planning to create virtual tokens of their own. The bill creates a legal definition of a “digital token,” which exempts it from US securities rules. These regulations come into play if the ledger which records all the transactions can be modified easily.

Furthermore, the act also makes digital token exchanges tax-free, contrary to current IRS policy. According to crypto proponents, exempted from taxes when exchanging a cryptocurrency — unlike fiat — is critical for the adoption of digital currency.

Finally, with the US congress mulling over possible frameworks to regulate the crypto industry, it is great to see lawmakers being proactive to protect citizens. Balanced legislation must be made to protect unsuspecting citizens from being defrauded. However, these laws must not infringe on their human rights.

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