Sen. Ted Budd (R-NC) has introduced his Keep Your Coins Act in the Senate, a bill designed to ensure individuals' rights to self-custody their crypto assets without mandatory reliance on intermediaries.
This legislation comes at a critical juncture for the cryptocurrency industry, particularly in the aftermath of last year's FTX exchange collapse. Since the crypto exchange filed for bankruptcy in November 2022, there's been increased attention from the industry on the importance of self-sovereignty in digital asset management.
"As consumers face new challenges and risks associated with the use of digital currencies, we should be empowering individuals to maintain control over their own digital assets," Budd said in a statement. "This approach will foster financial freedom and a more decentralized cryptocurrency ecosystem."
His bill already has a likely opponent: This time last year, Sen. Elizabeth Warren (D-MA) introduced her own legislation to curtail self-custody of crypto assets.
The bill targeted unhosted, or self-custody crypto wallets, requiring platforms and networks to identify such customers and track their transactions. FinCEN proposed such a rule in December 2020, which many crypto industry companies and advocates spoke out against, but it has yet to be implemented.
Budd's proposal reflects a growing sentiment in Congress regarding the autonomy of cryptocurrency users, aligning with previous initiatives by Rep. Warren Davidson (R-OH).
Davidson, who has been a proponent of the cryptocurrency industry, last year introduced a similar bill in the House. Both legislators have said they're looking to prevent federal agencies from enforcing regulations that would require the use of third-party custodians for digital wallets.
Earlier this year, Davidson said he planned to propose legislation aimed at removing Gary Gensler, the chairman of the Securities and Exchange Commission (SEC), from his position. This move stems from Davidson's and some industry advocates' concerns about the SEC's approach to cryptocurrency regulation, which they view as an overextension of its authority.
The SEC has been actively proposing amendments to extend regulatory oversight to more brokers and redefine what constitutes an "exchange." While Gensler asserts that these changes would benefit the market and its participants, some, including SEC Commissioner Hester Peirce, have criticized them.
Peirce has expressed stark dissent, arguing that the amendments could lead to centralization and hinder technological innovation within the industry.
The securities regulator's recent enforcement actions against crypto exchanges, like Coinbase and Binance, and its stance on new technologies such as staking and stablecoins have been points of contention among lawmakers. Critics have suggested that the SEC is using enforcement as a means to establish regulatory precedents rather than providing clear guidelines for the industry.
Editor’s note: This article was written with the assistance of AI. Edited and fact-checked by Stacy Elliott.