Crypto lobby defends self-hosted wallets and P2P from rumored gov't crackdown

[Cordillerabit]

Major players in U.S. crypto lobbying are coming out in defense of noncustodial wallets.

On Tuesday, the Blockchain Association released a new report presenting policy options for self-hosted wallets to regulators. On Wednesday, Coin Center published an expert view by Jai Ramaswamy, also defending such wallets.

The Blockchain Association is a trade organization for the crypto industry, while Coin Center is a nonprofit focused on defending decentralization before policymakers. Both are based in Washington, D.C.

Ramaswamy currently works on compliance for Celo's parent company, C Labs, and was formerly the head of the Department of Justice’s Anti-Money Laundering division. His piece focused on the role of the Bank Secrecy Act in crypto and increased regulatory anxiety over decentralized finance and peer-to-peer transactions. These areas lack the intermediaries that regulators pressure to keep financial data.

Ramaswamy and the Blockchain Association agree that efforts to enforce AML are best suited to crypto-to-fiat on- and off-ramps — typically exchanges. Using the Financial Action Task Force’s term VASPs, or virtual asset service providers, the Blockchain Association points to them as the real area of concern:

“Because non-compliant entities that are already subject to the global AML/CFT regime — namely non-compliant OTC brokerages and exchanges — represent the greatest ‘hole’ in the AML/CFT regime in the digital asset ecosystem, additional restrictions on self-hosted wallets would not address the substantially greater risk posed by non-compliant VASPs.”
Ramaswamy predicted that any attempt to restrict self-hosted wallets in the name of AML would ultimately flounder:

“A sober review of the technology explains why such efforts are bound to fail and will only serve to undermine rather than enhance efforts to detect and disrupt illicit financial activity.”
The Blockchain Association’s report identified three potential policies that regulators could enact to combat P2P wallet transactions:

Source: https://cointelegraph.com/news/crypto-lobby-defends-self-hosted-wallets-and-p2p-from-rumored-gov-t-crackdown