Senators Rally for Crypto Self-Custody Rights

In a decisive move to bolster the rights of cryptocurrency users, Senator Ted Budd (R-NC) has introduced the Keep Your Coins Act in the Senate. This bill is a staunch defense of the individual’s right to self-custody digital assets, a timely response to the heightened scrutiny on cryptocurrency custody following the FTX exchange debacle in November 2022.

The proposed legislation arrives amidst a pivotal moment for the crypto industry, emphasizing the significance of self-sovereignty in managing digital assets. Budd’s initiative is a clarion call for empowering consumers to retain control over their cryptocurrencies, promoting financial freedom and fostering a decentralized digital currency ecosystem.

Contrasting Budd’s stance is Senator Elizabeth Warren (D-MA), who, a year prior, sought to impose restrictions on self-custody of crypto assets. Warren’s bill aimed at stringent regulations for unhosted wallets, demanding identification and transaction tracking by platforms and networks—a proposal that has faced resistance from the crypto community and has not yet been enacted.

Budd’s bill echoes the sentiments of Congressman Warren Davidson (R-OH), a known advocate for the crypto industry in Congress. Davidson’s legislative efforts have similarly aimed to shield cryptocurrency users from mandates that would compel reliance on third-party custodians for digital wallets.

The push for self-custody rights also intersects with broader concerns regarding the SEC’s regulatory posture toward cryptocurrencies. Davidson’s call earlier this year to oust SEC Chairman Gary Gensler reflects a faction of industry supporters and legislators who criticize the SEC’s perceived overreach.

The SEC’s active pursuit of regulatory expansion, including proposals to broaden its oversight and redefine key market terms, has been met with mixed reactions. While Gensler champions these changes as protective measures for market participants, dissenters like SEC Commissioner Hester Peirce warn of potential centralization and stifling of innovation.

Recent SEC enforcement actions targeting major crypto exchanges and new technologies like staking and stablecoins have intensified the debate. Critics argue that the SEC’s enforcement-driven approach is creating regulatory uncertainty, advocating instead for clear, proactive guidelines for the industry.

The Keep Your Coins Act represents a significant legislative effort to preserve the autonomy of cryptocurrency users and maintain the foundational principles of decentralization in the digital asset space. As the bill progresses, it will undoubtedly shape the discourse on the balance between regulation and innovation in the evolving landscape of cryptocurrency.