Law Decoded: ‘Unhosted’ wallets are just ‘wallets,’ March 28–April 4
The European Parliament continued to keep crypto users and advocates at the edge of their seats last week as yet another piece of potentially harmful legislation — this time, a set of demanding data disclosure requirements for digital asset service providers — was rushed to a vote mere days after anear miss on banning proof-of-work-based cryptocurrencies.
Unlike the relatively happy resolution of the Markets in Crypto Assets framework situation, the EU’s new Anti-Money Laundering rules retained all the crypto-hostile language as they are going into the next round of consideration, the so-called trialogue negotiations. If the rules are enacted as they are, compliant crypto exchanges could be forced to halt transactions involving “unhosted” or self-custodied crypto wallets.
The tax reporting deadline is nearing across the Atlantic, and the Biden administration has revealed its plan to reduce the budget deficit by almost $5 billion by streamlining the reporting rules and collection of digital asset taxes in the upcoming fiscal year.
On the monetary policy front, the White House seems to have secured the passage of its four Federal Reserve nominees to the full Senate vote. Something that would be considered a formality back in the day, the Fed nomination process has become yet another partisan battlefield amid the increasing politicization of monetary policy.
The origins of regulators’ habit of framing a crypto wallet that is not custodied on a centralized platform as “unhosted” — a term that already conveys a certain air of neglect — can be traced back to at least December 2020, when the United States Treasury first attempted to impose financial monitoring requirements on crypto exchanges that facilitate transactions to such
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