US senator wants self-crypto custody wallets ban for Americans

Elizabeth Warren proposed a bill that seeks to ban the use of non-custodial digital asset wallets in the United States (US). 

Crypto & blockchain adoption is surging rapidly in the world because of the freedom of the crypto users & developers. In particular, self-custodial or non-custodial crypto wallets play an important role to provide full freedom to crypto investors to hold their crypto assets. Usually, bad actors take advantage of these self-custody wallets to transfer unlimited amounts of crypto assets for their illegal activities, without any restrictions. 

In Feb 2023, Massachusetts Senator Elizabeth Warren reintroduced a bill under the improvement of the Digital Assets Anti-Money Laundering Act. This bill was initially introduced by her with Kansas Senator Roger Marshall in December 2022.

Under this reintroduced bill, all self-custody crypto wallets, and other crypto mixing platforms are prohibited to use under US jurisdiction. This rule will be fully applicable to all crypto miners and validators to have Anti-Money Laundering (AML) policies.

If this bill succeeds in getting into law in the future then it will restrict & force all the crypto investors to use crypto wallets provided by centralised crypto exchanges & Banks and probably will ban the use of Decentralised Finance (Defi) concept-based protocols. 

A report noted that bad actors use fiat currencies to launder $800 billion and $2 trillion money per year but they only use crypto to launder $10 billion. In short, bad actors use cryptocurrencies in very low amount to launder money over fiat currencies because the nature of crypto assets is decentralised & any person can trace the transaction easily to catch their suspicious transactions.

A few crypto entrepreneurs said that it is ok if the bill will ban the use of crypto mixer platforms and prohibit such services in the US but it will not be fair to ban self-hosted crypt wallets because decentralised nature is one of the best qualities of this innovative sector. 

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