According to Wally Adeyemo, Deputy Secretary of the United States Treasury, the United States is worried about the risks presented by self-custody or unhosted crypto wallets.
Adeyemo believes the US Treasury is taking steps to restrict the use of self-custody crypto wallets in enabling illegal transfers throughout the world.
“We are working to address the unique risks associated with unhosted wallets. Because unhosted wallets are effectively just addresses on a blockchain, it can be difficult to determine who really owns and controls them – creating opportunities to abuse this heightened anonymity.”
Fundamentally, financial institutions need to know who they are transacting and doing business with to make sure they are not making payments to criminals, sanctioned entities or others.
Adeyemo says the US Treasury intends to provide unhosted crypto wallets with the information they need to prohibit transactions from blacklisted or sanctioned people and businesses.
“When it comes to unhosted wallets, we are working to provide them the information they need to avoid facilitating these kinds of illicit payments.”
The many players in the crypto asset industry, according to the US Treasury Deputy Secretary, have the same aims.
“It is critical that we balance both sides of this proverbial digital coin, the risks and the opportunities. And I believe that when it comes down to it, we as policymakers and you as investors, builders, and innovators in digital assets want the same things:
To foster innovations that bring better technology and better financial services to consumers and businesses, especially those who have traditionally been underserved or excluded;
To provide appropriate consumer and investor protections;
To ensure financial stability; and
To root out crime, fraud, and other abuse from the financial system we collectively depend on.”
