Crypto Companies Gear Up for Battle on Digital Wallet Proposal

Cryptocurrency exchanges and blockchain trade groups are preparing to mount legal challenges to the Treasury Department’s new proposal to boost disclosures on “unhosted” crypto wallets unaffiliated with a financial institution.

The proposal would require banks and money services businesses dealing in crypto, including exchanges like Coinbase and Circle, to collect and report on crypto owners who use wallets that aren’t held by any custodian.

Unhosted wallets, sometimes referred to as “self-custodied,” are a type software that secures the private cryptographic keys necessary to use digital currencies like Bitcoin or Ether. They are often located on a crypto user’s computer or ...