S-2284-119
Read twice and referred to the Committee on Banking, Housing, and Urban Affairs.
Sponsored by Ted Budd (R-NC)
What it does
This bill would prohibit any federal agency from restricting or impairing a person's ability to use convertible virtual currency (such as Bitcoin or similar cryptocurrencies) to purchase goods or services for their own use. It would also bar federal agencies from restricting a person's ability to hold and control their own digital assets through a "self-hosted wallet" — a digital tool the user controls directly, without a third-party intermediary like a bank or exchange. The bill applies to any person who obtains virtual currency to make purchases on their own behalf, regardless of how they acquired it.
Who benefits
Individual cryptocurrency holders who want to spend or self-custody digital assets without federal interference. Users of self-hosted ("non-custodial") crypto wallets who currently face or fear regulatory restrictions. Privacy-focused individuals who prefer to transact without intermediaries. Small businesses and merchants who accept cryptocurrency payments. Cryptocurrency software developers who build self-custody wallet tools. Libertarian-leaning consumers broadly skeptical of financial surveillance. Residents in underbanked communities who use crypto as an alternative to traditional banking.
Who is hurt
Federal financial regulators — including FinCEN, the SEC, and the CFTC — would lose the ability to restrict personal crypto use or self-custody, potentially limiting their anti-money-laundering (AML) and counter-terrorism financing (CTF) enforcement tools. Law enforcement agencies that rely on tracing cryptocurrency flows through regulated intermediaries could face reduced visibility into illicit transactions. Traditional banks and payment processors that compete with cryptocurrency for consumer transactions may face increased competitive pressure. Victims of cryptocurrency-facilitated fraud or ransomware attacks, if reduced oversight makes illicit use harder to detect and prosecute.
Supporters argue
Supporters argue that the right to use and control one's own money — including digital money — is a fundamental financial freedom that federal agencies have no legitimate basis to restrict for personal, lawful transactions. They contend that existing regulatory proposals targeting self-hosted wallets, such as FinCEN's 2020 proposed rule requiring reporting on unhosted wallet transactions, would impose surveillance burdens on ordinary users without meaningfully stopping sophisticated bad actors who can circumvent controls. They further argue that self-custody protects users from the risks of exchange failures, as demonstrated by the collapse of FTX in 2022, which wiped out billions in customer funds held by a third-party custodian.
Opponents argue
Opponents argue that self-hosted wallets are a primary vehicle for evading financial transparency requirements, citing the Treasury Department's finding that cryptocurrency is increasingly used in ransomware payments, sanctions evasion, and illicit finance. They contend that stripping federal agencies of any authority to regulate personal crypto use or self-custody would create a permanent blind spot in the U.S. anti-money-laundering framework, undermining the Bank Secrecy Act's core purpose. They further argue that the bill's broad language — covering any agency restriction, for any purpose — could inadvertently block legitimate enforcement actions against wallets used in drug trafficking, human trafficking, or terrorism financing, even where probable cause exists.
Constitutional context
Congress has broad authority to regulate financial instruments and transactions under the Commerce Clause (Art. I, §8, cl. 3), as cryptocurrency transactions aggregate into substantial interstate economic activity under the Wickard v. Filburn (1942) aggregation principle. By restricting agency authority through statute rather than delegating new rulemaking power, this bill also engages the post-Loper Bright (2024) landscape: it would limit agency discretion directly, reducing the risk of major questions doctrine challenges that would arise if an agency tried to impose such restrictions on its own.
Checks and balances
Congress would gain authority by stripping federal agencies (executive branch) of the power to restrict personal cryptocurrency use; the primary check on this shift is judicial review of whether specific agency actions violate the statutory prohibition, and Congress retains the ability to amend or repeal the restriction.
Historical precedent
FinCEN proposed a rule in 2020 (never finalized) that would have required banks and money service businesses to report transactions involving unhosted wallets above $3,000, representing the closest prior federal attempt to regulate self-custody cryptocurrency activity.