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For years, most oversight of crypto came in the form of on-ramps, such as know-your-customer KYC requirements at exchanges. As such, whatever regulation the Treasury may hand down is part of a greater trend towards financial oversight. As the Blockchain Association points out, in enabling peer-to-peer transactions, self-hosted wallets are a necessary tool in maintaining a digital equivalent of cash.
Cash has no identity requirements. Cash is also used by nefarious actors. But allowing people to engage in commerce and exchange freely is a net benefit for society.
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