Congress Revives ‘Market Structure’ Bill; Self-Custody Wallets Face New ID Rules

The legislative deadlock broke Sunday as the comprehensive Digital Asset Market Structure Act advanced through committee, defying reports from just 72 hours ago that the bill was stalled in the Senate Banking Committee. Coindesk confirmed the text is moving, signaling the first federal attempt to enforce strict identity standards on non-custodial wallets.

The ‘Criminal Prevention’ Vector

The core friction point isn’t the exchange regulation. It’s the user surveillance. The draft legislation explicitly targets unhosted wallets, mandating that platforms implement "counterparty tracking" for withdrawals to private keys. This effectively forces centralized exchanges to KYC the recipient of a transfer, not just the sender.

"If you're among the narrower group that keeps your own custody… your corner of the crypto sector would be subjected to more rules meant to head off criminals."

Privacy advocates argue this creates a de facto ban on self-custody for users unable to verify their own private keys against a government database. The bill trades operational clarity for exchanges, who finally get a path to registration, for user anonymity.

Markets Bleed on Uncertainty

Institutional capital didn’t wait for the vote. Bitcoin ETFs saw $1.72 billion in outflows over the last five sessions, dragging the asset lower as risk desks de-leveraged. Circle (CRCL) shares held flat at $71.33, decoupling from the broader crypto slide, likely due to the bill’s favorable treatment of regulated stablecoin issuers.

This legislative push contradicts the Senate’s recent pivot to housing affordability, suggesting a sudden expenditure of political capital by the Pro-Crypto administration working groups. If passed, the framework forces a binary outcome: compliant, surveilled adoption or a retreat to the offshore shadows.