If you’ve been following the headlines lately, you could easily be forgiven for thinking that the fight over stablecoin yields is the only sticking point holding the United States back from the crypto industry’s long awaited comprehensive market structure legislation. But sadly, you’d be wrong.

For months now, the headlines have fixated on a genuine but ultimately tractable disagreement: whether crypto platforms should be allowed to share yield from their Treasury bill reserves with stablecoin holders, or whether that practice should be restricted to protect traditional banks from competition for consumer deposits. It’s a real fight. The American Bankers Association has mobilized their entire lobbying arsenal against it. Coinbase has made it a red line. Senate negotiators have spent months trying to thread the needle. And they’ll probably figure it out eventually.

But while bank lobbyists and the media obsess over who exactly will get the privilege of pocketing stablecoin interest, Congress is getting dangerously close to gutting the single provision that will determine whether market structure actually delivers on its promise — or ends up crippling the very industry it claims to support. That provision – Section 604 of the current Senate draft – has to do with developer protections and whether those who write non-custodial software can be held liable by the USG as bona-fide money transmitters. Whether this section survives the Senate negotiation process intact will determine the fate of the entire bill.

This provision isn’t a technical footnote. It’s not some abstract philosophical debate. It is the load-bearing wall that supports the entire policy objective of this bill. And right now, it’s cracking.

The BRCA Is the Whole Ballgame

The Blockchain Regulatory Certainty Act, or BRCA, is a narrowly tailored provision with bipartisan origins. Introduced by Senators Cynthia Lummis (R-Wyoming) and Ron Wyden (D-Oregon), it does one essential thing: it clarifies that software developers and infrastructure providers who do not custody or control user funds are not money transmitters under federal law. That’s it. It doesn’t weaken anti-money laundering statutes. It doesn’t shield bad actors. It simply draws a line that should have been obvious from the start — that writing code is not the same as transmitting money.

Without the BRCA, developers of non-custodial software — the people who build the wallets, the protocols, and the decentralized applications that millions of Americans already use — face potential criminal liability under Section 1960 of the federal criminal code. Not civil penalties. Not regulatory fines. Criminal prosecution for the mere act of publishing software. 

This is not a hypothetical. We’ve already seen what “regulation by prosecution” looks like. In 2025, the developers behind Tornado Cash and Samourai Wallet were criminally prosecuted — not for personally laundering money, not for actively conspiring with criminals, but for simply writing and publishing code that other people used in ways the government didn’t like. Keonne Rodriguez and William Lonergan Hill are now locked up serving federal sentences following their respective convictions in what often looked like a show trial. Roman Storm is being re-prosecuted and faces over a century in prison. And all this despite standing DOJ guidance to the contrary, a Treasury department which acknowledges the valid need for privacy/mixers, and an administration that claims to be “the most crypto-friendly” in history. No matter what shade of lipstick you want to put on it, the message from federal prosecutors is unmistakable: if you build non-custodial software in the United States, you do so at your own peril.

If the Senate CLARITY Act passes without robust BRCA protections, that message becomes the law of the land. And the rational response from every developer, every startup, and every venture-backed crypto firm in America will be the same: leave.

This is not an exaggeration. It is an economic certainty. No founder with competent legal counsel will accept a regulatory framework where writing open-source code can land you in a federal penitentiary based on which way the wind is blowing in Washington D.C. Instead they will incorporate in Singapore, in Switzerland, in the UAE — in any jurisdiction that doesn’t treat software engineers like unlicensed money transmitters. A CLARITY Act without strong BRCA developer protections, won’t just fail to bring clarity. It will accelerate the very capital flight that Congress claims to be trying to prevent.

Congress Could Kill the Agentic Economy in Its Crib

The developer exodus would be catastrophic enough on its own. But the timing here couldn’t be worse because Congress could very well end up strangling a nascent technological revolution that has the potential to generate material GDP growth for decades to come: the agentic economy.

Autonomous AI agents — software systems that can negotiate, transact, and execute tasks on behalf of users without the need for human intervention — are emerging as the next great computing paradigm. NVIDIA CEO Jensen Huang projected a $1 trillion agentic AI opportunity at GTC 2026. OpenAI is building models purpose-designed for multi-agent architectures. Institutional capital is flooding in. And the infrastructure these agents need to operate at scale — micropayments, 24/7 settlement, programmable wallets, cryptographic verification — is all built using blockchains.

This is not a crypto-native fever dream. It is the consensus view of the world’s largest technology companies and investors. AI agents need permissionless, always-on financial rails. Traditional payment systems, with their batch settlements, minimum transaction fees, and business-hour limitations, cannot support an economy where machines transact with machines thousands of times per second. Blockchains can. And the developers building that nascent infrastructure are the same developers the CLARITY Act threatens to criminalize and drive offshore.

We’ve been here before. In the late 1990s, Congress faced a similar inflection point with the early internet. Lawmakers could have imposed heavy-handed regulations on the nascent web — requiring licenses for website operators, imposing liability on platform developers for user-generated content, taxing digital transactions before the market had a chance to mature. They chose restraint. That decision — deliberate, bipartisan, and far-sighted — enabled the creation of the most extraordinary engine of economic value in modern history. Google, Amazon, Apple, Meta, Microsoft, NVIDIA, Tesla — trillions of dollars in publicly traded equity, millions of American jobs, and an entire generation of global technological leadership — all trace their origins to a Congress that understood that overzealous regulation kills innovation.

The agentic economy is the internet boom of the 2020s. The question is whether this Congress will show the same wisdom — or whether it will over-legislate a transformative technology in its infancy, ceding what should be a new generation of American economic dominance to competing jurisdictions that won’t make the same mistake.

An Affront to the Toolmaker Principle

Even if we set aside the economic catastrophe sure to follow in the wake of any official criminalization of crypto/AI software development, the government’s current approach to developer liability – which would become permanently anchored by a CLARITY Act without strong BRCA protections – represents something more fundamental: a violation of the basic principles of American law.

We do not prosecute automobile executives as accessories to bank robberies because the getaway driver used a Ford. We do not charge Google engineers with conspiracy because criminals coordinated an attack over Gmail. We do not indict Microsoft engineers for money laundering because a cartel tracked its finances using Excel. In every other domain of American commerce, we recognize a foundational legal principle: the maker of a tool is not liable for its misuse.

Crypto developers are the only class of toolmakers in the American economy being singled out for this retributive treatment. And the tool they are building — non-custodial, open-source software that empowers individuals to transact without intermediaries — is arguably more aligned with American values of individual liberty, financial privacy, and free enterprise than any technology since the printing press.

This is not a partisan observation. The BRCA was co-introduced by a Republican and a Democrat. It passed in the House of Representatives with a 70% margin. The principle it embodies — that publishing code is not a crime — should be as uncontroversial as the principle that publishing a newspaper is not a crime. Yet here we are, watching a Congress that promised to make America the crypto capital of the world negotiate away the one provision that would actually make that possible.

What Congress Needs to Hear

Making America the crypto capital of the world was a central promise of the current administration and the congressional majority that rode into office alongside it. Voters heard that promise. The industry heard it. The world heard it. The CLARITY Act, without bulletproof developer protections, would fall catastrophically short of delivering on that promise.

The fight over stablecoin yields will get resolved. Nobody wants to see the digital yuan win because bank lobbyists needed the gravy train to keep running through Wall Street. The regulatory competition between the SEC and the CFTC will get resolved. A new Howey framework will be developed. These are all important details, but ultimately they are just that – implementation details. The existential question — the one that determines whether there will even be an American crypto industry left to regulate by 2030 — is whether Congress will protect the developers who build this technology from criminal prosecution for the act of writing code.

The BRCA must be included in any market structure bill. It must be included with teeth. And it must not be diluted, carved out, or traded away in backroom negotiations over provisions that, however important, are not the difference between an industry that thrives in America and one that packs its bags for Hong Kong or Singapore.

Congress has a very narrow window of opportunity left. The midterm elections in November look poised to be a political earthquake. The legislative timer in Washington D.C. is rapidly running out of sand. A generational opportunity for the United States to assert its continued leadership in the new multi-polar world order is disappearing. The time to get this right is now — not because the crypto lobby is demanding it, but because the principles of American innovation, equal treatment under the law, and our continued economic and technological leadership of the world demand it.

The question is not whether the United States will have a market structure bill. The question is whether that bill will be worth the paper it’s printed on.

This is a guest post by Kyle Olney. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.

This post What’s Really at Stake in the Market Structure Debate: The BRCA first appeared on Bitcoin Magazine and is written by Kyle Olney.

Bitcoin for Financial Services will host “Bitcoin as Everyday Money,” a live event and livestream, on Tuesday, April 28, 2026, at 10:00 AM PT at The Venetian’s Satoshi Social Room (Rooms 2002–2004) during Bitcoin 2026 in Las Vegas. 

Capped at 100 in-person attendees and streamed globally via TFTC, the event invites policy leaders, industry executives, and business owners around a single objective: “getting a Bitcoin de minimis tax exemption passed in this Congress”, according to a press release shared with Bitcoin Magazine.

The event is headlined by Janessa Lopez, Head of Digital Assets Policy at Block, and David Zell, President of the Bitcoin Policy Institute. Lopez and Zell will open with a fireside chat on the state of play in Washington, sharing what they’ve seen behind closed doors on the Hill and the real probability of legislation passing in 2026. 

Lopez will follow with a live “BTC is Money” demonstration, showing how a small business can accept Bitcoin at the point of sale through Square — and what that experience looks like for a customer spending Bitcoin on a cup of coffee or paying a plumber. An audience Q&A and networking reception will close the program, which runs from 10:00 AM to 12:00 PM PT. The event is hosted by Wyatt O’Rourke and Jordan Guess of Bitcoin for Financial Services.

De Minimis Tax Framework at Bitcoin 2026

The event builds on a January 12, 2026, coalition letter sent to Senate Finance Chairman Mike Crapo and House Ways and Means Chairman Jason Smith, co-signed by the Bitcoin Policy Institute, Block, Bitcoin Voter Project, Crypto Council for Innovation, The Digital Chamber, MoonPay, and River. 

The letter lays out a three-pillar framework for digital asset tax policy: 

• (1) cash-like treatment for GENIUS-compliant payment stablecoins with no transaction or annual limits.
• (2) de minimis relief extended to “qualifying network digital assets” on blockchains with a trailing six-month average market capitalization above $25 billion — a threshold designed to capture Bitcoin while excluding thinly traded or speculative assets. 
• (3) a value-based threshold of $600 per transaction and $20,000 per year, rather than a gain-based test that would require taxpayers to track cost basis on every coffee purchase.

“That framework responds directly to pending Washington proposals that would limit de minimis relief to stablecoins only” said the press release — an approach the coalition argues would leave the underlying compliance burden “largely unmitigated”, because every stablecoin payment still requires a taxable Bitcoin or Ethereum fee transaction to move on-chain.

The debate has spilled into public view, most notably in a March 2026 exchange between Block CEO Jack Dorsey and Coinbase CEO Brian Armstrong over whether Bitcoin was being actively excluded from de minimis discussions. Dorsey has been clear about what he believes is at stake, telling the Presidio Bitcoin podcast last year: “I think it has to be payments for it to be relevant on the everyday… if it doesn’t transition to payments and find that everyday use case, it just gets increasingly irrelevant. And that’s failure to me.”

“We see it with our clients all the time where they would love to spend their Bitcoin to further a circular Bitcoin economy, but the tax reporting requirements in place make this overburdensome for the masses, and therefore they still tend to only spend dollars,” said Jordan Guess, co-founder of Bitcoin for Financial Services. He added that, “We would like to see a free market decide what money they deem best to spend, without having the government favor one currency over another with the burden of self-tracking and reporting transactions on a decentralized Bitcoin ledger.”

The event is produced in partnership with Block, the Bitcoin Policy Institute, and BTC Inc., with sponsorship from Satoshi Pacioli Accounting, Bitcoin Well, and Falcon Rappaport & Berkman. TFTC will livestream the full program on its YouTube channel at youtube.com/@TFTC. Attendees will leave with a concrete call to action — including a unified script for contacting their representatives and a pointer to btcismoney.xyz as the organizing hub for the broader effort.

Registration for in-person attendance is open at luma.com/sy4ghp9o. Remote viewers can tune in via TFTC on YouTube at 10:00 AM PT on April 28. With the 2026 legislative window narrowing and Congress turning its attention to the midterms, the coalition’s message is urgent: “the path to Bitcoin functioning as everyday money in the United States runs through de minimis tax reform, and it runs through this Congress.”

This post “Bitcoin as Everyday Money” Event to Rally Industry Behind De Minimis Tax Framework at Bitcoin 2026 first appeared on Bitcoin Magazine and is written by Juan Galt.

Bitcoin’s quantum debate keeps slipping sideways because people keep arguing about two different things at once.

One question is technical: if quantum computing gets good enough to break Bitcoin’s signature scheme, the protocol can respond. New address types, migration rules, soft forks, deprecations, key rotation. That is a real engineering problem, but it is still an engineering problem.

The other question is legal: suppose someone uses a quantum computer to derive the private key for an old wallet and sweep the coins. What, exactly, just happened? Did he recover abandoned property, or did he steal someone else’s bitcoin?

In April 2026, BIP-361 proposed freezing more than 6.5 million BTC sitting in quantum-vulnerable UTXOs, including an estimated million-plus coins associated with Satoshi. No longer just an abstract discussion, it’s now a live fight over ownership, confiscation, and the meaning of property inside a system that ultimately recognizes only control.

I am not taking a position here on when a quantum computer capable of attacking Bitcoin will arrive. The narrower question is the one that matters first: if it does arrive, and someone starts moving long-dormant coins with quantum-derived keys, does the law treat that as legitimate recovery or theft?

Classical property law gives a fairly blunt answer. It is theft.

That answer will frustrate some Bitcoiners, because Bitcoin itself does not enforce title in the way courts do. It enforces control. If you can produce the valid spend, the network accepts the spend. But that only sharpens the point. The harder the network leans on control, the more important it becomes to state clearly what the law would say about the underlying act.

And on that front, the law is not especially mysterious.

Old coins are not ownerless just because they are old.

The actual quantum risk

It helps to begin with the narrower, more realistic version of the threat. Not all bitcoin is equally exposed. In the ordinary case, an address does not reveal the public key until the owner spends. That matters because a quantum attacker cannot simply look at any untouched address on the chain and pluck out the private key.

The real risk sits in a more limited category of outputs. Early pay-to-public-key outputs reveal the full public key on-chain. Some older script constructions do the same. Taproot outputs do as well: a P2TR output commits directly to a 32-byte output key, not a hash of one. Address reuse can also expose the public key once a user spends and leaves funds behind under the same key material. Those are the coins people really mean when they talk about exposed bitcoin.

The timeline for this scenario has compressed. On March 31, 2026, Google Quantum AI published research showing Bitcoin’s secp256k1 curve could be broken with fewer than 500,000 physical qubits, a twenty-fold reduction from prior estimates of roughly nine million. The same paper models the mempool attack vector directly: during a transaction, the public key is exposed for approximately ten minutes before block confirmation, giving a quantum adversary a window to derive the key before the spend confirms.

Current hardware remains far from these thresholds: Google’s Willow chip sits at 105 qubits and IBM’s Nighthawk at 120. But algorithmic optimization is outrunning hardware scaling. NIST’s own post-quantum migration roadmap calls for quantum-vulnerable algorithms to be deprecated across federal systems by 2030 and disallowed entirely by 2035. That federal timeline does not bind Bitcoin, but it supplies the benchmark against which institutional holders and regulators will measure Bitcoin’s preparedness.

A great many of those coins are old. Some are certainly lost. Some belong to dead owners. Some are tied up in paper wallets, forgotten backups, ancient storage habits, or estates that no one has sorted out. Some probably belong to people who are very much alive and simply have no interest in touching them.

That last point matters more than the “lost coin” crowd usually admits. From the outside, dormancy tells you very little. A wallet can sit untouched for twelve years because the owner is dead, because the owner lost the keys, because the owner is disciplined, because the owner is paranoid, because the coins are locked in a multi-party setup, or because the owner is Satoshi and would rather remain a rumor than a litigant. The blockchain does not tell you which explanation is true.

That uncertainty is precisely why property law has never treated silence as a magic solvent for ownership.

Dormancy is not abandonment

The casual “finders keepers” intuition that floats around these discussions has almost nothing to do with how property law actually works.

Ownership does not evaporate because property sits unused. Title continues until it is transferred, relinquished, extinguished by law, or displaced by some doctrine that actually applies. Time alone does not do that work. Inaction alone does not do that work. Value certainly does not do that work.

So if someone wants to argue that dormant bitcoin is fair game, the path usually runs through abandonment. The claim is simple enough: these coins have been sitting there forever, nobody has touched them, they are probably lost, therefore they must be abandoned.

The law is much stricter than that. Abandonment generally requires both intent to relinquish ownership and some act manifesting that intent. The owner must, in substance, mean to give it up and do something that shows he meant to give it up. Simply failing to move an asset for a long period is not enough, particularly where the asset is obviously valuable.

That is not some fussy technicality… it’s one of the core tenets of property law. If nonuse alone were enough to destroy title, the law would become a standing invitation to loot anything whose owner had been quiet for too long. That is not our rule for land, for houses, for stock certificates, for buried cash, or for heirlooms. It is not the rule for bitcoin either.

Take the easy edge case. If someone deliberately sends coins to a burn address with no usable private key, that begins to look like abandonment because there is both a clear act and a clear signal. But that example proves the opposite of what quantum raiders want it to prove. It shows what relinquishment looks like when a person actually intends it. Most dormant wallets do not look anything like that.

The better reading is the ordinary one: old coins are old coins. Some are lost. Some are inaccessible. Some are forgotten. Some are sleeping. None of that converts them into ownerless property.

And recent legislation has begun to formalize the same instinct. The UK’s Property (Digital Assets etc) Act 2025, which received Royal Assent on December 2, 2025, creates a third category of personal property explicitly covering crypto-tokens. In the United States, UCC Article 12 has now been adopted by more than thirty states and the District of Columbia, recognizing “controllable electronic records” as a distinct legal category. Neither regime treats dormancy as relinquishment. By formally classifying digital assets as property, both raise the bar for anyone arguing that old coins are ownerless by default.

Death does not erase ownership

The next move is usually to shift from abandonment to mortality. Fine, perhaps the coins were not abandoned, but surely many of these early holders are dead. Doesn’t that change the analysis? 

Not in the way the raider would like.

Some early wallets invite a kind of Schrödinger’s-heir problem: the owner is confidently declared dead when the raider wants ownerless property, then treated as notionally available whenever the burdens of succession come into view. Property law does not indulge the superposition.

When a person dies, title does not disappear. It passes. Property goes to heirs, devisees, or, in the absence of both, to the state through escheat. The law does not shrug and announce an open season. It preserves continuity of ownership even when possession becomes messy, inconvenient, or impossible to exercise.

The analogy to physical property is almost insultingly straightforward. If a man dies owning a ranch, the first trespasser who cuts the lock does not become the new owner by initiative and optimism. The estate handles succession. If there are no heirs, the sovereign has a claim. Valuable property does not become unowned merely because the original owner is gone.

Bitcoin is no different on that point. Lost keys do not transfer title. Inaccessibility is not a conveyance. A stranger who derives the private key later with better tooling has not uncovered ownerless treasure. He has acquired the practical ability to move property that still belongs to someone else, or to someone else’s estate.

That conclusion matters most for the largest block of old, vulnerable coins: Satoshi’s. Whether Satoshi is alive, dead, or permanently off-grid does not change the legal classification. Those coins belong either to Satoshi or to Satoshi’s estate. They do not become a bounty for the first actor who arrives with a quantum crowbar.

Unclaimed property law does not rescue the theory

Some people assume dormant bitcoin can be swept up under unclaimed property law. That confusion is understandable, but it misses how those statutes actually operate.

Unclaimed property law generally runs through a holder. A bank, broker, exchange, or other custodian owes property to the owner. If the owner disappears long enough, the state steps in and requires the holder to report and remit the asset, subject to the owner’s right to reclaim it later. The doctrine is built around intermediaries.

That framework works well enough for exchange balances. It works for custodial wallets. It works for assets sitting with a business that can be ordered to turn them over.

It does not work the same way for self-custodied bitcoin. A self-custodied UTXO has no bank in the middle, no exchange holding the bag, and no transfer agent waiting for instructions. There is no custodian for the state to command. There is only the network, the key, and the person who can or cannot produce the valid spend.

That means governments can often reach custodial crypto, but self-custodied bitcoin presents a harder limit. The law can say who owns it. The law can sometimes say who should surrender it. What it cannot do is conjure the private key.

The same problem defeats a more dressed-up version of the argument under UCC Article 12. A quantum attacker who derives the private key may gain “control” of the asset in a practical sense. But control is not title. It never has been. A burglar who finds your safe combination gains control too. He still stole what was inside.

Adverse possession does not fit, and salvage is worse

Two analogies get dragged out whenever someone wants to dignify quantum theft with a veneer of doctrine: adverse possession and salvage.

Neither one survives contact with the facts.

Adverse possession developed for land, and it carries conditions that make sense in land disputes. Possession must be open and notorious enough to give the true owner a fair chance to notice the adverse claim and contest it. A quantum attacker who sweeps coins into a fresh address does nothing of the sort. Yes, the movement is visible on-chain. No, that is not meaningful notice in the legal sense. A pseudonymous transfer on a public ledger does not tell the owner who is asserting title, on what basis, or in what forum the claim can be challenged.

The policy rationale also collapses. Adverse possession helps resolve stale land disputes, quiet title, and reward visible use of neglected real property. Bitcoin has none of those structural problems. The blockchain already records the chain of possession. 

Salvage is worse. Salvage rewards a party who rescues property from peril. The quantum raider does not rescue property from peril. He exploits the peril. In many cases, he is the reason the peril matters at all. Calling that “salvage” is like calling a pirate a lifeguard because he arrived with a boat: a euphemism masquerading as a legal theory.

What BIP-361 is really fighting about

This is why BIP-361 matters. It is the first serious proposal to force the issue at the consensus layer rather than wait for courts and commentators to argue over the wreckage afterward.

In broad strokes, the proposal would roll out in phases. First, users would be barred from sending new bitcoin into quantum-vulnerable address types, while still being allowed to move existing funds out to safer destinations. Later, legacy signatures in vulnerable UTXOs would stop being valid for purposes of spending those coins. In practical terms, any remaining unmigrated funds would freeze. A further recovery mechanism has been proposed using zero-knowledge proofs tied to BIP-39 seed possession, though that portion remains aspirational and incomplete.

Critically, the recovery path works only for wallets generated from BIP-39 mnemonics. Earlier wallet formats, including the pay-to-public-key outputs associated with Satoshi, have no realistic route back under the current proposal. That limitation is not incidental. It means Phase C, as currently designed, would preserve the property rights of more recent adopters while permanently extinguishing those of the earliest ones. That is a de facto statute of limitations imposed not by a legislature but by a protocol change.

The attraction of the proposal is obvious. If the network knows a category of coins is likely to become loot for whoever reaches them first, it can refuse to bless the looting. That is, in substance, a defense of ownership against a purely technological shortcut. It treats the quantum actor as a thief and denies him the prize.

But that is only half the story. The other half does not vanish merely because protocol designers would rather not observe it.

The proposal also creates a second legal problem, and it is harder to wave away. Phase B does not only stop thieves. It also disables actual owners who fail, or are unable, to migrate in time. That matters because property law does not ask only whether a rule has a good motive. It also asks what the rule does to the owner.

Calling that “theft” is too imprecise. BIP-361 does not reassign the coins to developers, miners, or some new claimant. It does not enrich the freezer in the ordinary way a thief enriches himself. But “not theft” does not end the inquiry. The closer analogy is conversion, or at least something uncomfortably adjacent to it. If the rule is that an owner had a valid spend yesterday and will have none tomorrow, not because he transferred title, not because he abandoned the coins, and not because a court extinguished his claim, but because the network decided those coins were too dangerous to remain spendable, the network has done something more than merely “protect property rights.” It has intentionally disabled the practical exercise of some of those rights.

That is what makes the freeze legally awkward. Freeze supporters can defend it as the lesser evil, and they may be right. But lesser evil is not the same thing as legal cleanliness. A rule that permanently prevents an owner from accessing his own coins begins to look less like ordinary theft and more like forced dispossession by consensus.

The strongest objections appear in the hardest cases. Timelocked UTXOs are the cleanest example. If a user deliberately created a timelock that matures after the freeze date, that owner did not neglect the coins. He did not abandon them. He affirmatively structured them to be unspendable until a future date. Yet the protocol could still freeze them permanently before that date ever arrives. Other older wallet constructions create a similar problem. If the eventual recovery path depends on BIP-39 seed possession, some earlier wallet formats may have no realistic route back at all. Estates create the same tension in another form. The owner may be dead, but title has not vanished. It passed somewhere. Freezing the coins does not eliminate the underlying property claim. It only eliminates the network’s willingness to honor it.

That is why the better description of Phase B is not “anti-theft rule” in the abstract. It is a confiscatory defense mechanism. Maybe a justified one. Maybe even a necessary one. But still confiscatory in effect for at least some owners. The proposal does not just choose owner over thief. In some cases it chooses one class of owners over another, then treats the losses of the disfavored class as the price of securing the system.

That does not make BIP-361 unlawful in any straightforward, courtroom-ready sense. Bitcoin consensus changes are not state action, so the takings analogy is imperfect unless government enters the picture directly. But as a matter of private-law reasoning, the conversion analogy lands harder. Title may remain rhetorically intact while practical control is intentionally destroyed.

That is the real symmetry at the center of the quantum debate. Letting a quantum attacker sweep dormant coins looks like theft. Freezing vulnerable coins by soft fork may be the lesser evil, but it is not costless, either materially or morally. For some owners, it begins to look a great deal like confiscation.

The legal answer is clear, even if Bitcoin’s is not

Classical property law is not going to bless quantum key derivation as some clever form of lawful recovery.

Dormancy is not abandonment. Death transfers title; it does not dissolve it. Unclaimed property law reaches custodians, not self-custody itself. Adverse possession does not map onto pseudonymous UTXOs. Salvage is a bad joke.

So if someone uses a quantum computer to derive the private key for a dormant wallet and move the coins, the legal system will almost certainly call that theft.

But BIP-361 shows that Bitcoin may not face a choice between theft and pristine protection of ownership. It may face a choice between theft by attacker and dispossession by protocol. Freezing vulnerable coins may be a defensible response to an extraordinary threat. It may even be the only response the network finds tolerable. Still, it should be described honestly. For some owners, especially those with timelocked outputs, old wallet formats, or no realistic migration path, the freeze begins to look less like protection than confiscation.

That is what makes the issue more than a simple morality play. Bitcoin collapses the distinction property law usually relies on between title and possession. Courts can say a quantum raider stole the coins. Courts can say a protocol-level freeze substantially interfered with an owner’s rights. But the chain will still recognize only the rules its economic majority adopts.

So the fight is not simply over whether Bitcoin should defend property rights during the quantum transition. The fight is over which property rights Bitcoin is willing to impair in order to defend the rest.

Welcome to classical politics.

This is a guest post by Colin Crossman. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.

This post When Quantum Computers Come for Your Bitcoin: What Classical Property Law Says Happens Next first appeared on Bitcoin Magazine and is written by Colin Crossman.

It seems that the U.S. Marshall Service (USMS) has sold the $6.3 million worth of bitcoin that Samourai Wallet developers Keonne Rodriguez and William Lonergan Hill paid the U.S. Department of Justice (DOJ) as a fee that was part of their guilty plea.

In doing so, it has potentially violated Executive Order (EO) 14233, which mandates that bitcoin acquired via criminal or civil asset forfeiture proceedings should be held as part of the United States’ Strategy Bitcoin Reserve (SBR).

If the Southern District of New York (SDNY), the federal judicial district in which the Samourai case was to be tried, did, in fact, violate EO 14233, it would not be the first time employees of the SDNY have acted in defiance of direction from the federal government.

What Happened to the Bitcoin?

According to a document titled “Asset Liquidation Agreement”, which has been obtained exclusively by Bitcoin Magazine and has not until now been made public, the bitcoin that Rodriguez and Hill forfeited is to be sold — or already has been.

As per the document, the defendants agreed to transfer $6,367,139.69 worth of bitcoin — 57.55353033 bitcoin at the time the final party signed the agreement, which was Assistant United States Attorney Cecilia Vogelon November 3, 2025 — to the USMS.

The bitcoin, which was sent from address bc1q4pntkz06z7xxvdcers09cyjqz5gf8ut4pua22r on November 3, 2025, seems to have bypassed any direct custody by the USMS. Instead, it seems to have been sent directly to Coinbase Prime address 3Lz5ULL7nG7vv6nwc8kNnbjDmSnawKS3n8 (Arkham Intel attributes this address to the brokerage), presumably to be sold.

This Coinbase Prime address currently has a zero balance, indicating that the bitcoin may have already been sold.

Violating Executive Order 14233

If the USMS has sold the forfeited bitcoin, it likely contravened EO 14233, which orders that bitcoin acquired by the U.S. government via criminal forfeiture, termed “Government BTC” in the EO, “shall not be sold” and should be contributed into the U.S. SBR.

If the USMS sold the bitcoin, they did so at their own discretion and not as a legal mandate, which indicates that certain members of the DOJ may still view bitcoin as a taboo asset to be offloaded as opposed to a strategic asset that President Trump has directed government agencies to retain.

Given that the Samourai prosecution originated under the previous administration, which was notoriously hostile toward noncustodial crypto tools and their developers, the decision to ignore EO 14233 and sell the bitcoin despite a mandate from the executive branch fits a pattern of treating bitcoin as something that should be removed from government balance sheets as soon as possible.

Legal Details Regarding the Forfeiture and Liquidation

According to a legal source close to this matter, the Samourai developers’ forfeited their bitcoin under 18 U.S. Code § 982(a)(1), which stipulates that any offense that violates 18 U.S. Code § 1960, the statute that prohibits the operation of unlicensed money transmitting businesses, orders that person to forfeit to the United States any property involved in the offense.

Judging by § 982 and its incorporation of 21 U.S.C. § 853(c), a criminal forfeiture statute that stipulates that “property that is subsequently transferred to a person other than the defendant may be the subject of a special verdict of forfeiture and thereafter shall be ordered forfeited to the United States,” the bitcoin that Rodriguez and Hill forfeited fits the EO’s definition of “Government BTC”.

Neither § 982 nor the incorporated § 853 requires that property that is forfeited as part of a criminal offense be liquidated. Furthermore, the fund forfeiture statutes cited in section three of the EO — 31 U.S.C. § 9705 and 28 U.S.C. § 524(c) — regulate where forfeiture proceeds are deposited and how they may be used; they do not require that forfeited bitcoin be converted to cash rather than held in kind.

The EO also stipulates that “Government BTC” falls under the umbrella of “Government Digital Assets” and states that “the head of each agency shall not sell or otherwise dispose of any Government Digital Assets” except in certain scenarios, none of which apply in the Rodriguez or Hill cases and, in all of which, the U.S. attorney general would play a role in determining what should be done with the forfeited digital assets.

The Sovereign District of New York

When taking EO 14233 and the statutes cited in this article into account, the SDNY seems to have acted in a manner that defies the EO 14233’s mandate to transfer bitcoin obtained via criminal forfeiture to the U.S. SBR.

This would not mark the first time that the SDNY has acted in such a manner. 

The judicial jurisdiction, sometimes colloquially referred to as “Sovereign District of New York,” has earned a reputation for operating independently and unilaterally, despite being part of a federal system.

The fact that the SDNY proceeded with the cases against Rodriguez and Hill as well as the case against Tornado Cash developer Roman Storm, is further evidence of this.

On April 7, 2025, Deputy Attorney General Todd Blanche issued a memo entitled “Ending Regulation By Prosecution” in which he stated “the Department [of Justice] will no longer target virtual currency exchanges, mixing and tumbling services, and offline wallets for the acts of their end users…”

The SDNY seemed to disregard the language in this memo, though, as it proceeded with the Samourai Wallet or Tornado Cash cases.

And when the defense team for Hill and Rodrguez learned as per a Brady request that two high-ranking members of the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) “strongly suggested” that Samourai Wallet wasn’t serving as a money transmitter due to the noncustodial nature of the service, the prosecution proceeded anyway.

When it comes to criminal cases tried within the federal court system, over 90% of defendants are convicted and sentenced, with as little as 0.4% being acquitted some years. And the prosecution for SDNY cases has a reputation for having an even higher win rate.

Rodriguez was aware of these statistics, as well as the fact that Judge Denise Cote, the judge who presided over his and Hill’s cases, has a reputation for harsh sentencing.

He told me as much the morning before he pleaded guilty to the conspiracy to operate an unlicensed money transmitter business charge.

Is the War on Crypto Really Over?

Many Bitcoin and crypto proponents who voted for President Trump in 2024 as well as the crypto industry, which supported the president in his reelection, are now beginning to question whether or not President Trump really does want to see an end to the war on crypto.

For this to happen, the DOJ under President Trump must honor what is mandated in EO 14233 and follow Deputy Attorney General Blanche’s guidance to stop prosecuting developers of noncustodial crypto technology.

To the latter point, President Trump recently stated that he is considering a pardon for Rodriguez.

His pardoning Rodriguez as well having the DOJ look into why it sold the bitcoin that the Samourai developers forfeited would send a signal that the president is quite serious about his pro-Bitcoin and pro-crypto stance.

This post Did DOJ Prosecutors Violate Trump’s Executive Order by Selling the Forfeited Samourai Wallet Bitcoin? first appeared on Bitcoin Magazine and is written by Frank Corva.

The Samourai Wallet matter raises a fundamental question about how the United States treats non-custodial software and the developers who create it. Keonne Rodriguez and William Lonergan Hill did not operate a financial service or handle customer assets. They wrote and maintained software that allowed users to construct collaborative Bitcoin transactions in a privacy-preserving way. Throughout the tool’s entire lifecycle, users controlled their own keys, initiated their own transactions, and never relied on Samourai or its developers to transmit or safeguard value. The distinction between a custodial service and a non-custodial tool is not a technicality; it is the core boundary that the Bank Secrecy Act, FinCEN guidance, and decades of regulatory practice use to distinguish software authors from regulated financial intermediaries.

This point was reinforced by FinCEN itself. In an internal analysis, the agency concluded that Samourai’s architecture did not constitute money transmission because no third party took possession or control of user funds. That conclusion was never disclosed to the defense while the prosecution advanced a theory that required the opposite: that building software which users employ for privacy is functionally equivalent to operating a financial institution. When that analysis finally surfaced, it confirmed what has long been understood across the industry and within the regulatory community—that non-custodial tools fall outside the BSA’s money-transmitter framework because there is no transfer of value by a third party. The case ultimately treated the developers as if they were responsible for the independent actions of users, even though they had no role in executing, intermediating, or approving any transaction. Some individuals did misuse the tool, as happens with any privacy or security technology, but the law has never equated misuse with liability for the creators. We do not treat the authors of encryption libraries, VPN protocols, or email clients as participants in unlawful activity simply because bad actors rely on those tools. Collapsing the distinction between developing a tool and operating a service would introduce an untenable level of risk for anyone building privacy-enhancing or security-critical software.

There is also an important speech component. Courts have consistently recognized that code is expressive, and publishing open-source software is an act of communication. When publication is treated as evidence of “operation,” the legal boundary between authorship and conduct becomes blurred in a way that threatens a wide range of legitimate technologies. Any precedent suggesting that developers are responsible for unforeseeable downstream use would have immediate consequences for cryptography, cybersecurity research, and open-source work more broadly.

Rodriguez and Hill ultimately accepted plea agreements in the face of substantial sentencing exposure, even though government records undermined the central regulatory theory of the case. Their convictions now rest on a framework that is at odds with established guidance and with the direction in which federal policy has since moved. A pardon would bring the legal outcome back into alignment with the underlying facts: this was software development, not money transmission, and the individuals involved should not bear criminal liability for writing code that users executed independently.

This case has already had a measurable chilling effect on developers working on privacy and security tools in the United States. Leaving the convictions in place would discourage responsible innovation and push critical work to jurisdictions that do not share our commitment to open research and transparent development. A pardon would correct a clear misapplication of federal law, protect the integrity of long-standing distinctions in financial regulation, and reaffirm that publishing non-custodial software is not—and should not become—a criminal act.

Disclaimer – This is a guest contribution by Zack Shapiro, originally published by the Bitcoin Policy Institute (BPI). The views and opinions expressed are solely those of the author and do not necessarily reflect the views of BTC Inc or Bitcoin Magazine.

This post Pardoning the Samourai Developers Would Restore Legal Clarity and Protect Non-Custodial Code first appeared on Bitcoin Magazine and is written by Zack Shapiro.

In a 2-1 decision issued today, the Tenth Circuit affirmed the denial of a Federal Reserve master account to Custodia Bank, the Wyoming-chartered Special Purpose Depository Institution (SPDI) that has become the test case for crypto-native banking. The panel upheld the district court across the board and left Reserve Banks with broad (and potentially unreviewable, in the words of the dissent) discretion over access.

Master accounts are the keys to the fiat kingdom. They’re the ledger entries that let institutions clear and settle directly at the Fed; without one, a “bank” is functionally just a vault dependent on fickle intermediaries and third-party rails. That practical choke point (which has been abused by regulators before) gives any discretion over access extraordinary policy significance.

Wyoming created SPDIs to pair traditional (but fully reserved) dollar banking rails with segregated digital-asset services. Custodia, barred from making loans and required to keep dollar deposits 100% backed by high-quality liquid assets, applied for a master account in October 2020. Early signals from the Kansas City Fed were positive (“no showstoppers”), but after the Board finalized its 2022 access Guidelines, FRBKC treated Custodia as a Tier 3 applicant, the bucket that “generally receive[s] the strictest level of review,” and formally denied the account in January 2023. The Board, consulted beforehand, emailed it had “no concerns” with FRBKC communicating a denial.

The Majority Opinion

Writing for the court, Judge Ebel rejected Custodia’s statutory and administrative claims, and essentially granted the Federal Reserve broad, and potentially unbounded, discretion on this point. Reading the Federal Reserve Act’s § 342 (“may receive deposits”) together with the Monetary Control Act’s § 248a, the panel concluded that access decisions remain discretionary with the Reserve Banks; § 248a(c)(2)’s “shall be available” language concerns pricing and parity for services the Board prices, it doesn’t force the Banks to open an account for every eligible institution. The court also treated the 2022 “Toomey Amendment” (§ 248c) as transparency-oriented, not a mandate to approve applications.

On the APA front, the panel held the Board’s “no-concerns” email was not final agency action, the ultimate decision belonged to FRBKC under the Guidelines, so it carried no independent legal effect. That also undercut theories aimed at the Board itself. Finally, Judge Ebel dispenses with Custodia’s constitutional argument related to the Presidential appointment of inferior officers on a (in my opinion) flimsy technicality: that the argument was not properly preserved.

The Dissent 

Judge Tymkovich dissented, reading § 248a(c)(2)’s “shall be available” as a substantive access guarantee, not mere pricing boilerplate. In his view, when Congress opened the Fed’s services to “nonmember depository institutions,” it made master-account access a duty enforceable, if necessary, through traditional tools like mandamus, rather than a roving veto lodged in unappointed Reserve Bank officers (a framework he warns invites constitutional headaches). He also emphasized that courts in related master-account litigation (e.g., Banco San Juan) recognize the centrality of § 342 but do not resolve away the MCA’s “shall” command.

We are bound by the ordinary language of the statute and, in my view, shall means shall. Section § 248a(c)(2) mandates access to the Fed’s payment services for all nonmember depository institutions. By denying Custodia a master account, the Kansas City Fed has unlawfully denied it access to those services which are vital to its business. That, it cannot do.

The Road Ahead

We need to see the result in PayServices (Ninth Circuit). If that court goes the other way, a circuit split would materially increase the odds of Supreme Court review. It’s interesting to note that Judge Tymkovich was also on that case. But, for now, the ball is firmly in Custodia’s court.  

Today’s ruling cements Reserve Bank discretion at the access gate; the dissent, by contrast, reads the MCA as Congress’s promise of open access for state-chartered, deposit-taking institutions like Custodia’s SPDI. The stakes, for constitutional structure, state innovation, and Bitcoin-adjacent banking, couldn’t be clearer.

Disclosure: I authored an amicus brief on behalf of Wyoming’s Secretary of State supporting Custodia.

This is a guest post by Colin Crossman. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.

This post Tenth Circuit Hands Fed a Win: Custodia Denied Master Account in Blow to Crypto Sovereignty,  Dissent Brings the Heat first appeared on Bitcoin Magazine and is written by Colin Crossman.

Kenya has passed a Virtual Asset Service Providers (VASP) law that fundamentally reshapes the regulatory landscape for digital assets in the country.

In plain English: it doesn’t regulate Bitcoin the protocol or your private self-custody. Instead, it regulates companies that touch customer assets — exchanges, custodians, token issuers, investment advisors, brokers, and trading platforms.

The law creates a licensing perimeter around commercial intermediaries and gives regulators enforcement teeth over that perimeter. Think of it as drawing a regulatory fence around businesses that handle other people’s bitcoin and crypto, whilst leaving individual users and peer-to-peer (P2P) transactions outside the gate.

This distinction is critical: the Act targets virtual asset services, not the underlying technology or private ownership. If you’re holding your own keys and transacting directly with another person, you’re outside the licensing regime. But the moment you start offering custody, brokerage, advisory, or platform services to the public, you’re inside the perimeter — and you need a license.

Key takeaway: The VASP Act concerns commercial intermediaries, not individual users. Self-custody and P2P transactions remain unregulated, but businesses touching customer assets face full licensing requirements.

What Parts of “Crypto” the Law Does Regulate: The Licensing Perimeter

Licensed VASPs are any Kenya-registered (or compliant foreign) companies that perform the activities listed in the Schedule to the Act. These activities map to specific regulators — primarily the Central Bank of Kenya (CBK) and the Capital Markets Authority (CMA) — and trigger comprehensive compliance obligations.

Exchanges & Trading Platforms: Brokers, trading platforms, and services facilitating fiat-to-VA or VA-to-VA exchanges. Both centralized and certain decentralized platforms that hold custody or market-make against clients fall within scope.

Custody & Wallet Providers: Any service holding client coins on their behalf. If you control the keys to customer assets, you’re a custodian and need licensing, capital adequacy, segregation, and audit requirements.

Investment Advisors & Managers: Providing advice or discretionary management of virtual asset portfolios for clients. This captures both retail advisory and institutional asset management services.

Token Issuance & Tokenization: Initial virtual asset offerings (ICOs/STOs) and real-world asset (RWA) tokenization. These fall primarily under CMA oversight as they intersect with securities and capital-markets regulation.

Escrow & Platform Operators: Services providing escrow functions for virtual asset transactions and certain platform operators facilitating multi-party trades or settlements.

Each activity triggers specific obligations: licenses, capital and solvency requirements, fit-and-proper assessments, AML/CFT/CPF controls, conduct standards, cybersecurity measures, advertising rules, periodic audits, and ongoing reporting. The breadth is deliberate — regulators want bank-grade compliance from anyone touching customer assets.

Key Definitions for Terms in the Act

Virtual asset: A digital representation of value that can be traded, transferred, or used for payment or investment purposes. Explicitly excludes fiat currency, e-money, and securities (which have their own regulatory regimes).

Virtual Asset Trading Platform: A centralized or decentralized platform that facilitates exchange and either (i) holds custody of client assets, or (ii) market-makes against clients. Both limbs trigger licensing.

Virtual Service Token: Pure utility tokens that are non-transferable and used solely within a closed ecosystem. These fall outside the licensing perimeter — a narrow carve-out for genuine utility.

These definitions matter because they set the boundaries of regulatory jurisdiction. The Act uses functional language (“digital representation of value”) rather than technology-specific terms, meaning it’s designed to be technology-neutral and capture future innovations. However, this breadth also creates interpretive grey areas — expect subsidiary regulations and guidance to clarify edge cases.

Who’s in Charge? Dual Regulators and Subsidiary Powers

Central Bank of Kenya (CBK) + Capital Markets Authority (CMA)

These are the joint lead regulators for VASPs, with activity-based allocation. CBK typically oversees payments, custody, and exchange functions; CMA handles token offerings, investment advice, and tokenized securities. The Cabinet Secretary for National Treasury can designate additional regulators by Gazette notice — so watch for future expansions of the regulatory perimeter.

Subsidiary Regulations (The Real Power)

The Treasury CS has broad discretion to issue subsidiary regulations that flesh out critical details: stablecoin frameworks, tokenization standards, capital adequacy ratios, solvency tests, insurance requirements, conduct rules, advertising standards, cybersecurity mandates, and more.

Expect a lot of the actual policy to be decided here — the Act is a framework; the regs will be the teeth.

Practical implication: The act is deliberately high-level. Founders and compliance teams should track the gazetting of subsidiary regulations closely — those will determine capital thresholds, operational standards, and day-to-day compliance burdens. Early engagement with regulators during consultation periods is advisable if you’re planning a VASP business.

What the Law Doesn’t Regulate

Outside the licensed perimeter, the Act does not (on its face) outlaw or require licensing for:

• Owning Bitcoin in self-custody (your own keys, your own wallet) — this is private property, not a regulated service.
• Paying another person directly wallet-to-wallet (peer-to-peer) — private contractual settlement between two parties remains outside the scope.
• Running a non-custodial wallet app where users hold their own keys and you provide only software (absent other regulated activities like brokerage or custody).

The Act explicitly applies to “virtual asset services” (the Schedule list) offered in Kenya; it is not a general ban or license requirement on private use of bitcoin or other virtual assets.

That said, unlicensed businesses offering any Schedule activity can face enforcement, fines, and criminal penalties. The line between “private use” and “carrying on a business” will be tested in practice — habitually dealing for the public, even informally, could morph you into an unlicensed broker.

Pros & Cons (Gloves Off)

Potential Pros

Legal Clarity for Institutions: Pensions, banks, fintechs, and corporates now have a rulebook to engage with digital assets. Licensed on-ramps and custodians with proper compliance make institutional adoption feasible.

Consumer Safeguards: Fit-and-proper tests, capital adequacy, audits, asset segregation, cybersecurity standards, and conduct rules reduce “cowboy operator” risk. Retail users benefit from recourse mechanisms and dispute resolution.

Tax Clean-Up: The punitive 3% Digital Asset Tax on transaction value was repealed by Finance Act 2025. Kenya now pivots to excise duty on VASP fees — much friendlier for savers and long-term holders. Tax targets platforms’ charges, not the full notional trade value.

Pathway for Tokenization & RWAs: Clear CMA oversight for tokenized securities and real-world assets unlocks capital-markets pilots and enterprise use cases (land registries, trade finance, supply-chain tokenization).

Real Cons

Gatekeeping via Licenses: Dual regulators plus high capital, insurance, and AML burdens can lock out SMEs and open-source teams. Big banks and fintechs win by default; innovation may be stifled by compliance costs.

Subsidiary-Rules Risk: Broad discretion given to the Treasury CS can tighten rules on stablecoins, self-hosted wallet interfaces, P2P marketplaces, or Lightning gateways later. Policy can “narrow the pipe” after headlines fade and public attention wanes.

Surveillance Creep: Strict know-your-customer (KYC) laws and record-keeping across VASPs, plus mandatory data-sharing with AML bodies, raises privacy risks for ordinary users who rely on custodial rails. Expect financial surveillance to intensify.

Category Error: Bitcoin ≠ generic “virtual asset.” Lumping bearer digital cash with issuer-based tokens invites over-regulation of money as though it were a security or product. The Act doesn’t correct that fundamental conceptual flaw.

From a Bitcoin Lens: Acquiring, Saving & Spending

Acquiring BTC

Via VASPs (exchanges/brokers): Expect full KYC, fee-based excise duty, AML transaction monitoring, withdrawal policies, and proof-of-funds queries. Institutional-grade on-ramps should improve in quality and reliability — but at the cost of privacy and friction.

Peer-to-peer: Private purchases and sales between individuals remain outside the licensing perimeter, as long as you’re not carrying on a Schedule business. Be careful not to morph into an unlicensed broker or exchange by habitually dealing for the public (e.g., running a Telegram group offering regular buy/sell services).

Practical upshot: Retail users can still dollar-cost-average non-custodially via P2P or occasional licensed platform buys; businesses wanting routinized, high-volume flows will likely use licensed platforms to manage compliance and audit trails.

Saving in BTC (Self-Custody)

Keeping Bitcoin on your own wallet (hardware or software where you control the keys) is not prohibited by the Act. This is private property, akin to holding gold or foreign currency at home.

Corporate treasuries: Companies can hold BTC on balance sheet, but must follow IFRS accounting standards (usually classified as intangible asset at cost with impairment testing; or inventory if you’re a market-maker). Create a board-approved treasury policy covering allocation limits, custody arrangements, key management, and audit trails. Kenya applies IFRS; the IFRS Interpretations Committee 2019 guidance (IAS 38 treatment) is the usual reference.

Spending / Paying in BTC

Direct wallet-to-wallet payments between two parties (e.g., paying a supplier, settling an invoice, tipping a creator) are not regulated as a VASP activity. Freedom of contract applies; the state can tax income or gains, but doesn’t pre-approve the medium of settlement.

If you provide a payment service that sits in the flow of customer funds — custody, routing, conversion, settlement facilitation — you’re likely a VASP-type business and need licensing. Lightning gateways that take custody or provide fiat conversion will fall within scope; pure routing nodes operated by users themselves likely won’t.

Constitution, Tax & Company Compliance — Outside the VASP Fence

Constitutional Stakes

Property & Privacy: Self-custodied keys are a form of digital property and personal data. Any future subsidiary regulation that compels key disclosure or bulk monitoring must pass constitutional tests under Kenya’s 2010 Constitution: necessity, proportionality, and respect for fundamental rights (Articles 31, 40). The VASP Act doesn’t override these rights — it creates a licensing regime for intermediaries, not a surveillance charter for private wallets.

Freedom of Contract & Association: Two people agreeing to settle an obligation in Bitcoin exercise freedom of contract (Article 36). The state can tax the income or gains, but needn’t pre-approve the medium so long as no other law (e.g., money-laundering statutes) is violated. The VASP Act doesn’t prohibit private contractual settlement in virtual assets.

Tax (Post-Finance Act 2025)

No More 3% DAT

The punitive Digital Asset Tax on transaction value is repealed. Instead, Kenya now levies excise duty on VASP fees (the platform’s charge for service). This doesn’t tax peer-to-peer notional flows directly; it taxes the intermediary’s commission.

Income / Capital Gains

Individuals: Kenya taxes income; gains may be taxable if you’re trading as a business or receive BTC for services rendered. Passive long-term appreciation without a realization event isn’t typically taxed until disposal — but document your cost basis (date acquired, cost in Kenyan shillings (KES), transaction ID (txid)).

Companies: Realized gains/losses hit profit & loss under IFRS; taxable under corporate income tax when realized. If BTC is held as inventory (e.g., market-making), trading profits are ordinary income. If held as intangible asset, impairment losses are deductible but unrealized appreciation isn’t taxed until sale.

VAT

Generally no VAT on money or money-like instruments; but VASPs’ service fees can attract VAT or excise depending on classification. Confirm with your tax advisor once subsidiary regulations land. Excise on VASP fees is already indicated in Finance Act 2025.

Accounting & Audit (IFRS)

Classification: Most corporate treasuries treat Bitcoin as an intangible asset (IAS 38). Market-makers and traders may classify as inventory (IAS 2).

Measurement: Intangibles are typically carried at cost less impairment (no upward revaluation through P&L until disposal), which can significantly understate economic value on the balance sheet. Pair this with management metrics in notes: BTC units held, fair-value footnotes, value-at-risk (VaR) disclosures.

Controls: Dual-control of private keys, SOC-audited custody providers (if using external custody), board-approved treasury policies, segregation between treasury holdings vs operational float, and regular reconciliation of on-chain balances.

Company Law & General Compliance

If you offer any Schedule VASP activity (brokerage, custody, platform, advice, token issuance), you must: incorporate appropriately, apply to the relevant regulator(s), meet capital and solvency requirements, pass fit-and-proper assessments, implement AML/KYC/CFT controls, comply with cybersecurity and conduct standards, adhere to advertising rules, file periodic reports, and undergo audits.

If you only hold BTC on your balance sheet, pay suppliers in BTC by mutual agreement, or accept BTC as settlement (converted immediately or held) without acting as a custodian or exchange for the public, you’re not a VASP — standard Companies Act and tax rules apply, but no VASP license is required.

Actionable Playbooks: What You Should Do Now

For Ordinary Kenyans

Learn self-custody: Choose a reputable non-custodial wallet (hardware or mobile), back up your seed phrase properly (offline, multiple secure locations), and practice small sends to familiarize yourself with the process.

DCA with exits: Use licensed on-ramps for KES-to-BTC conversions when convenient, but immediately withdraw to your own wallet. Keep detailed records: date, KES cost basis, txid, and wallet address.

Peer-to-peer payments: You can pay or receive BTC directly wallet-to-wallet. If it’s income (e.g., freelance work), declare it for tax. If you dispose of BTC at a gain, track your cost basis to calculate taxable gain accurately.

For SMEs / Corporates

Board-approved BTC Treasury Policy: Document allocation limits (e.g., % of reserves), risk management (volatility, custody, counterparty), key management procedures (multi-sig, hardware security modules), and accounting treatment (IFRS classification, impairment testing).

Non-custodial acceptance: Accept BTC from customers directly into your own wallet, or via a payment processor that settles instantly to you in BTC or KES (minimising custodial exposure and regulatory risk).

Avoid “accidental VASP” risk: Don’t hold client BTC, don’t broker or exchange for the

public, don’t run a trading platform—unless you affirmatively intend to obtain a VASP license and bear the compliance costs.

Tax & audit ready: Maintain ledgers of BTC units held, adopt a consistent cost-basis method (FIFO, LIFO, or specific identification), and record KES functional-currency conversions at transaction dates for P&L and tax purposes.

For Builders & Founders

Decide your regulatory posture: Non-custodial software (safer, outside licensing perimeter) vs custodial/market-facing VASP (licensing roadmap, capital requirements, ongoing audits, and compliance overhead).

Design for self-custody first: Prioritize user control of keys, composability with Lightning and other open protocols, and clean data trails users can export for tax reporting and auditability.

Engage regulators early: If pursuing a VASP license, begin dialogue with CBK/CMA during the application drafting phase. Understand their expectations on capital, systems, AML controls, and governance before you’re too far down the build path.

Stay agile on subsidiary regs: Monitor Gazette notices and public consultations — subsidiary regulations will define day-to-day compliance burdens, stablecoin rules, and emerging areas like Lightning or DeFi interfaces.

Bottom Line: What This Really Means

This law licenses intermediaries; it does not outlaw Bitcoin self-custody or peer-to-peer use.

The VASP Act will make bank-grade, compliant on-ramps more available — institutional capital can now flow into licensed custodians and exchanges with regulatory certainty. That’s a win for legitimacy, consumer protection, and formalizing the industry.

But it also centralizes power in licensed platforms, with all the usual trade-offs: higher fees, mandatory KYC, financial surveillance, slower iteration due to compliance overhead, and a bias towards incumbents (banks, large fintechs) who can afford the capital and legal costs. Smaller, open-source teams and peer-to-peer marketplaces face an uphill battle.

For Citizens & SMEs

The winning strategy is simple: learn self-custody, document your flows meticulously (dates, amounts,cost basis, txids), and don’t become a VASP by accident. Keep your Bitcoin on your own keys, transact peer-to-peer where possible, and use licensed platforms only when necessary for fiat conversion or institutional compliance.

For Builders Choosing the VASP Route

Assume bank-like compliance from day one: capital adequacy, fit-and-proper directors, AML/KYC systems (transaction monitoring, sanctions screening, suspicious-activity reporting), cybersecurity frameworks (ISO 27001, penetration testing), segregated client assets, external audits, and ongoing regulatory reporting. Budget for legal and compliance personnel; this isn’t a lean startup play.

The VASP Act is a double-edged sword: it legitimizes the industry and invites institutional participation, but it also imposes gatekeeping and surveillance that can undermine the open, permissionless ethos of Bitcoin. Your move depends on your goals — freedom and sovereignty, or legitimacy and institutional access.

Sources & Further Reading

Official Bill Text

Virtual Asset Service Providers Act (Kenya): Definitions (Part II), scope of application (Part III), Schedule of regulated activities, regulator mapping (CBK/CMA allocation), licensing framework, capital and solvency requirements, fit-and-proper standards, AML/CFT/CPF obligations, conduct and advertising rules, and enforcement provisions.

Finance Act 2025 (Tax Changes)

Repeal of the 3% Digital Asset Tax on transaction value; introduction of excise duty on VASP service fees. Confirms shift from taxing notional trade value to taxing intermediary charges — much friendlier for long-term holders and peer-to-peer users.

Passage & Dual-Regulator Design

Reuters, Parliament of Kenya official records, and press coverage of the Bill’s passage and pending/reported presidential assent. Commentary on the CBK/CMA co-ordination mechanism and the Cabinet Secretary’s subsidiary regulation powers.

IFRS Accounting Guidance

IFRS Interpretations Committee (2019) guidance on holdings of cryptocurrencies: IAS 38 (intangible assets) treatment, cost-less-impairment model, disclosure requirements. Kenya applies IFRS for corporate financial reporting; this is the authoritative reference for balance-sheet classification of Bitcoin and other virtual assets.

Constitutional Framework

Constitution of Kenya 2010: Articles 31 (privacy), 36 (freedom of association), 40 (property rights), and 47 (fair administrative action). These provisions anchor individual rights against over-reach in subsidiary regulations (e.g., compelled key disclosure, bulk surveillance without judicial oversight).

This guide is for informational purposes and does not constitute legal, tax, or financial advice. Consult a qualified Kenyan lawyer, tax advisor, or accountant for your specific circumstances. Law and regulations evolve; verify current status before acting.

This post Kenya’s New VASP Law: A No-BS Legal Guide for Bitcoin and Crypto Builders first appeared on Bitcoin Magazine and is written by Robert Kirubi.

A new House bill aims to lock in President Donald Trump’s August executive order directing the Labor Department to open retirement plans to alternative assets — including bitcoin.

The Retirement Investment Choice Act, expected to be introduced Tuesday by Rep. Troy Downing (R-Mont.), would give Executive Order 14330 “the force and effect of law.” 

The one-page bill cements Trump’s directive that Americans saving for retirement should be allowed access to crypto and other alternative assets if plan providers deem them appropriate.

“Alternative investments hold the transformative potential to supercharge the financial security of countless Americans saving for retirement,” Downing said in a statement reported by Politico. “I applaud President Trump for his leadership to democratize finance and am proud to be leading the effort in Congress to codify his EO.”

If enacted, it would permanently authorize 401(k) providers to include crypto-exposed products alongside traditional funds. This could unlock billions of dollars in new flows to Bitcoin and other digital assets.

Trump’s bitcoin-related executive order 

The executive order, signed in August, directed the Labor Department (DOL) and Securities and Exchange Commission (SEC) to expand access to “alternative assets” such as private equity, commodities, insurance products — and crypto. 

It gave the DOL 180 days to propose rules. That deadline falls in early February, though the recent government shutdown and staffing cuts at the Employee Benefit Security Administration could delay progress.

Senate Republicans urged the DOL in August to move quickly, calling for a “regulatory safe harbor” to protect plan sponsors that offer such investments. “Doing so will maximize the order’s effectiveness,” they wrote, “and ensure industry has the certainty needed to deliver on behalf of American retirees.”

Industry groups largely welcomed the shift. “Professional retirement plan fiduciaries — not the federal government — are in the best position to assess what is in the financial best interest of participants,” said Brian Graff, CEO of the American Retirement Association.

Still, the bill’s fate remains uncertain. Democrats are unlikely to support legislation seen as expanding crypto access in retirement accounts. And no Senate version has been introduced.

Even so, for a party increasingly embracing Bitcoin as a symbol of financial sovereignty, Downing’s proposal signals intent. Some lawmakers clearly want Bitcoin to be part of America’s retirement future.

Back in March, President Trump signed an Executive Order creating a Strategic Bitcoin Reserve and a U.S. Digital Asset Stockpile to centralize government-held crypto. The Reserve, including the $14 billion in seized bitcoin at the time, would be held as a store of value and not sold.

This post New GOP Bill Wants to Solidify Trump’s Bitcoin-Friendly 401(k) Order first appeared on Bitcoin Magazine and is written by Micah Zimmerman.

Today, in a media scrum after his opening remarks at the SEC-CFTC Roundtable on Regulatory Harmonization Efforts, U.S. Securities and Exchange Commission (SEC) chairman Paul Atkins expressed his excitement in regard to bringing tokenized securities on-chain, though he didn’t offer any insight into what platforms or protocols these assets might trade on.

The latter may be particularly important to Bitcoin enthusiasts, because the wallets that you use to trade tokenized securities on-chain will likely require identifying information, and such a rule could spill over to bitcoin wallets.

So, I asked the chairman what securities coming on-chain looked like to him: Would it look like gated platforms like Fidelity and Charles Schwab employing blockchain to settle transactions on the back end or would it look more like tokenized stocks trading on decentralized exchanges?

He did not respond to my questions directly.

He instead first shared how securities trading on blockchains can reduce settlement time.

“The great thing about tokens [is that] you can have payment and exchange of the actual asset online at the same time — it’s T zero, basically instantaneous clearance,” Chairman Atkins told me.

And he followed up this statement with some mildly concerning language.

“So, maybe we’ll have to even build in like a speed bump to make sure that we don’t have any mistakes or wire money to the wrong place,” the chairman added. “We will be working realistically for the next year or two to try to get where we have good guardrails around the system.”

Words like “speed bump” and “guardrails” triggered alarm bells, as they indicate some form of control, and where there’s control, there’s often KYC.

If tokenized securities end up trading within the walled gardens of traditional brokerages, then the issue of KYC isn’t so concerning, as these platforms already KYC their customers.

The issue becomes more critical if tokenized securities can be traded through protocols like Uniswap via wallets like MetaMask and Trust Wallet, which would then likely be required to KYC their users.

If this happens, it begs the following questions: Will this lead to all crypto wallets having to KYC their users? Will this rule eventually bleed over to bitcoin-only wallets?

Based on my interaction with the chairman, I got the impression that he doesn’t currently have the answers to these questions. That is, he wasn’t being evasive as much as he genuinely didn’t seem to know exactly what the broader picture around tokenized securities looks like right now, as he’s waiting for Congress to act.

Much regarding crypto market regulation hangs in the balance as the Senate discusses and revises the CLARITY Act (CLARITY), the digital asset market structure bill. The chairman stated that he’s paying attention to CLARITY as it works its way through the legislative process.

“There’s the market structure act that cleared the House and is now [being discussed] in the Senate,” he told me. “We’ll see what happens.”

Bitcoin Magazine will follow up with Chairman Atkins on this issue when and if CLARITY passes.

In the meantime, if you want to protect your right to use you bitcoin wallet privately and permissionlessly, be sure to contact your elected officials as part of the Satoshi Needs You campaign.

This post SEC Crypto Policy: Chairman Atkins Vague on Wallet Rules first appeared on Bitcoin Magazine and is written by Frank Corva.

On Friday, the U.S. Senate Banking Committee released its latest draft of the CLARITY Act (CLARITY), in which it proposes an amendment to 18 U.S. Code § 1960(a) stipulates that only crypto developers or providers that “knowingly exercise control over currency, funds, or other value that substitutes for currency” be treated as money transmitting businesses.

What is more, this amendment would not only protect Bitcoin and crypto developers in the wake of a bill with this language included in its passing, but it would also protect said developers retroactively.

In Section 501 of section Title V of the draft, entitled “Protecting Software Developers and Software Innovation,” it states that “This section, and the amendments made by this section, shall apply to conduct occurring before, on, or after the date of enactment of this Act.”

A Positive Development for Tornado Cash Developer Roman Storm

If this language is included in a version of the bill that is enacted into law, Tornado Cash developer Roman Storm, who was found guilty of operating an unlicensed money transmitting business last month, stands to benefit.

Storm has alluded to the notion that he plans to appeal the guilty verdict, as per reporting by Eleanor Terrett.

If CLARITY becomes law and the language regarding retroactive developer protection is included in the draft of the bill that passes, Storm’s legal team should theoretically have no issue winning at the appellate level.

Unfortunately, if CLARITY passes with the retroactive protections included, this will not help the Samourai Wallet Developers, who accepted a plea deal for operating an unlicensed money transmitting business in July.

Further Protection for Developers of Noncustodial Crypto Tech

This most recent draft of CLARITY also stipulates that developers or providers of “non-controlling” (noncustodial) crypto technology shall not be treated as money transmitting businesses under 31 U.S. Code § 5330. This would also be applied retroactively.

Non-controlling developers are defined as those who create or work on “distributed ledger service(s), that in the regular course of operations, does not have the legal right of the unilateral and independent ability to control, initiate upon demand, or effectuate transactions involving digital assets to which users are entitled, without the approval, consent, or direction of any other third party.”

The definition applies to developers of crypto services, software, or hardware that helps customers facilitate the self custody and safekeeping of digital assets.

What Comes Next?

Congress is back in session as of September 2, 2025, and the U.S. Senate Banking Committee plans to continue to prioritize CLARITY, after accepting input on the bill from many members of the crypto industry.

“This legislative draft reflects feedback from hundreds of stakeholders on a wide range of questions as part of the Request for Information (RFI) on the July discussion draft,” a spokesperson from the Senate Banking Committee told Bitcoin Magazine. “Chairman Scott, Senator Lummis, and their colleagues will continue working in a bipartisan way to deliver a final product that will protect investors, foster innovation, and keep the future of digital finance anchored in America.”

No hearings regarding the bill are currently on the Senate Banking Committee’s calendar.

This post New CLARITY Act Draft Could Shield Bitcoin and Crypto Developers From Past Liability first appeared on Bitcoin Magazine and is written by Frank Corva.