Maine committee hears competing views on unhosted crypto wallets in LD 11 97

Senator Baldacci’s office presented LD 11 97 to the committee as “an act to update the Maine Money Transmission Modernization Act by removing provisions of law regarding unhosted wallets.” The sponsor’s representative said the earlier law (LD 2,112) had included broad provisions requiring identification of owners of every self‑hosted wallet operating in the state and that those provisions exceeded national norms.

Witnesses supporting LD 11 97 included industry representatives from the Crypto Council for Innovation and Coinbase. They argued self‑hosted (unhosted) wallets — software wallets controlled by individual users rather than custodial platforms — cannot be practically regulated to the same extent as hosted wallets. Rashawn Colbert of the Crypto Council for Innovation said requiring identification of every self‑hosted wallet owner is “technically unfeasible” and warned the measure would push businesses out of Maine and reduce consumer access. Ashley Gunn of Coinbase described the reporting requirement (as drafted last session) that would force exchanges to identify owners of recipient self‑hosted wallets; she said the technical ability to link a wallet address to an identifiable person does not exist in the way the statute requires and that no other U.S. state or country imposes such reporting.

Opponents included Linda Conti, Superintendent of Consumer Credit Protection, and an Assistant Attorney General in the Consumer Protection Division. Conti said the bureau intentionally included the provisions in its version of the model act because unhosted wallets are being used in scams, kiosks and other schemes that have caused consumer harm in Maine. Conti described cases in which victims were directed to convert cash at so‑called cryptocurrency kiosks and send coins to unhosted wallets controlled by scammers; the bureau has pursued administrative and licensing actions against some operators. The assistant attorney general said the statutory requirements in the 2023 act attempt to prevent scams by requiring exchanges to identify recipients of cryptocurrency sent to unhosted wallets and by prohibiting self‑attestation alone as sufficient proof of ownership.

Committee members asked technical and enforcement questions, including whether law enforcement can trace blockchain transactions and how on/off ramps (exchanges, kiosks) factor into enforcement. Industry witnesses said blockchains are transparent but pseudonymous; they recommended investing in blockchain analytics tools for law enforcement and consumer education rather than the identification mandates. Regulators said the main challenge was the limited local investigative resources needed to trace and recover funds in many of these schemes.

Ending: The hearing closed with the committee signaling further work-session debate. Parties asked for drafting clarifications; industry and regulators said they would work with the committee to refine language and address enforcement concerns.