Unhosted wallet
An unhosted wallet is a crypto wallet whose user controls the private keys needed to authorize transfers. It is also called a self-hosted wallet because a custody provider does not manage those keys for the user. This arrangement gives the user direct control over the assets, together with responsibility for keeping the keys accessible and protected.
A wallet address alone does not establish the identity of its owner or explain the purpose of a transfer. The EU travel rule sets information requirements when a covered crypto-asset service provider sends to or receives from a self-hosted address. The provider must collect the required customer and transfer data and assess additional checks under the applicable rules.
What the EU travel rule requires
The Transfer of Funds Regulation (EU) 2023/1113 has applied to crypto transfers since 30 December 2024, and calls an unhosted wallet a self-hosted address. A crypto-asset service provider that sends to or receives from such an address collects the originator and beneficiary data, as for any transfer. Above 1,000 euros it must also check that its own customer owns or controls the address, and linked transfers count together, as 21 Analytics explains. The provider keeps the data for five years.
A transfer between two unhosted wallets, with no provider involved, falls outside the regulation. 21 Analytics walks through the borderline cases in an article on when the regulation applies.
How providers check ownership
The EBA travel rule guidelines, EBA/GL/2024/11, name methods such as signing a message with the key of the wallet or sending a small test amount from it, the so-called Satoshi test, as Spark summarizes. BaFin stated in July 2025 that a self-declaration by the customer is not enough. Switzerland goes further and verifies every transfer to or from an unhosted wallet, whatever the amount.
For a customer who keeps bitcoin in a hardware wallet or an MPC wallet, this means an extra step at the exchange for withdrawals above 1,000 euros.
Outside the EU
In the United States, FinCEN withdrew its 2020 proposal on reporting transfers to unhosted wallets on 19 August 2024. In the EU, Article 37 of the regulation asked the Commission to assess by 30 June 2026 whether the rules for self-hosted addresses work, according to Spark.
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What is an unhosted wallet?
An unhosted wallet is a crypto wallet whose private key the owner holds, with no crypto-asset service provider in between. Hardware wallets and wallet apps such as MetaMask are examples. EU law calls it a self-hosted address.
Are unhosted wallets legal in the EU?
Holding crypto in an unhosted wallet is legal, while providers have these duties: they collect transfer data and, above 1,000 euros, verify that their customer controls the wallet.
What is the difference between hosted and unhosted wallets?
A hosted wallet is an account at an exchange or custodian, which holds the keys and knows the customer. In an unhosted wallet the owner holds the keys, and no institution stands between the owner and the blockchain.
Unhosted wallets and Finance Loop
Finance Loop covers crypto transfers in its Payments & Digital Money track, together with the travel rule and stablecoin payments. Finance Loop brings people from banks, payment firms, crypto firms and their supervisors together at events in Frankfurt, Munich, Berlin and Hamburg.
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