Tangem's CTO Says Governments Shouldn't Get A Kill Switch On Your Wallet

Tangem says governments should not require hardware wallets to include identity checks, transaction restrictions or remote-freeze capabilities, arguing that self-custody loses its meaning once a company or regulator can control whether users are allowed to move their funds.

In an interview with Yellow.com, the hardware wallet's co-founder Andrey Lazutkin said the company deliberately designed its cards so that neither Tangem nor an outside authority can remotely alter the signing process.

“The card does not know what KYC is, does not depend on a compliance server, and does not ask Tangem for permission to sign a transaction,” Lazutkin said.

His comments come as regulators increase scrutiny of so-called unhosted wallets and consider tighter rules around transaction screening, sanctions compliance and destination checks.

Compliance Should Stay At Regulated Gateways

Lazutkin said policymakers need to distinguish between self-custody hardware and the regulated services users access around it.

Inside a Tangem card, the private key is generated and stored in the secure chip. The card signs a transaction after the user authorizes it, but does not consult a centralized compliance system or require approval from Tangem.

“The user can interact with the card through the official Tangem app, or technically through open-source tools and SDKs,” he said. “That means Tangem cannot remotely freeze the card, extract the key, or prevent the user from accessing their funds at the hardware level.”

Rather than forcing compliance controls into hardware wallets, Lazutkin said regulators should focus on exchanges, on-ramps, off-ramps, payment products and other financial intermediaries.

“What we already see globally is a different trend: regulators focus on points where crypto touches regulated services,” he said. “That is where KYC, AML, sanctions checks, and reporting obligations usually belong.”

Tangem may support compliant access to regulated services, he added, but the self-custody layer itself should remain outside centralized control.

“The card protects the key. The user controls the funds. Tangem does not hold the assets, does not control the private key, and does not have a remote switch to decide whether a user is allowed to sign.”

Immutable Firmware Reinforces Tangem’s Position

Tangem’s regulatory stance is closely tied to its hardware design. The company’s card firmware is fixed during manufacturing and cannot be updated later through Bluetooth, USB or over-the-air software.

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“Patchability is not free,” Lazutkin said. “In a hardware wallet, an update mechanism is also a permanent code-injection mechanism.”

He argued that updateable wallets require users to keep trusting a manufacturer’s signing keys, servers, employees, release systems and future business decisions. A compromised update process or regulatory order could potentially change how the device behaves after purchase.

Tangem removes that pathway by making the firmware immutable.

“For long-term self-custody, we believe the safer root of trust is immutable,” Lazutkin said. “The device should not depend on the manufacturer staying trustworthy forever.”

The trade-off is that an existing card cannot be patched if a future vulnerability is discovered. Users would instead need to move funds to replacement hardware. Lazutkin said that limitation is preferable to keeping a permanent mechanism through which security-critical code can be changed remotely.

Self-Custody Faces A Regulatory Test

Lazutkin also warned that forcing wallet providers to embed controls directly into the signing layer could push users toward less secure alternatives.

“If regulators push users away from secure and audited products, many users will simply move to less transparent and less safe alternatives,” he said. “That would increase losses, scams, and shadow activity — not reduce them.”

The broader question is whether regulators will accept a model in which wallet interfaces may comply with local laws while the hardware signing layer remains beyond company or government control.

Tangem’s position is that regulated services can carry KYC and monitoring obligations, but the hardware wallet itself must remain permissionless.

That approach may become increasingly important as governments seek more visibility into self-custody transactions. For Tangem, however, the inability to freeze, alter or remotely control a user’s card is not a regulatory weakness. It is the defining feature of the product.

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