Best of luck
In addition to the fight to get this passed, the attempt to regulate non-exchange hosted wallets is technically difficult(basically impossible) to enforce in any comprehensive way. I expect this is just a tissue thin cover to justify civil asset seizures whenever the police find a paper or offline wallet in someone's possession during a search.
It's pretty much impossible to force one of the cryptocurrency networks to comply with this across the board though. So the Fed can't touch the majority of actual network traffic, and can't do squat without access to the keys and passwords anyway. They can ruin your life of course, but they can't grab your coins without your keys, or really stop you from transferring it wherever you want as long as you control the keys. Of course this will jam up the exchanges where people change regular money for cryptocurrency, but laws for that were already on the books.
Parts of this are probably progress for the parts of the scene that want to be legit, and gain access to the broader world baking system. And the cowboys and criminals DGAF and will do whatever they want regardless.