Sen. Elizabeth Warren's Bitcoin Bill Is Anti-Privacy, Anti-Freedom

Sen. Elizabeth Warren's Bitcoin Bill Is Anti-Privacy, Anti-Freedom

U.S. senators have introduced A bill that would directly affect the classification and control of bitcoin miners, wallets, and nodes.

The "Digital Asset Anti-Money Laundering Act of 2022," introduced by Senators Elizabeth Warren (D-Mass) and Roger Marshall (R-Kan), would significantly affect the privacy of bitcoin users.

Senators Elizabeth Warren (D-Mass) and Roger Marshall (R-Kan)
Senators Elizabeth Warren (D-Mass) and Roger Marshall (R-Kan)

The bill would mandate the implementation of know-your-customer (KYC) systems by miners, wallet providers, and self-custodial wallet providers. To restrict users' ability to maintain their privacy, it would also forbid financial institutions from interacting with privacy tools like CoinJoin. While the bill focuses on measures to prevent money laundering, applications like CoinJoin allow users to use bitcoin in a manner that is more analogous to actual cash.

know-your-customer (KYC) systems by miner

The bank has limited knowledge of what users do with the money after withdrawing it from an ATM. Only cryptocurrencies that use tools like CoinJoins can achieve this cash-like quality (example of a CoinJoin). Additionally, regulatory bodies would be permitted to file reports and monitor users without a warrant or official request.

In addition, the bill calls for a

"rule classifying custodial and unhosted wallet providers, cryptocurrency miners, validators, or other nodes who may act to validate or secure third-party transactions, independent network participants, including MEV searchers, and other validators with control over network protocols as money service businesses,"

which would seem to include Bitcoin nodes as well.

The guidance, which, according to blockchain advocacy group CoinCenter,

"is the most direct attack on the personal freedom and privacy of cryptocurrency users and developers we've yet seen,"

is to be put into effect by the Financial Crimes Enforcement Network (FinCEN).

Senators Elizabeth Warren (D-Mass)
Senators Elizabeth Warren (D-Mass)

Senator Elizabeth Warren has previously stated that she wants the cryptocurrency market to be regulated, most recently following the demise of FTX. Since code is free speech, the bill would likely face intense scrutiny because, among many other problems, it would require unhosted wallet providers to register before publishing their products, effectively limiting free speech.

Disclaimer: Nothing on this site should be construed as a financial investment recommendation. It’s important to understand that investing is a high-risk activity. Investments expose money to potential loss.



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