Senator Warren Introduces Bill That Threatens The Privacy Of Bitcoin Users

By Kevin • December 14, 2022 5:03 pm • Comments

Senator Elizabeth Warren has always been vocal about her anti-crypto stance and was opposed to Fidelity’s decision to add Bitcoin to their retirement plan options.

Amid the recent collapse of FTX and many other crypto firms during the current bear market, it seems that she is once again trying to control crypto.

Recently, she introduced a new bill called the “Digital Asset Anti-Money Laundering Act of 2022” which essentially makes it requirement for self-custodial wallet providers to make users go through “Know Your Customer” checks.

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In a sense, this defeats the entire purpose of crypto because cryptos like Bitcoin were designed to allow people to own and control their assets with absolute privacy.

Forcing people to go through these KYC checks in order to get a self-custodial wallet would eliminate all privacy and would likely make things even more difficult for crypto firms to operate.

BitcoinMagazine reports:

It would also prohibit financial institutions from interacting with privacy tools such as CoinJoin in an effort to limit the ability of users to maintain their privacy.

While the bill focuses on such measures in order to curb money laundering, tools such as CoinJoin simply restore the users’ ability to use bitcoin in a way that more closely resembles physical cash. That is, the bank knows when a client withdraws cash at an ATM, but has limited knowledge of what any user does with it afterwards.

This cash-like attribute is only realized in cryptocurrencies through tools such as CoinJoins. In addition to this, regulating bodies would be allowed to file reports and surveil users without need for a warrant or government request.

According to the bill, it also 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 imply that Bitcoin nodes would be classified as such as well.

A lot of different blockchain advocacy groups are already trying to speak out against this new proposed bill due to its potential impact on the industry.

For example, the blockchain privacy group called CoinCenter just stated that this was the most direct attack on personal freedom and financial privacy that they have every seen.

Clearly, it is aimed at controlling the use of digital assets and would make the United States much less appealing as a crypto hub compared to other countries in the world.

Additionally, it might also stunt blockchain innovation in the country as companies will seek to relocate to other regions in the world to conduct business.

As expected, Senator Elizabeth Warren is using the FTX collapse as an example in order to push for this new bill to pass.

Whether or not the bill will actually pass is another story.

DeCrypto.co reports:

The bill was introduced following November’s collapse of cryptocurrency exchange FTX, with founder and former CEO Sam Bankman-Fried arrested this week by Bahamian police amid numerous criminal charges from U.S. authorities.

Bankman-Fried faces charges from the U.S. Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC), as well as the Complex Frauds and Cybercrime Unit at the Southern District of New York U.S. Attorney’s Office. Coin Center alleges that the bill would not prevent another FTX-like collapse in the future.

“This bill is focused exclusively on financial surveillance and does not address any of the issues of corporate control that led to the collapse of FTX,” Van Valkenburgh wrote.

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