Title: The U.S. Government Is Targeting Cryptocurrency to Expand the Reach of Its Financial Surveillance | Electronic Frontier Foundation
Headings: The U.S. Government Is Targeting Cryptocurrency to Expand the Reach of Its Financial Surveillance
The U.S. Government Is Targeting Cryptocurrency to Expand the Reach of Its Financial Surveillance
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Content: Third, the regulation could hamper broader adoption of self-hosted wallets and technologies that rely on them, or at least make it difficult to integrate these technologies with intermediaries like exchanges. The regulations make it significantly more difficult for self-hosted wallet users to seamlessly interact with other users who have wallets provided by a service subject to the regulations. Under the proposed rules, these hosted wallet services would have to collect certain information about self-hosted wallet users who transact with their customers in some circumstances. That may complicate certain automated transactions, such as smart contracts, or be difficult to implement in scenarios involving decentralized exchanges. Despite the name, “wallets” are not just personal stores of currency: they are a way for individuals and computing systems to hold and dispense money without relying on institutions. Adding friction to these types of transactions undermines the technology’s importance in giving individuals control over their finances. It could also chill the ability of innovators to create decentralized financial platforms with a wide range of lawful uses. Fourth, although the proposed rules purport to simply apply pre-existing regulations involving cash transactions to cryptocurrencies, they ignore that these digital financial tools exist in part to afford financial privacy and anonymity equal to and perhaps beyond that of traditional cash. In this respect, the proposed regulations are part of a larger troubling trend of the U.S. government extending the financial surveillance of the traditional banking system to cryptocurrencies.