A coalition of cryptocurrency-related organizations is urging US lawmakers in a new session of Congress to prioritize data protection when developing legislation to foster “a pro-privacy future.”
“Lawmakers have failed to protect our digital privacy for too long, leaving market-based solutions as the only practical defense anyone has against constant unreasonable digital surveillance,” said Lia Holland, director of campaigns and communications. at digital rights nonprofit Fight for the Future, which organized an open letter released Tuesday.
Signatories to the letter, addressed to new lawmakers, include crypto wallet provider Ledger, developer of privacy-protecting digital currency Zcash, and peer-to-peer crypto payment platform MobileCoin.
The recent collapse of cryptocurrency exchange FTX is expected to put pressure on lawmakers to set barriers for the emerging industry. Cryptocurrency proponents argue for the potential of decentralized technology to enable private online transactions that are more akin to the anonymity of cash. They fear that regulatory steps so far risk eroding one of the key features of the cryptocurrency.
Fighting for the Future came out against a bill introduced in the last Congress that seeks to combat the use of digital assets for money laundering and terrorist financing. The Digital Asset Anti-Money Laundering Act would require customer identity checks by providers of digital wallets and other related businesses, while limiting the use of tools such as mixers that are meant to make cryptocurrency transactions more anonymous .
In 2022, the US Treasury Department imposed its first fines on virtual currency mixers, first Blender and then Tornado Cash, for their use by hackers to launder money. The bipartisan infrastructure bill that became law in 2021 also targeted cryptocurrency transactions with new reporting requirements.
These measures amount to financial surveillance that could have a chilling effect on the development of privacy-preserving digital asset technologies, according to Fight for the Future.
His letter calls on Congress to support technologies such as end-to-end encryption, a secure means of communication that has come under scrutiny by law enforcement agencies who say it protects criminal activity. The letter also urges passage of “long overdue” legislation focused on safeguarding consumer privacy online.
Lawmakers in the last legislative session of Congress made some progress toward advancing a bipartisan online privacy bill alongside two other bills focused on children’s online experience, but steps stalled for the opposition from leading legislators.