Free Market

The Government Wants to Erase the Privacy of Crypto

Shock and surprise are two things that many who follow the use of cryptocurrency around the world did not show when US Senator Elizabeth Warren rolled out her Digital Asset Anti-Money Laundering Act of 2022. The United States and other world governments have been running a financial surveillance state since even before the internet existed. This latest piece of legislation is no different.

In fact, the bill would expand surveillance to all cryptocurrencies. The excuse is a tale as old as time: drug kingpins and terrorists. Sure, the recent fallout of FTX and Sam Bankman-Fried will be the poster child held up, but the bill will do little to address any of what actually happened.

Instead, this will be used as an opportunity to clamp down on the private, decentralized nature of cryptocurrencies built on blockchain technology. The bill doubles down on the third-party doctrine, which generally allows governments to access your information (like financial transactions) without a warrant if it is held by a third party (now you know why some people only want to use cash). 

People transacting outside the eye of the government are a great threat to the power structures that those in power are desperately trying to maintain. Look around the world to see how the adoption of cryptocurrency is bringing economic freedom to those oppressed by more authoritarian regimes.

Instead of fearing cryptocurrencies, free societies should be embracing it. Those concerned with the unfair nature of crony capitalism should see it as a means of leveling the playing field. Centralization consistently leads to less freedom for the masses, and the decentralized nature of blockchain technology runs in the opposite direction.

Some state governments have recognized the positive aspects of cryptocurrency and blockchain by pursuing policy solutions that embrace its innovative nature. Utah, for example, has passed several bills in the past few years inviting entrepreneurs to do more, not less, with blockchain. Last year was no different with two different pieces of legislation passing, both of which Libertas supported.

Senator Warren and others would be wise to take notice that around the world the collusion between governments and “banks” is not one that leads to the economic freedom of the very people they claim to be helping. In this area and many others, we need more privacy, not less.