US Senator wants to criminalize bitcoin self-custody

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While US authorities seek solutions to protect investors from cases similar to FTX’s, some are taking advantage of the fragile moment in the market to suggest laws that violate user privacy.

Presented by Senator Elizabeth Warren, the one that called Bitcoin snake oil, such a proposal wants self-custody wallets to require KYC. That is, it requires investors to verify their identity when using such services.

The text goes further, asking that even the miners carry out said verification if they want to continue operating in the sector. Since the United States is the world’s largest mining center, such a proposal is doubly worrisome.

Bill takes advantage of industry’s fragile moment

Called the Digital Assets Anti-Money Laundering Act, the bill appears to be building on fragile industry momentum and the Sam Bankman-Fried arrest to win supporters.

However, it is already possible to see widespread indignation on the part of users on social networks, who highlight the following excerpt from the proposal sent by Senator Elizabeth Warren.

“The Financial Crimes Enforcement Network will promulgate a rule classifying custodial and non-hosted wallet providers, cryptocurrency miners, validators, or other nodes that may act to validate or secure third-party transactions, independent network participants, including MEV finders and other validators. with control over network protocols like financial services companies.”

Most controversial excerpt from the proposal presented by US Senator Elizabeth Warren.

In short, this would end the anonymity of self-custody wallets. Going further, it is hard to believe that anyone would feel more confident using Bitcoinor another cryptocurrency, by sending your personal data to third parties, on the contrary.

For this reason, the project affirms that this would be a way of dealing with money laundering with cryptocurrencies, an old excuse to turn the sector into a financial Big Brother.

The proposal also focuses on anonymity tools

Next, Senator Warren also wants to kill bills that give users more privacy. Private cryptocurrencies and mixers are mentioned, but generic terms like “technologies to improve anonymity”.

That is, it is possible that even Bitcoin Lightning Network is included in these fine print. We can go further, imagining the same thing in generating more than one receiving address for each user, a common practice aimed at anonymity.

Finally, it is difficult to think that this will become law. However, the fragility of the industry after the FTX bankruptcy could mean that Senator Warren has more allies than she normally would. So this can be a threat to investors.

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