Tech Leaders Seeks To Prioritise Privacy In Blockchain Regulation

The letter comes after a turbulent year for blockchain technology in Washington, most notably the Treasury Department’s choice to penalise cryptocurrency mixer Tornado Cash in August.

In an open letter released on Tuesday, a coalition of more than 28 technology companies that work on open source and decentralised projects urged Congress to “take a bold position” to safeguard consumer privacy while regulating the blockchain industry.

The Blockchain Association, the Zcash Foundation, and the Free Software Foundation are just a few of the organisations that have signed the letter. Both the cryptocurrency sector and privacy activists expressed outrage at the measure, arguing that the punishments defied legal precedent and treated code as free speech covered by the First Amendment.

The letter also criticises attempts by members of Congress to deanonymize blockchain transactions, such as legislation put forth late last year by Sens. Elizabeth Warren, D-Mass., and Roger Marshall, R-Kansas, which would require blockchain intermediaries to register as financial institutions and follow the rules set forth by the Bank Secrecy Act for gathering information about customers. The organisation urges Congress to adopt laws that will defend privacy-preserving technologies.

These safeguards must include encrypted chat apps, which the group claims are similarly vulnerable to assault. Privacy groups continue to be concerned about the protracted disputes over encryption between American law enforcement agencies domestically and abroad. The FBI deemed Apple’s decision to completely encrypt its cloud services “very troubling” in December.

The letter points out that open source privacy technologies created in the United States provide significant safeguards for both inhabitants of nations that restrict the internet, such as Russia and Iran, as well as for journalists, protesters, other domestically marginalised groups. The organisations also emphasised the significance of open source technologies in consumer decision-making, noting that many users migrated to Mastodon, a decentralised social network, when Elon Musk assumed control of Twitter.

In 2022, lawmakers made ground-breaking progress with federal privacy legislation, but the initiatives faltered because of disagreements over whether to allow consumers to file private lawsuits and to what extent state laws should be preempted.