Elizabeth Warren's Crypto Law Branded Absurd And Dangerous

Warren's bill would potentially make a wide range of activities, including writing code for cryptocurrency applications, illegal.

Has Liz Warren really considered the implications of her bill?

Senator Elizabeth Warren is on a crusade against crypto, which she believes poses a major threat to the United States. However, her draft bill, which is gaining some traction in Congress, has bizarre and Orwellian implications that make it unworkable in practice.

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Gathering Support

Warren's Digital Asset Anti-Money Laundering Act, introduced in July, has recently gained signatures from several more senators: Raphael Warnock, Laphonza Butler, Chris Van Hollen, John Hickenlooper, and Ben Ray Luján.

Warren claims that the bipartisan bill is designed to address the use of crypto for money laundering and terrorist financing, bringing the fast-growing sector into line with the rules imposed on existing financial services organizations. However, the recommendations in the bill are so extreme that they represent an all-out assault on the crypto sector.

For example, the developers of unhosted wallets and blockchain node runners would need to register before publishing code or relaying transactions, and DeFi protocols would be required to collect KYC information about their users.

As at least one Twitter/X user noted, this has some curious implications. For example, anyone flipping a coin to generate entropy for a Bitcoin wallet and operating a node as a hobby could be considered to be running a money service business. Head of Policy at Bitcoin Policy UK, @freddienew, included a video of his young children doing just this to illustrate the point.

Echoes Of The 1990s

The whole episode recalls some of the absurdities that arose with the release of PGP encryption in the 1990s. The 1976 Arms Export Control Act (AECA) made it illegal to distribute munitions to other countries without a license. Since the definition of "munitions" included cryptography, developers came under scrutiny: Specifically Phil Zimmermann, who released Pretty Good Privacy, or PGP. The US Justice Department launched a three-year criminal investigation into Zimmermann as a result.

To highlight how ridiculous this was, t-shirts were printed with the code for PGP displayed on them. Freedom of speech rules meant that it was legal to wear these on an international flight, but not to send the same information to foreign countries electronically.

Warren: Slim Odds Of Success

While Warren's draft bill has attracted a few headlines, at least in the crypto world, there is probably little to worry about. As Twitter/X users noted, her track record in actually getting bills passed is extremely poor.

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