Technical managers seek to prioritize privacy in blockchain regulation

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

In an open letter released on Tuesday, a coalition of more than 28 technology companies working on open source and decentralized projects called on Congress to “take a bold stand” to safeguard consumer privacy while regulating the blockchain industry.

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

The letter also criticizes attempts by members of Congress to de-anonymize blockchain transactions, such as legislation introduced 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 follows the Banking Secrecy Act’s rules for obtaining information about customers. The organization urges Congress to pass laws that will defend technologies that protect privacy.

Those security measures must include encrypted chat apps, which the group claims are equally vulnerable to attack. Privacy groups continue to be concerned about the long-running disputes over encryption between US law enforcement agencies at home and abroad. The FBI deemed Apple’s decision to fully encrypt its cloud services “very troubling” in December.

The letter points out that open-source privacy technology created in the United States provides significant safeguards both for residents of nations that restrict the internet, such as Russia and Iran, as well as for journalists, protesters, and other domestically marginalized groups. The organizations also emphasized the importance of open source technology in consumer decision-making, noting that many users migrated to Mastodon, a decentralized social network, when Elon Musk took control of Twitter.

In 2022, lawmakers made groundbreaking progress on federal privacy legislation, but the initiatives faltered over disagreements over whether to allow consumers to file private lawsuits and to what extent state laws should be preempted.