Crypto privacy tests limits of Trump's deregulatory push
Donald Trump's deregulatory blitz has its limits.
It doesn't seem to like financial privacy, an omission that appears to have galvanised crypto devs and policy experts.
To recap: Last week, Tornado Cash developer Roman Storm was convicted of a federal crime. The week before, the developers of Samourai Wallet pleaded guilty to the same crime.
The same day the Samourai devs threw in the towel, Trump's crypto policy team came out with a 166-page report titled 'Strengthening American Leadership in Digital Financial Technology.' Not everyone liked what they saw.
The report recommended expanding the infamous Patriot Act to cover crypto technology, labelling certain tools 'primary money laundering concerns.' It suggested to force DeFi protocols to comply with the Bank Secrecy Act and its anti-money laundering provisions.
'This could include services that custody assets or have centralised governance, including through instances in which governance tokens are held by one or a small group of persons that can effectively assert control,' the report reads.
There is a cost to privacy. As one of Storm's prosecutors put it, 'Isn't anonymity just another word for concealment?'
The argument appeared to be that we've all got something to hide, but that criminals have more to hide.
There's also a cost to not having privacy. As one of Storm's attorneys put it, 'How would you feel if someone took your bank account and published it on the internet?'
The received wisdom of the DeFi community is that blockchain-based finance will never go mainstream without privacy.
The devs are fighting back.
'To me, the medium-term target is to make privacy [the] default in wallets,' Ethereum co-founder Vitalik Buterin said in a recent appearance on the Bankless podcast.
'The biggest mistake that we're making as an ecosystem right now is that we came up with this concept of a privacy wallet. We should not have privacy wallets — privacy should be a feature of wallets.'
Buterin added that the Ethereum Foundation has started working on the issue, and more information can be expected in the next several months. It has also pledged an additional $500,000 towards Storm's legal costs.
Last week, Electric Coin Company CEO Josh Swihart asked senators to protect financial privacy in a forthcoming mega-bill.
'This is not about hiding crime; it is about protecting law-abiding citizens from constant surveillance, data breaches, and unjust profiling,' Swihart wrote.
'Treating all privacy-oriented digital assets as suspect would be akin to banning locks because criminals might hide behind closed doors.'
Top DeFi stories of the week
This week in DeFi governance
PROPOSAL: Uniswap DAO considers incorporation in Wyoming
PROPOSAL: Lido DAO considers token buyback program
PROPOSAL: Polygon DAO considers raising validators' required minimum stake
Post of the week
Trump promised a Strategic Bitcoin Reserve stocked with crypto seized by US law enforcement. According to one rumour, the first contribution will come from a crypto developer.
Aleks Gilbert is DL News' New York-based DeFi correspondent. Got a tip? Email at aleks@dlnews.com.
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