Both the Senate and the US House of Representatives. UU. They are considering bills creating a regulatory framework for Stablcoins, and all the usual cryptopicity stirrups have been sung, including the anthem that cryptography is for crime.
For example, Senator Elizabeth Warren (D-MA) warned that Senate’s genius law “will supercharge terrorism financing.” During the debate on the stable law of the Chamber, the representative Brad Sherman (D-CA) worried about the use of provisions against the “unfected wallets to evade.”
It is not surprising that both the genius and the stable acts include significant sections on illicit finances, including the submission of stablecoin emitters to the Banking Secretation Law (BSA). But legislators must ensure that Bills anti-launching measures do not open the door to financial surveillance without restrictions of Stablecoin users.
The stablecoins are cryptographic tokens that are linked to the value of another asset, such as the US dollar. The general idea is that the stable value of these tokens will promote their use as a digital exchange medium. Stablecoins can be considered as much as an improvement in existing payment rails as a way of bringing the US dollar “in the chain”. In other words, Stablecoins is an update of the 21st century in cash. The Senate and the Chamber have the two advanced bills that would create a regulatory regime for “stable emitters allowed” directed, in part, to ensure that the stable are, in fact, stable.
But these days, conversations about the dollar, financial services and cryptography seem to go hand in hand with conversations about the prevention of illicit finance. BSA requires financial institutions to help federal agencies detect and prevent money laundering and other crimes, among other things, keep transaction records and submit reports to the Government. Both the genius law and the stable law address the concerns of illicit finance when clearly stating that a allowed stable issuer “will be treated as a financial institution for the purposes of the Bank Secretation Law.”
Appointing a stable issuer allowed as a financial institution is relatively not controversial. Leaving aside the question of whether the BSA is a good (or constitutional) form of managing illegal financial risks, the allowed stable emitters are very similar to other entities, such as banks and trusted companies, which are already financial institutions of BSA. But it is not so simple.
The BSA surveillance framework requires that financial institutions “know their clients” and supervise the transactions that take place through the institution. However, such surveillance does not extend to the transactions that take place among people without the participation of an institution. For example, the BSA does not apply when the cash changes hands between two people, which allows people to make transactions in private.
While it is unfeasible to track cash transactions in the manner prescribed by the BSA, stables can be traced through a block chain as they move among the holders, even when transfers occur between wallets that do not take into account intermediaries. This characteristic is tempting for those who want to extend the surveillance of BSA beyond its already expansive (and constitutionally sick) limits.
Fundamentally, digital assets transactions that are genuinely in pairs should not be subject to greater government surveillance than transactions between cash. The application of provisions against money laundering to wallets without possession, which resemble physical wallets that have effective than bank accounts, would be a massive expansion of financial surveillance and an unwanted intrusion in the abilities of Americans to order their financial lives outside the government’s eyes.
Both the genius and the stable acts make it clear, to varying degrees, that the stablecoin emitters must have customer identification programs only for customers who have accounts “with the payment of payment of payment” (genius) or that are “initial holders” of a stable payment (stable).
But the other BSA requirements that the bills would impose to the stablecoin issuers, including maintaining compliance programs against money laundering, retention of stable transactions records, monitoring and reports of suspicious activities, are not so clearly limited. This leaves the door open to the imposition of broader surveillance requirements in Stablecoin transactions that take place far from the issuer, which would be an important invasion of the rights of Americans to make transactions in private.
Fortunately, the sponsors of both bills seem to read surveillance obligations. The representative Bryan Steil (R-WI), one of the sponsors of the stable act, explained during the marking of the bill that requires the surveillance of BSA of “each autohosotada wallet” would be a dramatic invasion of personal freedom “and that” the Americans should not be treated the same as financial institutions. “And Senator Bill Hagerty (R-TN) Sponsors of Genius Law, he said during the marking of that bill that “[r]Equiring emitters to monitor transactions in several blockchains would be expensive and. . . Loss of time. “
This feeling on the scope of the BSA obligations imposed should be clearly reflected in the text of both bills to definitively close the door to more expansive future interpretations.
Despite the characterizations of some skeptical members of Congress, preserving financial privacy is not simply a gift for criminals. The easy government access to financial information raises risks for all, particularly those with unpopular political opinions or any person in the minority. This surveillance disagrees with the rights of free persons (including the rights recognized in the Constitution of the United States) to live without unjustified government monitoring.
One step to ensure that these rights are not infringed anymore is to ensure that stamping legislation into consideration unequivocally protects stable surveillance transactions that occur without a financial intermediary.
