The Electronic Frontier Foundation (EFF), a privacy-oriented NGO, has criticized President Biden’s new infrastructure bill, which the EFF claims will increase the government’s ability to surveil everyday crypto users.
“This outcome could be disastrous for the crypto space in the United States,” Marta Belcher, a cryptocurrency and civil liberty attorney who serves as special counsel to the EFF, told Decrypt.
In a Twitter thread, the organization outlined six fundamental reasons why the bill would do significant harm to the American crypto industry.
EFF’s arguments
First and foremost, EFF claims the bill will lead to more surveillance against cryptocurrency users, which of course flies in the face of the organization’s commitment to digital privacy. This is in part because of the "broad, confusing language" that the bill uses, the organization wrote.
In defining all crypto-adjacent entities, even those that are not acting as crypto custodians for others, as "brokers" and forcing them to collect tax information on their users, the current draft bill would turn the crypto industry into a "cumbersome surveillance system."
This, the EFF adds, would complicate the legal landscape for crypto projects. The EFF also argued that the bill could make user information more available for exploitation on the part of malicious actors.
In a further two points, the EFF claimed that miners could not possibly comply with this bill and that smart contracts and decentralized exchanges would suffer because the bill creates uncertainty about peer-to-peer cryptocurrency transactions.
“Imposing reporting requirements on non-custodial cryptocurrency actors could have a huge chilling effect on innovation and civil liberties,” added Belcher.
Not everybody agrees with the EFF
For large swathes of the crypto community, this bill is everything the industry is designed to rebel against.
“As those who understand crypto already know, users are pseudonymous and access is permissionless. It’s literally impossible for non-custodial actors like miners to get the information they need,” said Jake Chervinsky, general counsel at Compound Finance.
But given the sheer frequency with which people fall victim to massive losses in crypto—either due to ransomware, theft, fraud, or simple user errors—Chervinsky’s argument doesn’t quite cut it for everyone.
“If compliance is impossible because it’s a system purposely defined to evade the rule of law, then the entire industry should be outright banned. Full stop,” said computer programmer and crypto critic Stephen Diehl.
U.S. Senator Elizabeth Warren (D-MA) has also taken aim at the crypto industry recently, claiming it needs “rules of the road” for the sake of protecting small investors.
“I don’t want to wait until a whole lot of people, a whole lot of small investors, a whole lot of small traders have been completely wiped out,” Warren said last week.
Lobbyists from the crypto industry have been hard at work to amend portions of the bill. Though they’ve managed to change some of the bill’s language, many are still unsatisfied.
Jerry Brito, the executive director of crypto think tank CoinCenter, said that “there’s still time” to get the bill just right.