It leaves developers with no real protection against charges for what others do, warns L33tz. The analyst warns that the rule authorizes the Treasury to restrict privacy. The United States Senate Banking Committee presented a 278-page draft aimed at regulating the structure of the digital asset market. It has set off alarms among defenders of privacy and open source technology. Although the proposal, identified as HR 3633, has been received by some sectors of the industry as an advance, an exhaustive analysis by researcher L0la L33tz indicates that the document is, in reality, a “dangerous” piece of legislation. This is because it facilitates mass surveillance and grants extraordinary powers to the Treasury Department. The proposal, according to the journalist, attempts to reconcile the positions of legislators who seek to establish a framework of clarity for the ecosystem. However, consider that the text appears to prioritize state oversight capacity on the protection of individual rights. According to L33tz’s analysis, the authorities’ objective appears to have simply been «to have done something after months of negotiations.» In this way, the result would be a document that «creates meaningless technical distinctions» and delegates much of Congress’s authority to government agencies, according to the researcher.
Alleged protection for cryptocurrency developers
L33tz highlights that one of the most critical points of the draft cryptocurrency law It is the supposed protection of software developers. Although the text includes a version of the Blockchain Regulatory Certainty Act (BRCA), presented this week before the Senate. This is a project that, as Criptonoticias explained, seeks to prevent those who do not control funds from being considered money transmitters. However, the legal reality is different. For the researcher, this legislation «does not offer any protection against the real problem: that is, being responsible for what others do with your software.» Likewise, L33tz’s analysis warns that, although this could reduce possible sentences, offers no real protection against serious charges. The reporter, in fact, warns that the draft «continues to leave the door wide open to accuse developers of self-custody tools of conspiracy to evade sanctions and money laundering if other people use their software for illicit purposes.» Regarding personal possession of bitcoin and other cryptocurrencies, L33tz points out that the so-called Keep Your Coins Law «appears to guarantee the right to self-custody.» However, says the analyst, it includes a rule of interpretation that nullifies said protection against the Bank Secrecy Act (BSA). This means, according to the author, that the US government would maintain the authority to seize assets or restrict transactions under the argument of combating illicit financing. The following image is the letterhead of the bill HR 3633, questioned by researcher L0la L33tz:
Surveillance of self-custody transactions is activated
Meanwhile, L33tz points out that the draft also empowers the Treasury to issue guidelines that would force financial institutions to monitor transactions with self-custody wallets. This, in a similar way to the «Travel Rule» already applied in other jurisdictions, such as the European Union. In addition, the specialist warns, the legislation introduces obligations for what it calls «application layers of distributed accounting books.» The above, referring to the web interfaces. This, in his opinion, would force the operators of these sites to use decentralized network analysis tools. to block or restrict transactionsdirectly affecting technological neutrality. Finally, L33tz highlights that the draft amends the PATRIOT Act to give the Treasury the power to prohibit specific types of digital asset transactions that it deems of “primary money laundering concern.” This, according to her, puts privacy technologies at direct risk. Among those, transactions under the CoinJoin protocol in bitcoin. For L0la L33tz, the Senate Banking Committee’s cryptocurrency bill is not the framework of clarity that software developers and bitcoin users were hoping for. On the contrary, the researcher concludes that the draft functions as a legislative tool designed to facilitate “full surveillance of all users of self-custody software.”
By not legally shielding those who write open source and granting discretionary powers to the Executive, she argues that the digital asset ecosystem would be vulnerable to government interpretation that prioritizes state control over financial privacy and technological innovation.