New U.S. Anti-Encryption Bills Threaten the Crypto Market

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A number of bills are currently being passed through the United States Senate, regarding personal privacy surrounding encryption. If the Lawful Access to Encrypted Data (LAED) Act or the Eliminating Abusive and Rampant Neglect of Interactive Technologies (EARN IT) Act is passed, they would dismantle the privacy that cryptocurrency networks intentionally provide. 

The Lawful Access to Encrypted Data (LAED) Act would mean that law enforcement has the right to access encrypted data if it can prove that it is in the best interests of public safety. This is a new bill that has only just been introduced to the Senate, and it means that Bitcoin users may no longer be able to keep their transactions anonymous. Online transactions can be considered a form of correspondence or communication, and are therefore subject to scrutiny that goes against the privacy of encryption. 

The Eliminating Abusive and Rampant Neglect of Interactive Technologies (EARN IT) Act is designed to help protect children and youth against online sexual exploitation. This could still have wide-reaching impacts for cryptocurrencies, as it may require companies to forego liability protection against content or actions taken on their site or platforms. The alternative for these companies is to remove their encryption services and therefore remove all liability from their end. 

Cryptocurrency platforms are not the intended targets for either of these bills, but the privacy that they offer users and investors would still be heavily affected. The Electronic Frontier Foundation (EFF) points out that all tech platforms would lose the protection given to them under Section 230, which only holds you accountable for your own actions online, and not the actions of others who happen to be using your platform. EFF suggests that under the current version of the EARN IT Act, internet platforms are open to state laws that can prosecute them, as long as the prosecution’s “purpose is to stop crimes against children”.

A number of analysts believe that there is no way for blockchains to continue functioning the way that they do if these bills are passed into law, as they fundamentally oppose the structure of private crypto transactions. They believe that despite the different intentions of the two bills, they are both an attack on personal privacy. Furthermore, even if the bills do not pass, we should be concerned that personal privacy is even up for debate in this context, and could have greater ramifications in the future. 

They also point out that even if a legal “backdoor” exists for the right reasons (i.e. for law enforcement to police illegal activity pertaining to the sexual abuse of children), it still severely reduces personal privacy. Providing the tools for someone to breach encryption will ultimately be used for criminal intent by someone, and crypto platforms are then at risk for a complete breakdown in their system. 

Although these potential laws pertain to a U.S. jurisdiction only, the government must understand what precedent they are potentially setting. It is possible that if these laws do come into effect in the United States, other countries may follow suit, eroding online privacy on a more global scale.

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