The principles that allow the creation of crypto are similar to those that proclaim the need to protect people’s privacy. In the US, several developments suggest this privacy could be in danger, as it is the nascent industry that could provide an alternative to the current financial system.
US Banks Snitched On Clients, What’s The Role Of Crypto?
In a report from Reason, there is an update about a legislative process that began on June 12, 2023. The US House Judiciary Committee is investigating major financial institutions in the country due to a potential breach of customer privacy.
The government entity subpoenaed Citigroup, JPMorgan Chase, PNC Financial Services, Truist, Bankcorp, Wells Fargo, and Bank of America for allegedly handing out information about their clients “voluntarily.” Specifically, the latter of these entities supposedly helped the Federal Bureau of Investigation (FBI) identify individuals without going through the standard legal process.
The report stated the following, quoting an official announcement by the House Judiciary Committee:
Individuals who had previously purchased a firearm with a BoA product were reportedly elevated to the top of the list.
The government is now extending its investigation into Citibank and its activities related to similar practices. These actions might have endangered its clients’ private information by ignoring necessary legal steps.
US Regulators “Intimidate” Crypto Companies
The Reason report highlights the increased surveillance of US citizens since the PATRIOT Act, potentially breaching civil liberties. The relationship between banks and law enforcement is a concerning indicator.
Another indicator is the actions of the US Securities and Exchange Commission (SEC), the Department of Treasury, and the Department of Justice (DOJ). The report quotes Coinbase’s Chief Legal Officer (CLO) Paul Grewal and the growing tensions between the SEC.
The Commission has been regulating the crypto industry with an “enforcement” approach, as Grewal and others believe. In that sense, the executive noted the lack of clarity from the regulator:
Cryptocurrency seems like the only viable alternative in a world where financial and personal privacy are potentially jeopardized. However, regulators and government entities in the US seem to be working to lock their citizens from accessing digital assets.
In addition to the SEC’s actions, the recent lawsuit by the Treasury against the Ethereum-based exchange Tornado Cash, and its developers highlights a disturbing truth: people can become a target by government entities by going against the state’s interest.
In the Tornado Cash case, the US seems willing to cross many lines to outlaw the technology. Coincenter’s Director of Research, Peter Van Valkenburgh, points at it in a recent post against the lawsuit and the sanctions imposed on the platform and its co-founders, Roman Storm, and Roman Semenov:
(…) sanctions, special measures can and often are imposed without any showing of probable cause, without a warrant, and in secret accompanied by a gag-order for the financial institution made to implement a particular special measure prohibition. Just as in the KindHearts case, this unchecked investigative authority is simply irreconcilable with our Fourth Amendment rights.
Cover image from Unsplash, chart from Tradingview