The US Senate Banking Committee has submitted a 278-page draft proposal aimed at regulating the structure of digital asset markets. This sparked alarm among privacy and open source technology advocates.
While this proposal, identified as HR 3633, is being received as an advance in some sectors of the industry, a thorough analysis by researcher L0la L33tz shows that the document is actually: It’s a “dangerous” bill. This is because it facilitates large-scale surveillance and gives the Treasury Department extraordinary powers.
The journalist said the proposal seeks to align the positions of lawmakers who are trying to establish a framework that defines the ecosystem. However, the text They seem to be prioritizing national surveillance capabilities. Regarding the protection of individual rights.
According to L33tz’s analysis, the authorities’ goal was simply to “do something after months of negotiations.” In this way, the result will be the document It “creates meaningless technical distinctions” Researchers say Congress has delegated much of its power to government agencies.
Suspected of protecting virtual currency developers
L33tz highlights one of the most important points of the crypto bill. This is to protect software developers. However, the text includes a version of the Blockchain Regulatory Certainty Act (BRCA) that was introduced in the Senate this week. As Criptonoticias explained, this is a project that ensures that those who do not control the funds are not considered senders.
However, the legal reality is different. For researchers, the law “doesn’t provide protection against a real problem: liability for what others do with your software.”
Similarly, the analysis of L33tz suggests that although this may reduce the number of possible sentences, It offers no real protection against serious charges. In fact, this reporter warns that the draft law “remains open to the possibility of accusing developers of self-custody tools of collusion to evade sanctions or money laundering if others use their software for illegal purposes.”
Regarding private ownership of Bitcoin and other cryptocurrencies, L33tz points out that so-called laws apply. keep your coins It appears that he has guaranteed self-custody. However, the analyst said it includes an interpretive rule that would override the aforementioned Bank Secrecy Act (BSA) protections.
According to the author, this is because the U.S. government maintain the power to seize assets or restrict transactions; Under the claim of combating illegal lending.
The following image is the letterhead of HR 3633, the bill that researcher L0la L33tz asked about.
Monitoring of self-custodial transactions triggered
Meanwhile, L33tz points out that the draft law also gives the Treasury the power to issue mandatory guidelines to financial institutions. Monitor transactions with self-custody wallets. This is similar to the ‘travel rules’ already in place in other jurisdictions such as the European Union.
Additionally, experts warn that the law introduces obligations for what they call the “application layer of the distributed ledger.” The above describes the web interface. In his opinion, this would force the operators of these sites to use decentralized network analysis tools. to block or restrict transactions;which directly affects technological neutrality.
Finally, L33tz highlights that the draft law would amend the Patriot Act to give the Treasury Department the authority to ban certain types of digital asset transactions that it deems to be of “major money laundering concerns.”
She says this puts privacy technologies at direct risk. Among them are transactions based on Bitcoin’s CoinJoin protocol.
For L0la L33tz, the Senate Banking Committee’s virtual currency bill is not the clear framework that software developers and Bitcoin users were hoping for.
On the contrary, researchers conclude that the draft acts as a legislative tool. It is designed to facilitate “complete oversight of all users of self-custody software.”
She argues that by not legally protecting those who create open source and giving discretionary powers to executive departments, the digital asset ecosystem becomes susceptible to government interpretation. It prioritizes state control over financial privacy and technological innovation.