 Harvard fellow Timothy Massad recently told Congress that policymakers need to “creatively rethink” how to fold in cryptocurrencies into the surveillance of the Bank Secrecy Act and its reporting requirements of customers’ transactions to the government. Nicolas Anthony in a CATO blog notes: “The problem dates back to the 1970s. The Supreme Court dealt a major blow to privacy with what is now commonly called the third-party doctrine. In short, the court held that so long as a third party is involved (e.g., a bank or credit union), customer records are not protected by the Fourth Amendment. However, to the extent third parties are not present, the Fourth Amendment should still apply. “This detail is important because there is no third party involved if a cryptocurrency is decentralized and exchanged with a self-hosted wallet. Given that Supreme Court justices have expressed concern over their original considerations of both the Bank Secrecy Act’s reporting requirements and the third-party doctrine, it’s hard to imagine how surveilling of transactions between two individuals without a warrant does not run afoul of the protections guaranteed by the Fourth Amendment. “It may seem like a fine line, but Congress should keep this distinction in mind. Financial surveillance should be pared back, not extended further. And in the end, that means strengthening financial privacy for both traditional finance and emerging finance, alike.” Comments are closed.
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