As a seasoned crypto investor with a deep understanding of the decentralized finance (DeFi) landscape, I am deeply concerned about the potential implications of the Intelligence Authorization Act of Fiscal Year 2025 on open-source, decentralized protocols. This bill, if passed as is, could set a dangerous precedent that unfairly targets these vital innovations in our industry.
As a researcher studying open-source technologies, I’ve come across a concerning development: A new bill, the Intelligence Authorization Act of Fiscal Year 2025, has been passed by the Senate State Committee with unanimous approval. This legislation could potentially create an uneven playing field for decentralized protocols, potentially leading to unfair treatment in the future.
As a researcher studying this legislation, I can explain that Section 423 of the bill focuses on crypto and decentralized protocols by extensively using terms like “assets” and “dApps.” This language allows for the potential regulation and even sanctioning of these technologies if they are found to interact with illicit wallets or funds. The term “foreign digital asset transaction facilitator” is used in the bill, referring to entities that facilitate digital asset transactions for users in the US. If these entities fail to prevent illicit fund flows, they could be subject to sanctions.
Next year, it’s likely that the bill will be enacted into law. However, the extent to which it will actually be implemented as law is uncertain. Lawmakers may identify potential negative consequences for the crypto industry and make amendments or even eliminate problematic sections. If left unaltered, the Intelligence Authorization Act could be wielded against crypto protocols and businesses by their adversaries.
Decentralized protocols typically allow unfettered transfer of funds from any wallet due to their decentralized nature. This open access enables users to utilize the protocol’s benefits regardless of the origin of their funds. However, if this bill is passed in its present form, the government would gain the power to shut down numerous decentralized applications (dApps).
The cryptocurrency community vehemently opposes government restrictions on specific protocols and coding. The recent ban on Tornado Cash by US authorities has sparked heated debates among crypto supporters, who argue that the government is essentially banning code. It’s important to note that while Tornado Cash was linked to large-scale money laundering operations, most other cryptocurrency protocols were predominantly used by less notorious individuals.
The bill fails to specifically identify which protocols will be prohibited, such as those commonly employed by cybercriminals for money laundering activities. Consequently, any protocol handling insignificant sums of ill-gotten gains could potentially be subject to the ban.
Image by herbinisaac from Pixabay
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2024-06-07 12:51