Crypto Crackdown: A Gift to Authoritarian Regimes?

The Unintended Anti-Freedom Impact of the Blockchain Integrity Act

The United States has long championed individual freedoms, liberty, and the rule of law in its foreign policy. However, the proposed Blockchain Integrity Act carries an unintended consequence that could undermine these core values for activists and dissidents living under authoritarian regimes.

The Blockchain Integrity Act's Overreach

The Act aims to impose a moratorium on "mixers" – privacy tools that obscure cryptocurrency transaction trails – under the presumption that they facilitate money laundering. See article by

Nick Anthony

HERE and my interview with him HERE that discusses financial privacy. Representative Sean Casten (D-IL) justified this move, stating, "until we've studied [mixers] and have a good audit trail, the presumption should be that these are money laundering channels."

While this rationale appears reasonable on the surface, only a small fraction (0.36% in 2023 and consistently below 0.5% for years) of Bitcoin transactions involve illicit addresses, suggesting that the security benefits of restricting mixers may be marginal.

Moreover, the government's case against mixers like Samourai Wallet relies on an unprecedented legal interpretation that "money transfers" need not involve custody of funds, setting a concerning precedent for overreach.

Aiding Authoritarian Regimes

By eliminating privacy tools like mixers, the Act could directly aid authoritarian regimes in suppressing dissent through financial censorship and asset seizures. As

Alex Gladstein

highlights in his writings HERE and our recent interview HERE, this undermines the very activists America has historically supported in their pursuit of freedom and democracy.

If the U.S. leads in restricting mixers, it provides cover for oppressive governments worldwide to follow suit, jeopardizing the ability of pro-democracy movements and human rights groups to operate and receive funding. "Criminal activity" is usually defined by those in power, and Americans rarely face the same threats to civil liberties as the 72% of the global population living under tyranny.

Sacrificing Liberty for Marginal Gains

As Ben Franklin famously warned, sacrificing liberty for security is a perilous trade-off. By eliminating private transactions, we sacrifice global liberty for minimal security gains, as illicit activities will inevitably find alternatives. While governments have increasingly used financial monitoring to combat crime, this power can also be abused to prosecute legitimate dissent and ideological pursuits.

Instead of curtailing privacy, the U.S. should safeguard the tools that empower activists to challenge oppression and fight for the liberties it has long advocated for abroad. Tread carefully when limiting individuals' ability to fund their ideals and pursuits, especially for the 5.4 billion people who struggle under authoritarian rule. The proposed restrictions undermine America's long-standing advocacy for democracy and human rights abroad.