Project of Bill to declare Cryptocurrencies at the border of the United States

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regulations btc usa

With increasing and justified concern for increasing terrorist activity and its methods of financing, four US senators have proposed legislation that would lead to an extension of the federal government’s powers in relation to citizens’ money when traveling to or from U.S.

On May 25, a bipartisan congressional commission formed by Senators Charles Grassley (R-Iowa), Dianne Feinstein (D-Calif.), John Cornyn (R-Texas) and Sheldon Whitehouse (DR.I.) presented the new law proporsal, the Anti-Money Laundering, Terrorism Financing and Counterfeiting Act of 2017. This enacted legislation would result in an easier process for the federal government to confiscate assets transported abroad or in the United States.

The intent of the legislation is to make it more difficult for drug traffickers, terrorists and other criminals to transport money and other “financial instruments” across the US border. Under current federal law, travelers who transport $ 10,000 or more in cash or other monetary instruments must report such funds to US Customs and Border Protection. Lack of information, although unintentional, could result in monetary seizure and even criminal or civil penalties.

This legislation would expand the definition of “monetary instruments” codified under current law to include “prepaid access devices, stored value cards, digital coins and other similar instruments”. This is where it becomes risky because the criptocurrencies, like Bitcoin, are technically transportable through the owner’s digital wallet wherever he travels.

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A number of possible scenarios could arise under the provisions of this law that could result in innocent Americans being losing their assets. Through a so-called process of confiscation of civil assets, citizens’ property could be seized if it is suspected to be linked to a criminal activity, even if the property owner is never charged. Using a hypothetical example linked to this practice, if an individual received bitcoin from, for example, another user or from third parties that has nefarious links, it is possible that he could be penalized with confiscation of property regardless of whether the recipient has a suspicion of that the sender had been involved in some kind of illegal activity. However, the ability to track this would require a heavy burden for the authorities.

However it is important to highlight a couple of features of digital coins. In particular, there are two attributes of the digital currency that demonstrate that the sponsors of this bill have an insufficient understanding of the technology that generates them. The first attribute is that digital coins technically have no location because the assets are simply represented in the digital books of thousands of computers around the world, both inside and outside the US. Therefore, it is impossible to “stop” crossing a border, as intended.

The second attribute is that it is almost impossible to detect the keys that allow access to the funds. All that someone needs to recover their assets in a new location is the memorization of a twelve word recovery phrase. Detecting these assets would be completely ineffective with conventional methods.

Discussing the need for regulation of digital coins to face the challenge of using them for criminal purposes is understandable and necessary, but it should deprive a better understanding of the technology that creates digital coins and the various methods of government of to understand how to develop more effective laws.

We invite you to follow the day by day about the cryptocurrencies, blockchain and bitcoin world at Crypto-economy.

 

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